Credit crunch brings private jet market down to earth

(16.12.2007     Guardian)

The executive jet – the ultimate symbol of conspicuous wealth for business high-rollers
– has become the latest victim of the credit crunch.   Aviation experts report
that in the past fortnight, the ‘forward’ price for these jets has plummeted,
as even the mega-rich start tightening their belts.

Twin-engined mini jets, such as the $60m ( £29.5m) Gulfstream G550, owned by retail
tycoon Sir Philip Green, have been so popular that waiting times for delivery
are typically at least four years.

Investors put down deposits of around $5m to place an order. But instead of taking
delivery, they sell on the option to the super-rich who are not prepared to wait
– for a fee. Investors can make up to $10m profit on each plane, if they can guarantee
speedy delivery.  

Of the estimated 300 executive jets sold last year, about 10% were thought to
be acquired in this way.   Wealthy Asian businessmen in particular have driven

But John Keeble, chief executive of executive jet consultancy Twinjet Aircraft,
says investors are rushing to sell options in the forward market because they
are worried their value will fall as the super-rich curb their spending.   He said
that in the past fortnight investors have put three options to buy the French-made
Dassault Falcon 7X, on the grey market with a list price of $45m.

Keeble said no more than one option per month on the plane would have been put
up for sale before the credit crunch. He estimated that investors would be prepared
to accept a fee of as low as $2m to get the jets off their hands.