Wealth

It's a buyer's market for (used) private jets

Suddenly, private jets are affordable.

Well, "affordable" in a relative sense.


Great time to buy that private jet!
VIDEO1:5601:56
Great time to buy that private jet!

Gulfstream delivers dozens of its top-of-the-line G650s to a waiting list of the world's richest people, and as the unit of General Dynamics announces new jets like the G500 and G600, the market for preowned Gulfstreams is getting a little crowded.

"We're seeing quite a few 550s have hit the market," said Tyler Webb, sales director for Jeteffect, a major seller for private jets.

Webb said a year ago that there were 11 used Gulfstream G550s for sale. Now there are more than 30. One sits inside Clay Lacy Aviation in Van Nuys, California, owned by Skybird Aviation. The 8-year-old jet is on the market for just shy of $32 million, about $20 million below the cost of a new one.

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There are no trade-ins at this level of income. Billionaires who take possession of new jets try to sell their old ones. In the case of the G650, many owners are hoping to unload their G450s, Vs or 550s through brokers or through Gulfstream itself.

Analysis by airplane broker Bloomer deVere breaks down the current price discounting this way:

G550
2008 Bluebook value: $45.8 million
Current value: $28.5 million (62 percent of original retail)
Projected 2019 value: $18 million (39 percent of original retail)

A Gulfstream G550 jet on display at the Singapore Airshow in February 2014.
Nicky Loh | Bloomberg | Getty Images

G450
2008 Bluebook value: $38,855,000
Current value: $22 million (61 percent of original retail)
Projected 2019 value: $14 million (33 percent of original retail)

File photo: Visitors look at a Gulfstream G450 aircraft at the India Aviation 2012 conference in Hyderabad, India,
Dhiraj Singh | Bloomberg | Getty Images

"If you were in the market, say in 2006, and you paid a premium for your aircraft, it would be a horrible time to sell right now because you're taking such a huge hit," Webb said. Up until now, there hasn't been much competition. Jeteffect said the market for used inventory peaked in 2008 with 3,100 aircraft for sale. Currently it's below 2,300 … and rising.

Webb said demand is also picking up. Much of the market has returned to the United States, as high-net worth individuals and companies that couldn't previously afford a higher-end Gulfstream begin to see it as a possibility. Jeteffect said there was only one sale of a G550 in the first half of this year. Since then, there have been eight, "and at least two others are currently under contract."

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Why would a billionaire sell a perfectly good jet to trade up to a G650?

"That's the cat's meow right now," Webb said. "People love buying new aircraft." The G650 has a longer range, larger cabin, faster speeds and state-of-the-art avionics.

All of this is pushing down the prices of lower-cost jets. Webb said older GIVs "can start anywhere from 3 to 4 million."

However, there is one used Gulfstream model that you can sell for a profit at the moment—the G650. "There are only four or five on the market, but you're looking at anywhere from $70 to $75 million for those, which is actually a premium of what they paid new for them."