Sales of Aircraft Fractional Interests - Sales to Third Parties
• Fractional ownership disposition options – sale to a third party. “Plan B” for fractional owners looking to dispose of their interests is to sell to a third party purchaser with the consent of the program operator. If you have time remaining under your fractional program management agreement and you have underflown your interest, this option bears looking into. In all fractional programs, the maximum number of hours that an owner is permitted to use program aircraft during a contract year varies with the size of the owner’s interest – e.g., 50 hours for a 1/16th interest, 100 hours for a 1/8th interest and so on. Most programs permit unused hours from any contract year to be carried forward to succeeding contract years. If you are three years into your contract and have built up a substantial number of unused hours, keep in mind that those unused hours may be of value to a prospective purchaser. The point here is that if you put your interest back to the program operator you will not be compensated for these unused hours, whereas if you sell your interest to a third party, you might be. Everything comes at a cost, however. Here, it is the loss of certainty in the timing of the sale. You will need to engage a broker and it might take some time for the broker to locate an interested purchaser.
