China Business Aviation Market and Investment

 
 
 
 

China’s Business Jet Market Expected with Explosive Growth 2012-01-06
 

The otherwise dormant Chinese business jet market has come to a turning point, triggered by the air control relax reform. This week,  Airbus and Boeing have held their press conference, predicting that each of them will sell over 5 business jets to China each year, while Bombardier also showed that over the next 10 years, total sales of business jets in China will reach over 600 units.

According to Li Bing, sales superintendent of Boeing Greater China, government, large corporates, business leaders etc are their main clients. This year Boeing is expected to deliver 3 business jets, mainly to VIP charters such as Hainan Airlines, and Air China. Upto now Boeing has sold 195 business jets worldwide. Although only with 8 Boeing jets, China is among the fastest growing regions.

Comparatively, Airbus’s business jet marketing in China is much quicker. Among its 170 sets of business jets sold worldwide, China owned 20. This year Airbus has already sold 2 jets to China, to be delivered to DeerJet and Southern Airlines. Last year, Airbus sold 15 business jets worldwide, China took 15%.

The largest business jets represented by BBJ (Boeing) and ACJ (Airbus) with dozens of passenger capacity, have a space 4 times that of smaller ones such as Bombardier and Gulfstream. Their flight range is also much longer. However, with the convenience of spareparts and repair service sharing of their mainstream jets, their operation cost is yet lower than those smaller jets, therefore the big business jets of Boeing and Airbus have been securing their position as the topmost business jet suppliers.

In the myriad of business aircraft types, helicopter is also an important member. EuroCopter, world’s largest helicopter manufacturer said, along with the opening of the low sky, demand of helicotpers in China will also be released, which is suppressed for too long.

Recent data showed that currently China has no more than 100 private jets, while the U.S. has more than 18000 business aircrafts.

At the moment, the Beijing Capital Airlines, which is a joint venture of Hainan Airlines and Beijing Capital Tourism, is the largest business jet operator, Its predecessor was the DeerJet. Capital Airlines has 24 business jets, and hence has the largest fleet in Asia Pacific region, accounting for 90% of China’s total fleet. To meet with the market change of wealth redistribution to the Orient, China Airlines, Eastern Airlines and Southern Airlines are also planning for the business aviation.

China Airlines plans to set up a joint venture with the Beijing Municipal Government to operate VIP chartering. A new type of BBJ jet will be purchased. Previously the China Airlines has only 4 Gulfstream jets under management. Eastern Airlines invested RMB 50 million in a business jet charter company in 2008, and plans to increase its fleet to 3 this year. Southern Airlines, until now not yet involved in business aviation, has also planned to procure a ACJ business jet, and will probably found an independent business jet company.

However, air control in China has impeded the business jet chartering. Passengers are unable to drive directly to beside the jet to get aboard, nor can they alter their route at the last moment. In addition, apart from a few cities with business jet terminals, the rest of Chinese cities have no specialized facilities for business charters. These two factors have become the two largest barriers towards successful development of the Chinese business aviation market and industry, therefore, industry insiders predict that it needs time before the market will really take off.
 

China Needs Different Business Jets Now

2012-01-06

When things get moving in China, they can move quickly. Until about four years ago, Chinese demand for business aviation was one of those things that was forever coming, forever predicted, but never a reality.

Then, when orders from China finally began picking up, around 2008, the market revealed its immaturity: almost all the buyers wanted large aircraft. With no business aviation culture, the only people who thought of flying in business aircraft were extremely rich individuals and top managers of large companies.

Moreover, with the Chinese emphasis on face or reputation, executives of various manufacturers privately said that, to many buyers, showing a big, luxurious cabin to friends and associates was an important motivation for getting the aircraft.

Now coms early signs of change.

“Initially, it was almost all top end,” Gulfstream President Larry Flynn said in a recent interview. “But now the mid [-size] aircraft are picking up.” Related to that is a sign that the market is growing firmer roots in the utility, as distinct from the showiness, of business aviation. “They are becoming more need-buyers than want-buyers,” says Flynn. “You are looking at what your needs are: passenger loads, range, city-pairs.” That does not mean companies such as Gulfstream, Bombardier and Dassault will sell fewer of their large aircraft. More likely, sales of medium-size aircraft will just grow faster, although China is still probably years away from wanting many light and very light private jets, and even further from demanding propeller business aircraft, the hallmark of a deeply ingrained business aviation culture.

Another feature of the Chinese market that Gulfstream has discovered is the strong power of brands. The company’s brand is among the best known worldwide and, therefore, in China. Feeling their way in unfamiliar markets, Chinese buyers of almost any foreign products show a strong bias toward the very top brands, to the frustration of companies whose products are excellent but do not have household names.

In Gulfstream’s case, it may help that its Mandarin name, Wanliu, is an easily remembered, literal translation that sounds rather pleasant to many Chinese ears.

Hong Kong used to be the dominant Chinese market for all business jet makers. Gulfstream now counts 33 of its aircraft there, compared with 43 in mainland China. Reinforcing success, the company opened an office in Beijing in December. Also, “we have been putting more and more people, product support and parts warehouses into” mainland China, says Flynn.

Chinese fighter builder Avic Aviation Techniques, an Avic unit formerly known as Avic Defense, last year sought proposals from all major business aircraft manufacturers to support it in moving into the business aviation market. It wants production of a current aircraft moved to its Chengdu works and joint development of a second aircraft to be built there.

It is difficult to see much incentive for most foreign companies to help Avic Aviation Techniques in this plan, and Gulfstream appears to have been one of the first to make clear that it was not interested.

Asked to comment on that, Flynn suggests that the company has little interest in joint developments. “We are inwardly focused,” he says, adding, “There is not a worldwide need for more aircraft plants.” The ambitions of Avic Aviation Techniques and sibling company Avic General Aircraft (or Caiga) reflect another common phenomenon in China. Seeing large-scale demand in China for something, in this case, business aircraft, the government is keen to ensure that local manufacturers address that market.
 

Shenyang airplane sales surged 2007-04-10

From the beginning of the year upto now, we’ve sold already 6 airplanes, tripling the sales compared with last, a person of the Shenyang Zhongti Light Aircraft Co., Ltd. said. However, just few months ago, it was reported that the company has only sold less than 60 aircrafts in 12 years. And now the official implementation of the “Operation Licensing Administration Regulations of General Aviation” and along with it, the deregulation of operation and application formalities has boosted the sales of private in China.

On the other hand, the prices of private aircrafts are rising too. Shenyang Zhongti plans to raise it to about 700,000 Yuan, because prices of all components are rising. For example the engine cost alone has risen by about 70,000 Yuan.