Exchange funds must keep at least 20% of assets in qualifying illiquid holdings to preserve tax-deferral status under Section 721. Instead of real estate, Craft satisfies this requirement with a fleet of business jets that generate charter income and can appreciate in value.
How we finance the aircraft
We acquire new or pre-owned jets using two types of credit:
Aircraft-backed loans — secured directly by the aircraft and engines.
Asset-backed loans — borrowing against a portion of the contributed equity portfolio, freeing up cash without selling securities.
How we allocate flights
Each year’s flights are split between:
Charter demand — from corporate and leisure clients booking through Craft Charter LLC or partner brokers.
Participant usage — from investor-members using their allocated trips. If member demand is lower than forecast, the Pod can release those trips to retail charter, turning idle time into profit.
Diversification within the charter sleeve
The fleet operates from multiple geographic hubs, which spreads out risk and maintenance costs across regions and customer types.
Cash flow and upside
Charter flights generate operating income, while the aircraft themselves may appreciate or maintain value thanks to life-extending maintenance programs. This combination of income, tax-qualifying illiquid assets, and potential gains meets the Section 721 requirement, produces cash yield, and creates an opportunity for capital appreciation when the aircraft are sold.
For details on what happens to aircraft proceeds when you redeem units, see What happens to my aircraft on exit. For the broader picture of our investment mandate, read Primary investment objectives of Craft Pod and Exchange fund overview.
Please read our full disclosures before making an investment decision.