Billionaires flip their super jets

Billionaires flip their super jets

Still, the jet has become the must have plane for the world’s billionaires, with Ralph Lauren and Oprah Winfrey both lining up for one. Demand is so strong that a buyer signing a contract today won’t get their G650 until the third quarter of 2017. That’s why many buyers are willing to pay more than $ 70 million to get their planes today.

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“These are billionaires who are willing to pay a premium to avoid the wait,” said Philip Rushton, founder of Aviatrade, an aviation consulting and brokerage firm.

The deals are a double-edged sword for Gulfstream. While they highlight the strong demand and value of its aircraft, they also show that customers are now making millions off of its product. The company said that it is “not privy to the details” of any flips, “if customers are, in fact, getting a premium for the aircraft, it’s a testament to the amazing capabilities of the G650.”

The real problem for Gulfstream is clients trying to sell their planes before they are delivered. Gulfstream said that “Customers cannot sell the aircraft before they’ve physically taken delivery of it. This prevents speculation, which isn’t good for the market.”

The company has a “non-assignability” clause in its contracts, meaning the ownership can’t be reassigned after a contract is signed.

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Some customers tried to get around the clause by buying the plane under the name of a newly created aviation company. They would then sell the company to a new buyer, essentially transferring ownership of the plane through the company sale. Brokers said Gulfstream caught on to the game and is now requiring the signer of the contract to be involved in the final delivery.

“They’re really doing their best to deter this,” said Jay Duckson of Central Business Jets.

By CNBC’s Robert Frank. Follow him on Twitter @robtfrank.

High Net Worth


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