In his latest “Inside Fractionals” column for Business Jet Traveler, fractional jet advisor, James Butler, takes a timely and unbiased look at whether it makes sense for fractional owners to buy or sell.
For those already invested, Butler stresses that, “The attempt by some fractional companies to delay repurchases tells me that capital is tight. If you’re wary that financial problems may cause your provider to fail, you should seriously consider selling your share now.”
Noting that preowned aircraft sales are slow, Butler says, “[If] you sell your fractional share back to your provider now, you’ll enjoy the benefit of older comparable sales that reflect higher values.”
The problem is that many fractional companies are low balling their owners on repurchase valuations (a battle that Butler and Shaircraft have fought successfully for many owners.)
For those considering a new investment, Butler stresses that, “Regardless of the economic circumstances, you need to make certain that fractional ownership is the right investment to satisfy your travel needs, preferences and budget.”
Butler explains that it’s also important to consider the length of your investment horizon. “[W]hile the current economic downturn may provide an opportunity for you to take advantage of lower aircraft pricing that has resulted from declines in the market value of aircraft, this decrease may continue for some time and so the value of your aircraft, and thus your share, may drop over the next couple of years. The private jet market tends to by cyclical, and so values likely will come back with the economy, but this will take time.”
To read Butler’s full analysis of the buy/sell factors in today’s fractional market, download the full text version of this article below.
Business Jet Traveler: “Bail Out — or Buy a Share?”
Download in PDF format (16kb)
