Preowned: June-July 2007

At a dinner party recently, the subject turned to private jets and someone asked, "If you could have any jet, which would you pick?" Someone else blurted out, "an F-16," and everyone laughed. If you think about it, an F-16 might well give you a decided advantage over business rivals, but it would likely also raise a few concerns.

Of course, the which-jet-is-best question gets asked seriously every day, but meaningful answers require a fair amount of due diligence and evaluation of such factors as the number of passengers to be carried, the number of hours to be flown per year and typical destinations.

Right now, those factors are leading many buyers to opt for long-range aircraft. Consider the latest variant large-cabin Gulfstreams. Of the 228 G300 through G550s in service, only two are currently available-one G450 and one G500-and one of those (the G500) is rumored to have a sale pending. The only G550 you can buy is a 2008 delivery position priced at $52 million, several million above its factory list price. The situation is similar with long-range jets from Airbus, Boeing, Bombardier and Falcon Jet.

The scarcity of these current production aircraft, coupled with extended backlogs (nearing 2010 in some cases), also has served as an impetus for a resurgence of predecessor models. Compared with a year ago, for instance, fewer than half as many of Dassault's Falcon 900Bs and Bombardier's Global Expresses are available. And fewer than half as many Gulfstream GIVs, GIV-SPs and GVs are on the market now as there were when inventory was at its peak in the past 12 months.

Even in this climate, to attract interest, sellers may need to make price adjustments, albeit from historically high levels. While it may be a seller's market in the large-cabin arena, buyers can exert some influence, as evidenced by the Falcon 50EX and 900EX, both of which saw 2006 pricing test new highs, leading to an increase in inventory (from exceedingly low to normally low). Likewise, the Challenger 604 pinged off an all-time inventory high last month, which seemed out of sync with the rest of the large-cabin sector. Thanks perhaps to sellers' recognition of this imbalance coupled with buyers' perception of value, five aircraft are now under contract. When concluded, these deals should bring inventory of the model back to year-ago levels and a notch under its 12-month moving average.

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