What's Up With Flight Options?

Given the economic downturn, common sense tells you that the fractional jet business must be down. Unfortunately, common sense is largely all we have to go on because the major fractional companies don't publicly report their programs' results of operations.

Another clue to look at is how a fractional provider is handling the repurchase of shares from existing fractional owners. With share sales slow, these companies likely must utilize existing capital or lines of credit to fund many of these repurchases.

In this regard, Flight Options' recent business practices give one pause. To be sure, in the past Flight Options has consistently low balled its owners on the value of their shares. I know this because, for over ten years, I have been fighting on behalf of Flight Options' (and other jet company) share owners to get them fair value for their shares. It's no surprise to me that this practice of low balling owners on share valuations continues. What's new is that now Flight Options is trying to delay share repurchases in direct contravention of its contractual obligations. It's excuse? In a recent letter it claimed that, "[T]he current market for used general aviation aircraft is illiquid, with very few transactions taking place making it increasingly challenging to establish market value." This claim is disingenuous at best. A liquid market does exist and values can be reasonably determined.

One wonders how financially strong Flight Options is if it's trying to delay share repurchases and offering flight credits in its JetPass program in lieu of cash. As we continue to do battle with Flight Options, we'll let you know.