Friday, August 25, 2017

China’s Aviation Push Has Aircraft Manufacturers Ready For Takeoff: Orders for helicopters and planes are up as the Chinese government reforms flight restrictions

The Wall Street Journal
By Trefor Moss
Aug. 25, 2017 5:30 a.m. ET

SHANGHAI—Above Shanghai’s skyline, things are eerily quiet: the helicopters and small planes that whir over other cities in the world are hardly ever seen here, or anywhere across China, thanks to decades-old airspace restrictions and a dearth of airstrips and heliports.

China has fewer than 4,000 helicopters and light aircraft, according to the U.S.-based General Aviation Manufacturers Association—fewer than New Zealand, and a fraction of the 210,000 aircraft operating in the U.S.

But that is changing. China’s leaders have decided to promote general aviation—air services spanning leisure and transportation, logistics and emergency services—to befit the world’s second-largest economy.

The reforms promise a bonanza for aircraft makers, air base operators and infrastructure developers.

Orders are rolling in. Textron Aviation Inc.’s Bell Helicopter has this year scooped up two big China orders for 150 aircraft, potentially worth $350 million at list prices. Last year, Airbus Group Inc.’s helicopter division secured a 100-aircraft contract worth $790 million, and agreed to set up a local assembly line in the northeast city of Qingdao. Textron’s Cessna Aircraft Co., which set up a local production line for its Caravan utility airplane in 2013, recently announced its 100th delivery in China.

Also last year, Leonardo SpA, the helicopter unit of Italy’s Finmeccanica SpA, sold 55 aircraft worth roughly $350 million at list prices to help local operator Shanghai Kingwing General Aviation Co. establish what it said would be China’s largest airborne emergency medical service.

The trigger for change came last year when the State Council, China’s top policy-making body, published a blueprint signaling the transformation of general aviation into a $150 billion industry by 2020.

It said China would liberalize airspace below 3,000 meters (nearly 10,000 feet), buy thousands of aircraft and build 500 new general-aviation airports within four years (the country has 300 today). That sounded ambitious enough, but when a local newspaper recently counted the airport projects already under way it found 934 of them.

The recent spate of aircraft orders suggest growth is accelerating. China’s helicopter fleet nearly doubled to 907 aircraft between 2013 and 2016, according to Asian Sky Group, an aviation research company.

At China’s first privately run heliport on the outskirts of Nanjing, trainee pilots—mostly young men and women dreaming of a career in the aviation industry—were being schooled on a bright blue U.S.-built Robinson Helicopter Co. R-44 Raven II that sat primed for takeoff. Besides flying lessons, the facility offers transportation services, aerial tours of Nanjing and even midair weddings.

The heliport, owned by Ruohang Group, hasn’t turned a profit since opening eight years ago, but the new national focus on improving air services should soon change that, said manager Zhang Weidong.

“We are at an important point: demand is increasing, we have policy support, investment funds and institutions have money to invest,” he said. “There will be explosive growth.”

Ruohang recently bought 29 aircraft from Robinson and Airbus to boost its 11-strong fleet, and to serve its three local heliports, plus a new facility in Tibet, Mr. Wang said. Aspiring pilots and local companies seeking transportation services are fueling demand, he said.

Ruohang is one of several local operators, including Kingwing and Reignwood Aviation Co., that has emerged as one of Bell’s largest regional customers investing in aircraft and infrastructure to capitalize on the regulatory changes.

General aviation adds 1.2% to U.S. GDP, and China is seeking to tap that same source of growth, said Michael Shih, China head for Textron, whose stable also includes U.S. aircraft makers Beechcraft and Hawker.

“We’re expecting substantial growth,” said Mr. Shih. “It’s a whole chain of industries that they’re trying to develop from zero.”

Tourism, transportation, agriculture, logistics and law enforcement are some sectors that get a boost from air capability, he said. The effect is multiplied in regions where there is relatively little infrastructure on the ground, and where deserts or mountain ranges have traditionally hampered economic growth.

China’s aviation enthusiasts don’t expect takeoff to happen overnight.

“China is building all these so-called aviation townships and aviation development zones,” said Francis Chao, the managing director of Uniworld LLC, a consultancy that helps American aviation companies operate in China. “But nobody is talking about who’s actually going to use them.”

Some fear local officials are jumping on the general-aviation bandwagon because they see new airports primarily as lucrative real-estate projects.

“My worry is that property development comes first, and aviation is a side business,” said Mr. Chao.

Authorities should instead develop a national resource of amateur and professional pilots, Mr. Chao said. A thriving general-aviation sector can only be built from the bottom up, he said.

Yet there is demonstrable progress encouraging aircraft operators to invest, according to Mr. Zhang. Recognizing the need for pilots, the government pays Ruohang roughly $17,500 every time a trainee graduates from flight school, he said—there have so far been 38—and the Nanjing air base is now allowed to ferry passengers within a 30-mile radius more or less unrestricted.

“The industry in China has been almost nonexistent,” said Mr. Zhang. “Now every province is making a plan to develop general aviation: the space is huge.”

Original article can be found here ➤


Anonymous said...

It will not be long before China starts to build its own helicopters. After that, with low labor costs, it will not be long before China starts to market them in the USA. Bell Helicopters, Sikorsky and Boeing will then have to survive only on military sales and all commercial rotary wing aircraft all over the world will be Chinese, just like the drone industry now. While these are natural, "market based" developments I worry about two aspects of this situation. One is China is intent on domination and will do everything, even take a loss for a long time, to achieve that end. Also, to satisfy our "short term" interests, like quarterly earnings, we let them pursue domination. Long-term, strategic leadership from Washington is non-existent.

Anonymous said...

I would be worried, if China could make an actual jet engine. You do realize their combat fighters are dependent on Russian engines right? There are some technological things that are harder than just a country saying "I want to do that".

Anonymous said...

Given the PLA's control over the air traffic control for commercial flights, and its incredible negative impact on on time flights in China, I think we should ask not just the central govt and the provinces if they support general aviation in China. We need to ask the PLA if they also support it. If they are against it, it won't work.

Anonymous said...

The freedom to fly is a dangerous action for a totalitarian state to unleash upon itself.

Anonymous said...

A flight school at the Redding, California airport is training Chinese pilots in the good weather of the Central Valley. Their English-language skills are very minimal. The air traffic controllers do a good job of deciphering, although occasionally the instructor must step in. From that I've concluded that these men (they all seem to be men) are being trained for the home market.