“Transparency and innovation are at the core of our fractional model and continue to differentiate us in the marketplace,” said Brad Blettner, chief revenue officer, flyExclusive.

“The JetQuity Protect program offers a compelling proposition to our fractional customers by creating easier planning and certainty in their investment. We’re proud to further simplify the process of owning a private jet share and provide our customers with a best-in-class experience along the way.”

By paying a one-time fee upfront, owners can lock in a minimum value for their share of the jet. This protects them from the possibility that the market value of the jet could decline after five years.

In addition, regardless of how the jet market performs, the program guarantees they can sell their share for at least the predetermined price. If the market value of the jet happens to be higher than the guaranteed minimum after five years, the owner gets the higher amount.

The company said that the program provides certainty as to the future value of the asset while ensuring that fractional owners can sell their aircraft share at the guaranteed price.

flyExclusive owns and operates the second-largest fleet of Cessna Citation aircraft in the world, giving fractional owners guaranteed access to a large, versatile fleet of light, mid or super-mid aircraft with no monthly management fees.

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This means that flyExclusive’s fractional aircraft customers can lock-in a value for their aircraft. Jetquity typically offers five year guarantees.

“We are thrilled to team up with flyExclusive to offer a comprehensive solution to fractional jet owners,” said Asad Rahman, CEO, Jetquity. “Our residual value guarantees will provide flyExclusive’s clients with a competitive edge and enable them to forecast their financial outlay far more accurately than is possible with today’s market offerings.”

The guarantee will cover the fractional operator’s Cessna CJ3 and Cessna CJ3+ fleet. It will also include new CJ3 Gen 2 aircraft when they are delivered.

“Partnering with Jetquity to offer residual value guarantees for our CJ3 aircraft is another way we can offer the best service and value to our customers. This collaboration ensures that fractional owners can invest in our state-of-the-art aircraft with confidence, knowing that their investments are protected,” says Jim Segrave, CEO, flyExclusive. “We are excited about the opportunities this relationship with Jetquity presents, and we believe it will further strengthen our position as a leading fractional jet provider.”

Jetquity launched in April 2023. It also has a partnership with Jetcraft, the global broker-dealer.

Also read: Jetquity launches to guarantee future aircraft values

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Which means that now is a brave time for a new entrant offering guaranteed future aircraft prices.

Jetquity, which calls itself a “private aviation fintech” (or financial technology company) is launching a residual value guarantee (RVG) product called The Protect Program. It’s getting the money for this from a mixture of family offices and private investment firms.

Residual value guarantees are relatively common in aviation. Financiers sometimes use them to get deals past credit committees. Manufacturers in the past have used them to sell aircraft (although this is rare now). Jetquity wants to offer them to all owners.

“Owners want to be able to reduce risk and have the flexibility to upgrade easily in a few years,” Asad Rahman, CEO, Jetquity tells Corporate Jet Investor. “Our programme makes sense if you are buying an aircraft and want to be protected from the downside, but still be able to benefit from the upside.”

Jetquity says it has developed an advanced proprietary algorithm to determine the residual value of private jets, considering market trends, aircraft age, and usage. Owners (or potential owners) tell them the tail number for their aircraft and how they plan to fly it. It works out the rest. Rahman says they have been working on this for more three years.

“We needed a lot of very granular data which you could not get in the past,” he says. “At heart, we are a financial technology company. Our system uses serious artificial intelligence to go through years of data and looks at things like utilisation and elasticity of demand for different aircraft to forecast values. Demand drives value.”

The owner pays a fee – a small percentage of the aircraft’s value – each year that they own the aircraft. Jetquity guarantees to buy the aircraft at a set price five years later (it will do up to seven years in special cases). If after five years, the aircraft is worth more, the owner can sell it on the market. If it is worth less, the aircraft becomes Jetquity’s problem. Its investors are taking this risk.

They are prepared to offer guarantees for both new and used aircraft. But Rahman says they will be selective.

Rahman says they are seeing strong demand and that they are keen to work with brokers to establish the product. While owners could use an operating lease (where they make lease payments and then return the aircraft at the end), he believes many owners are keen to manage their aircraft like an investment.

“We want people to stay with us on the programme as they own different aircraft,” he says, “and we want to work with the leading broker dealers to manage this.”

Jetequity knows that the value of your aircraft can go down. They are just betting that their forecast is right in five years.

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