Thursday, April 17, 2014

China's business aviation slackens

After a few years of powering forward China's business aviation has started to slow burdened by insufficient support.

"China's business aviation market is eye-catching with great potential," said Wang Zhiqing deputy administrator of the Civil Aviation Administration of China (CAAC). "But the country's business aviation market has slowed down since last year," he said at the Asian Business Aviation Conference and Exhibition (ABACE).

The annual conference is the region's largest event dedicated to business aviation. It ran from April 15 to 17 this year.

Business aviation is the use of general aviation airplanes or helicopters for a business purpose.

By the end of 2013, there were less than 300 business aircraft operating in the Chinese mainland, much less than the 20,000 in the United States and the 3,000 in Brazil.

With its vast area and growing number of high powered executives, there is a huge market for business jets in China, said Einar Tangen, principal of DGI Design Group, an interior design provider for homes, jets, yachts and cars.

"To balance their duties they need to make the most efficient use of their time," said Tangen.


Still in its infancy, with an underdeveloped infrastructure, few professionals and limited progress in opening up airspace, business aviation has started to drag.

Nearly all operators and leasing providers in the industry have noticed the market slow down since last year, said Wu Jingkui, vice president of sales and market development in North Asia of Cessna Aircraft.

"China is facing a tough task. It's not easy to purchase more aircraft or open up airspace," said Wang.

It comes down to airspace, airport construction, professional personnel development and cultivation of support services, he said.

"There is an extreme shortage when it comes to infrastructure," said Jiao Jian, vice manager with Deer Jet, the largest business jet company in the Asian-Pacific region.

The company boasts the largest fleet of business jets in Asia. Its fleet accounts for about 40 percent of all China's business aircraft.

There is no executive airport, and no standard fixed-base operation (FBO) with a complete maintenance and support system in China, said Jiao.

By the end of last year, there were 399 airports or landing points for general aviation nationwide. Meanwhile, the U.S has about 5,000 airports and 19,000 landing points for general aircraft.

During the conference, it was announced construction of China's first executive airport will be begin by the end of the year in Beijing's neighboring Hebei Province.

Sanhe Executive Airport will be about 60 km east of the capital.

At the conference, Deer Jet announced it would build between four and six FBOs within the year.

But as already mentioned, other areas also need improving.

By the end of last year, there were only 1,655 registered Chinese pilots in the general aviation sector.

It is estimated that China needs more than 6,000 in the next three years. This will increase to 15,000 in a decade.

The country's current training capacity is only about 1,000 per year.


Operating costs of a business aircraft in China are among the highest in the world.

"Maintenance, flight, airport and air route usage costs are all very expensive," said Liao Xuefeng, chairman with the China Business Aviation Group.

The cost on using airports for a small-size business jet on a Beijing-Shanghai trip is far more expensive than the cost of the flight.

"The excessive costs are a critical factor that is dragging development of the industry," Liao said.

"There is also unconfirmed information that some government authorities will impose a luxury tax on business aircraft. That will be damaging if it becomes true," said Jiao Jian.

In the next two decades, there will be 2,420 business aircraft delivered to China, which is forecast to become the world's third largest business aviation market after North America and Europe, according to research by manufacturer Bombardier.

"It's is a huge and lucrative high tech market, which China should not miss out on," Einar Tangen said.