In his debut contribution to Business Jet Traveler's "Inside Fractionals" column, Shaircraft CEO, James Butler, offers advice to owners challenging providers' low share valuations. Many fractional owners wonder if their shares have gone down in value as the providers claim, in some cases as much as 60%. Butler emphasizes that owners have the right to contest these valuations through the appraisal process provided in their Purchase Agreements. Is it worth it? "The larger the share and the bigger the aircraft, the more likely it is that it will be worth your while to contest the provider's valuation," Butler advises. "On more than one occasion, we've told owners that the potential rewards may not be worth the cost. In other cases, we've fought for and obtained significantly higher valuations by making the most of the owner's contractual rights and by using appraisers who understand all the aspects that make fractional aircraft unique." Owners can put themselves in the best position by anticipating this contest and negotiating changes in the standard boilerplate Purchase Agreement with regard to how the process will work and, most importantly, what is meant by "fair market value."
Download: "Sometimes, 'Fair Market Value' Isn't So Fair" (PDF)