After a two-year buying spree, business jet sales in 2006 reverted to a more typical cyclical pattern. Overall, sales remained strong, but the year was characterized by ups and downs. We witnessed a lackluster first quarter, followed by a buoyant second quarter and a summer slowdown. Buying activity then kicked into high gear in the fourth quarter, seemingly aided by an adrenaline rush from October's National Business Aviation Association convention in Orlando, Fla.

The robust sales of the past couple of years prompted a predictable rebalancing of inventory, beginning in early 2006. The number of business jets on the market grew steadily from January through August before edging back down in September to about 1,750, a figure that appears likely to remain fairly constant through the end of the year. That's about 150 more offerings than were in the inventory in late 2005, but the increase comes amid a growing worldwide fleet.

The corporate aviation community may have begun to get some relief after years of taking potshots from the consumer press, which has called private jets luxury items for the rich and a waste of stockholders' money. This small but growing segment of general aviation may have become the beneficiary of the heightened terrorism concerns that have forced airline passengers to endure serpentine TSA security lines, followed by preemptive purging of their coffee, shaving cream and toothpaste. Today, it seems that any company able to afford a jet either has one or plans to buy.

Many will consider pre-owned models, if only because of unprecedented long waits-in some cases until 2010-for delivery of new jets. The backlog of orders for new aircraft directly influences pricing and supply of used offerings. Whether a downturn is imminent is anyone's guess, but the gut feeling here is that this cycle has taken on quite a different complexion from the last one, which occurred after the dot-com bubble burst. Back then, aircraft values came down hard and fast and were slow to recover.

Right now, long order backlogs are causing some models to carry huge premiums. For instance, the G550-which can be purchased somewhere in the mid-$40 million range, depending on how it's optioned up-reportedly has brought $4 million to $5 million premiums.

That's quite a surcharge, but it doesn't seem to be putting off buyers, as only one is available today-and it carries an asking price of $49.995 million. In fact, of the roughly 200 large-cabin Gulfstreams in operation and in production, only five are for sale-the aforementioned G550 and four G450s. (A 2007 G450 delivery position is also for sale.) Unlike some of their aging counterparts, these aircraft are not gathering moss, as all but one have resided on the used market for fewer than 40 days.

Other aircraft are just as hard to find. Not a single used Falcon 2000EX is for sale and of the six Falcon 900EXs on the market, deals for three are pending and one is a 2007 delivery position, so just two are actually available. Only a handful of Falcon 50EXs are for sale, as are three Global Expresses, one of which has a sale pending. Three Challenger 300s are available, two of which are positions that deliver next year.

No doubt, the demand for late-model jets is being fueled by the lack of a readily available supply of new ones. This in turn has helped firm up values of some slightly older aircraft, such as the Challenger 604, Falcon 900B and Gulfstream IV-SP. Many believe more Falcons will land on the market as 7X deliveries begin early in 2007. The stock of GIVs is double what it was a year ago-28 now versus 14 then-while Falcon 50 and Challenger 601-A supply has remained stable for a couple of years, with prices firm.

The super-midsize category is one of the most sought after, with the Citation Sovereign and Gulfstream 200 in sparse supply. A couple of years ago, G200s flooded the market, but offerings have since dropped nearly 75 percent, despite a 50-percent growth in the G200 fleet. As with most new models, as more buyers discover it, it is becoming a sought-after commodity, one that can command significant premiums for delivery positions. The early serial numbers are selling for around $15 million and 2007 delivery positions have been parked above $17 million. The Citation X, a contender for buyers' attention in this segment, has backed off the heated pace of last year, adding several choices for buyers to consider.

Suspected Culprit
The success of Cessna's CJ3 is the suspected culprit for knocking the CJ2 off its perch. The CJ3 recently passed the century mark for number of aircraft in operation and can capture delivery-position premiums above $300,000. As the CJ3 fleet has grown, there has been a corresponding spike in the stock of used CJ2s, which has more than doubled during the last 12 months, spelling opportunity for some prospective purchasers. Another market standout is Cessna's Excel XLS, the sequel to its popular Excel. The few available XLSes are all priced above $11 million, with early serial numbers selling for slightly less.

December will undoubtedly end on a high note and the relatively predictable trading pace that marked 2006 may well continue into next year. With attractive finance rates, along with continuing security concerns and factory backlogs on new aircraft, sales of pre-owned models may have found a sweet spot. Certainly a counterbalance, such as a forecast economic slowdown, could derail the jubilant feeling in short order, but for now endorphins are running high, and for much better reasons than in the last cycle.

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Today's Best Deals, and Two To Avoid

What are the best buys in the current market and which models should you avoid? That question has never been tougher to answer than it is now. One of my industry counterparts mentioned recently that "today's soft market is tomorrow's hot market," and there's a lot of truth to that. While values of many aircraft have bumped up over the last few years, many look poised to take a breather. That said, here are a few models that currently appear bargain-priced-and a couple you may want to avoid.

Priced To Sell
Challenger 601-1A-This aircraft appears to offer lots of bang for the buck. Few jets with $8 million price tags provide its coast-to-coast range and so much comfort. Most of the 66 Challenger 601-1As produced convert to the upgraded CF34-3A engines of its successor model at the typical 6,000-hour overhaul interval. Right now, 15 of the 66 Challenger 601-1As are for sale, placing buyers in the driver's seat.

Citation CJ2-If I were trying to sniff out a deal, I'd put a full-time bloodhound on the trail of a CJ2. Despite a significant increase in inventory over the last year or so, asking prices appear little changed so far. But the buildup, likely attributable in part to deliveries of new CJ3s, is bound to produce some bargains.

Falcon 50EX-Six are now for sale, up from one in the first quarter of 2006, which has taken prices down a few pegs. At present, prices range from just under $16 million to about $18.5 million.

Hawker 800A-This aircraft may be undervalued. There are 36 for sale now, down from 44 at mid-year. Other aircraft in this category, such as the Learjet 60, may also be good values.

Proceed with Caution
Astra SPXs-Only three of 59 Astra SPXs were available late in the first quarter of this year, but the number has since risen to 10. Few aircraft can deliver as much value as the Astra, but the small number produced can shift this market from hot to cold and back in short order. Prices have backed off their highs of a year ago and may be feeling some pressure from above, namely a handful of later-model G100s. The spread between the two stands at about $2 million and any lowering of G100 prices could negatively impact the SPX market.

Citation Bravo-Reports of higher-than-expected overhaul costs on the Bravo's P&WC PW530A powerplants may be the reason inventory has risen from 20 last January to 33 today. The current number still represents no more than average supply, but the increase is significant and sellers would likely prefer to see the availability trend heading in the opposite direction.