Author: CHUNG Yoon Ngan
Date: 04-16-12 01:37
Font Size:
Sky’s the limit
http://www.chinadailyapac.com/article/skys-limit
By Karl Wilson
April 13, 2012 - 5:11pm http://www.chinadailyapac.com
Just 15 years ago, there was only one corporate jet in China. Till 2003, private jet ownership was illegal after which the law was changed to allow individuals to own jets.
Today, there are over 200 private and executive jets in China and around 700 in Asia, says a spokesman for Brazil-based Embraer, the world’s fourth-largest manufacturer of executive aircraft.
Embraer itself entered the Asian market only eight years ago with the sale of just one aircraft to an Asian businessman. Today it has 40 aircraft in the region.
While North America still dominates the sector with 40 percent of the world’s private jet fleet, industry analysts predict that though Asia accounts for just five percent at present, private jet sales in the region will exceed $40 billion over the next 10 years.
As Asia continues to grow, so too do demands for private jets, especially among business executives who cannot waste time waiting at airports or run the risk of missing scheduled services. By 2020 Asia could account for 16 percent of all private aircraft sales globally.
It is not only the corporate world where executive jets are finding new customers. It is among the new rich, especially those in India and China, which now have the second-largest concentration of millionaires after the United States, according to a study by Merrill Lynch Global Wealth Management and French global IT services company Capgemini.
Manufacturers of private jets such as Embraer, Canada’s Bombardier, and US Gulfstream and Hawker Beechcraft are not only targeting Asia’s corporate executives, they are also focusing on the region’s “ultra high net worth” individuals, each with assets of at least $30 million. The number of the super rich in the region rose to 23,000 in 2010, the Merrill Lynch report says, while US business magazine Forbes estimates China alone has 95 billionaires.
Indonesia is another major driver of the private jet business in Asia.
Donnie Armand, CEO of Enggang Air Services, a prominent Indonesian executive aircraft charter provider, says he is planning to expand his fleet.
“Private jets in the United States average 30-50 hours of flying time per month; we average around 75 hours per month, well above the industry,” Armand told CNBC.
According to him, Indonesia will take delivery of nearly $500 million worth of private jets this year. The country already has an estimated 18 jet charter companies operating in the domestic market, and this number is climbing.
Pasha Saleh, Hawker Beechcraft’s regional sales director for Southeast Asia, calls Indonesia the strongest market for executive jets in Southeast Asia.
“It’s been that way for the past 24 months and I think it’s going to continue to lead the region,” he said at the Singapore Air Show in February.
Jose Costas, Asia Pacific vice-president for marketing and sales for Embraer, agrees, adding that alongside Indonesia’s growing wealth, the topography is a large driver behind private jet travel in the country.
“With more than 17,000 islands spanning over 3,000 miles, companies need an efficient mode of transportation to shuttle employees between their headquarters and the locations of the mines, for example,” Costas says.
However, despite the boom, Asia’s private aviation market is handicapped by lack of basic infrastructure that is needed to realize its full potential.
The lack of pilots, technicians and engineers is a problem, says Carlos Gomez, CEO of Geneva-headquartered TAG Aviation Asia that offers aviation services, including aircraft management and charter. “We simply do not have enough locals trained to do these jobs,” Gomez tells China Daily Asia Weekly. The industry, he says, is still heavily reliant on expatriates throughout the region which is “more expensive”.
“We are also running short of service centers for scheduled maintenance and existing providers seem to have very little spare capacity left,” he says.
However, now there is a growing silver lining.
“We are starting to see some manufacturers make significant investments in the region,” he adds.
In February, Gulfstream, the region’s biggest operator of private jets, opened a simulator for its G450/G550 aircraft in Hong Kong in a joint venture with FlightSafety International, the American company providing professional aviation training, simulation equipment and software.
Jeff Miller, vice-president for communications for the company, says the new facility, the first of its kind in Asia, will support the region’s rapidly growing customer base for executive jets.
“Pilots and technicians can now train closer to where they are based rather than make the long trip to the US,” he says
The number of services FlightSafety provided to the region’s Gulfstream operators increased by 230 percent in the past five years. More than 4,000 courses were delivered last year, including over 700 for pilots, maintenance technicians and other aviation professionals who operate and support Gulfstream aircraft.
The company has also established a joint venture with Beijing Capital Airlines, popularly known as Deer Jet, a subsidiary of the Hainan Airlines Group, China’s largest business jet provider with a fleet of 26 Gulfstream aircraft. The venture, in which Grand China Aviation Technik is also a partner, will operate a business jet service center at Beijing Capital International Airport, to be called Gulfstream Beijing.
The move makes Gulfstream the first business jet manufacturer to offer maintenance, repair and overhaul facilities in China.
Awake to the potential and benefits of the industry, China’s government is ready to support and develop the country’s business aviation sector.
Speaking at the Asian Business Aviation Conference and Exhibition in Shanghai in March, Xia Xinghua, deputy director of Civil Aviation Administration of China, said the government was drafting rules to regulate business aviation.
“Various improvement measures and industry layouts are also underway,” Xia reportedly said. These include relaxing the ban on the use of China’s low-altitude airspace for general aviation.
Xia said China’s business aircraft fleet will estimatedly exceed 260 by the end of 2015. By 2020, China will add more than 280 general airports, 40 of which will be designated for business jets. It will also have a basic service support system for the business aviation sector, which includes fixed base operators, flight service stations and maintenance service centers
Xia’s statement has been welcomed by many of the world’s leading manufacturers of executive and private jets.
“Certainly there is enough wealth in China to support the sector,” says Carey Matthews, general manager of Shanghai Hawker Pacific Business Aviation Service Centre.
“It is a time of great opportunities for Chinese companies and units to explore their domestic and global market efficiently by using high-performance and modern aircraft,” says Jeffrey Lee, vice-president of flight operations with American Express.
Apart from providing on-the-go offices and a more flexible timetable, a business jet can also boost the development of a well-run and forward-thinking company, says Lee.
Global and domestic business aviation giants like the Aviation Industry Corporation of China and the newly established Beijing Capital Airlines are now looking to support services, professional training and consultancy.
Still, the sector’s future development however depends on a more open airspace as well as a determined and unified policy on the industry, says Wang Wei, vice-president of Beijing Capital Airlines.
China’s central government said in its 12th Five-Year Plan (2011-2015) that it will promote the development of the general aviation industry, reform the airspace management system and increase the efficiency of the allocation and utilization of airspace resources.
Many of the hurdles that Asian countries currently face — like steep airport taxes and insufficient airport infrastructure — are slowly being overcome. Demand from Asia is helping to offset some of the negative news found elsewhere in the world, especially in the West, contributing to an overall positive industry outlook in the months ahead.
Ed Bolen, president and CEO of US National Business Aviation Association, says business aviation has enabled companies of all sizes to become more competitive.
“It saves them time, increases productivity and helps companies grab new opportunities,” he says.
karlwilson@chinadailyapac.com
Related Content:
Spreading their wings in India
Asia needs props for jetsetting
More Sharing ServicesShare | Share on print Share on email Share on twitter
|
|
The Asiawind forums are provided to you by
InTechTra Inc.
