Jet Market struggling in United States

Corporate jet owners are feeling the sting of the economy and the war. The market for corporate jets is the worst it's been in a decade, and that's bad news for dozens of would-be sellers. "I've had a Gulfstream III for sale for three years. I was asking for $13 million three years ago, and now the market is $8 million," said Jack Schafer, president of Jack Schafer Aircraft Sales Inc., based out of John Wayne Airport in Orange County.

It's part of a nationwide slump. Corporate jet values are off about 20 percent across the board over the past 18 months, with some as much as 30 percent. While traffic at local airports has risen, it appears to be coming from an increase in activity by current owners of jets who have sought ways to escape terror-induced security delays at commercial airports.

Manufacturers like Bombardier and Gulfstream have reported falling sales of new aircraft, and some used jets can't be sold for any price. Jet prices are not expected to recover at least this year. Worldwide, inventory of private jets for sale has been rising for five years, according to Jetnet LLC, which tracks the market. The flagging market has cut into the value of jets that aren't listed for sale, such as those owned by entertainment companies like Via-com Inc., Dreamworks SKG and actor Jim Carrey.

All own Gulfstream IV jets, the same model that Petersen Aviation, based at Van Nays Airport, has been trying to sell two of since October 2002. A Gulfstream III owned by a company called Media Copy is also for sale at Van Nays Airport, and has been for sale since March 2001.

Vivendi Universal SA recently announced plans to sell off its three corporate jets as part of a plan to pay down some of its $14 billion in debt. The company values the three Gulfstream jets it has for sale at between $15 million and $35 million each. Corporate jet brokers and aviation industry analysts speculated that Vivendi is certain to take a multi-million dollar loss on the sales.

Many companies are holding onto their planes and waiting the market out. Right now, 17 percent of corporate jets in the U.S. are for sale, but that number is artificially low because many sellers have taken their planes off the market. The market for new corporate jets is also depressed. Gulfstream. Aerospace Corp., a unit of General Dynamics Co., reported a decrease in deliveries to 19 planes in the third quarter of 2002, vs. 24 in the like year-earlier period.

At other corporate jet manufacturers, the story is similar. Bombardier Inc. warned in December that it would lay off 2,000 workers and sharply reduce its Learjet and Challenger production in response to the weak economy. Manufacturers Boeing and Cessna have also announced layoffs and decreased production.