China's rich yearn to fly for a hobby

By Alison Leung 
 ZHUHAI, China | Thu Nov 15, 2012 8:36am EST  

(Reuters) - Wealthy Chinese are itching to take up flying as a hobby, drawing crowds to an air show in the southern city of Zhuhai this week, but high taxes and military controls on airspace are grounding the aviation industry's hopes of a sales boom.
 
Mongolian coal mine boss John Zhang, aged 39, is aware of restrictions on using private planes in China for now, but said he still wanted to buy one to take his family up for pleasure.

"Flying is my childhood dream and this is a gift to myself," said Zhang, pointing to a white Cirrus SR20, worth about $320,000 before tax.

"I probably will get a pilot license in three months as I plan to put aside everything and be fully devoted to training," he told Reuters at the air show on Thursday.

Zhang's personal dream, and the desire felt by many others to take up a hobby which has long been popular in the United States, ought to provide a boost to the aerospace industry.

The country's aviation regulator, the Civil Aviation Administration of China, estimates that about 1,000 general aircraft will be delivered to China from 2011 to 2015.

That is a fraction of the potential demand if the world's second largest economy opens up its skies to ordinary citizens.

With 310 million people, the United States had about 230,000 business-to-general aviation aircraft at the end of last year, while China with a population of 1.3 billion had about 1,100.

China pledged in its latest five-year plan for 2011-2015 to promote the general aviation industry and reform the airspace management system to open up more airspace - badly needed not just by hobbyists but also by congested commercial air lanes.

But observers say China's military, which technically governs all the country's airspace while carving out narrow corridors for use by airlines, is reluctant to give up control.

"The airspace here has not opened up as was forecast," said Briand Greer, Asia-Pacific president for Honeywell International's aerospace division, one of 650 exhibitors at the air show held every other year in Zhuhai.

"The military still owns the airspace and today with a fifth more aircraft in the sky you have got to have more airspace."

LEADERSHIP HOPE

As the country emerges from a period of leadership transition, many in the industry hope authorities will relax the controls and promote the production of small aircraft.

The restrictions also apply to civil helicopters, a relatively rare sight in China compared to many Western countries but also seen as a huge potential market for foreign manufacturers who are investing in Chinese facilities.

Under test projects, private planes now can fly below 1,000 metres in the country's northeastern and central-southern regions, as well as seven second-tier provincial cities.

China will further open up low-altitude airspace to private planes next year, said Ma Xin, an official with the state air traffic control commission, at the show, without elaboration.

Despite slow moves to free up airspace, Western companies are positioning themselves for growth in China as they suffer a slowdown in their biggest market, the United States.

Textron subsidiary Cessna, the world's largest general aviation aircraft maker, signed a joint venture agreement with Aviation Industry Corp of China's general aviation unit, one of many suppliers at the Zhuhai air show.

The two companies will jointly assemble Citation XLS+ business jets in Zhuhai for Chinese customers.

Anticipating a flying craze and seizing a chance to acquire help for the development of its domestic aerospace industry, state-owned AVIC bought privately held Cirrus of Minnesota last year in a deal that briefly stirred U.S. political concerns over the transfer of aerospace technology to China.

Chinese private entrepreneurs like Fang Tieji, have also jumped on the bandwagon. His Jilin Hanxing Group in north China bought U.S. private plane maker Glasair Aviation last year.

Fang plans to set up 40 dedicated service facilities and 10 airports for general aviation alongside aircraft manufacturing and real estate all over China by the end of the decade.

At the country's first general aviation fixed-base operation, Fang presented a team of 12 female pilot trainees in Zhuhai, dubbed the city of dreams.

Private plane owners share the hurdles that have also slowed the growth of business jets - not only restricted airspace but also a lengthy import process and taxes of up to 21 percent.

Other problems include a shortage of infrastructure such as suitable airports, pilots and service facilities.

That may not put off enthusiasts with disposable incomes like Zhang, the coal mine boss, but piloting a plane or even taking one remains a distant hope for many ordinary Chinese.

"I go to this show every time it is on," said Li Qiang, an employee with a Zhuhai-based sportswear manufacturing firm. "I would love to have a private plane if only I could afford it." (Additional reporting by Tim Hepher; Editing by Jon Hemming)

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