Values of jets for firms declining.

Entertainment company Vivendi Universal SA isn't the only corporate jet owner to feel the sting of the economy and the war mood.

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," said Paul Wyatt, editor of Aircraft Bluebook Price Digest.

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 Gulf-stream have reported falling sales of new aircraft, and some used jets can't be sold for any price, Wyatt said. Jet prices are not expected to recover this year, he said.

Worldwide, inventory of private jets for sale has been rising for five years, according to Jetnet LLC, which tracks the market. Of the 1,985 jets for sale as of mid-January, 130 are in California.

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. There's another Gulfstream IV for sale at Burbank Airport, Schafer said.

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.

Paying down debt

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, Wyatt said. 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.

Gulfstream also wrote down the value of its used-jet inventory by $25 million during the nine-month period, as used aircraft inventory swelled to 417 jets from 254 at the beginning of 2002.

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.

Use rises

While sales of corporate jets are down, traffic at local airports has risen over the past year. Since sales are down, the number of corporate jets at airports has stayed roughly the same, and conditions in the commercial flying industry have driven more companies to use them.

Local Los Angeles airports have shown consistent or slight increases in corporate jet activity over the past several months. Van Nays Airport, the busiest corporate aviation hub in L. A., saw its flight activity increase about 7 percent in December from a year earlier.

Santa Monica Airport, which Sony Pictures Entertainment and Bank of America Corp. have used for corporate travel, saw a surge in activity following the Sept. 11, 2001 terrorist attacks but traffic the past several months has "stabilized because of the economy," said Bob Trimborn, Airport Manager.

Among the few buyers in the market are corporate aviation companies that charter flights. They have benefited from the trend away from plane purchases.

Trans-Exec Air Service Inc., a corporate charter company based in Santa Monica that specializes in servicing celebrities, politicians, and high-profile executives, operates out of Santa Monica Airport and owns or operates eight Gulfstream jets. The company purchased a new Gulfstream V in 2002, an aircraft with a current retail value of $43 million.

"Our client list is the ultimate A-list in celebrities, like the $20 million per movie actor and big name directors," Randy Huft, marketing communications director at Trans-Exec Air.

A few individuals, such as biotech entrepreneur Al Mann, have also picked up jets in the down market.