In the last decade, the fractional ownership model wooed scores of private jet customers. The shiny new jet factor is a major appeal for owners who, after five years, can sell their share back and reinvest their money in a newer model plane with the latest amenities.

But selling part of a jet isn’t always simple. A number of fractional jet owners and charter card holders want to cut out early and remarket those jet shares before those five years are up. In fact remarketing jet shares is often a source of tension between jet companies and share owners. If an owner sells early, reason the fractional companies, the average fair market value of the provider’s jets goes down.

Enter third-party remarketers. Big-name providers like NetJets and Flight Options don’t necessarily like the secondary market although the fees they collect from in-house remarketing are fairly profitable, according to Lee Young, founder of Liquid Jets, a jet third party jet remarketing company based in Carlsbad, Calif. Liquid Jets remarkets both individual fractional shares and cards, and Young said the company was born out of necessity, catering to those fractional owners who need to sell fast

“Some contractors, and builders are hurting from the sub-prime market, and they were flying around in fractional shares,” said Young. “A fractional jet card or share with two years left on the contract can be liquidated in a blink of an eye if you don’t deal with the big guys.” Young explained the that fractional provider will still eventually repurchase the contract, but clients can save both money and time by using a third party. Fractional companies typically charge remarketing fees starting at three percent of the sales price.

However it may get tougher to use an outside party. According to an article by James Butler in June/July issue of Business Jet Traveler magazine, many providers have “changed their contracts to restrict third-party sales, either by adding outright prohibitions or by insisting upon onerous approval rights.” To circumvent this restriction, Butler in his article advises structuring the transaction as a stock sale rather than an asset sale.

“The major fractional providers discourage [third-party remarketing], but I’m in aviation and not here to dilute their brand,” said Young. Instead, he sees his operation as a more efficient option for clients looking to unload their shares early and one that will actually save providers time in the long run. “Aviation has a small community,” he said, “and you really want to take care of people or word gets around.”

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