No room for competition says jet firm

PUBLISHED : Tuesday, 22 May, 2012, 12:00am
UPDATED : Tuesday, 22 May, 2012, 12:00am


The only business jet terminal operator in the city said it did not need a competitor despite the Airport Authority contemplating a second private terminal at Chek Lap Kok.

The Hong Kong Business Aviation Centre (BAC), which is backed by Sun Hung Kai Properties, Kadoorie Group, China Southern Airlines and Signature Flight Support, has been witness to the booming business jet industry in the region. The number of jet movements handled by the BAC jumped to 7,000 last year from 350 when it started operating in 1998.

'Business aviation has taken off in Hong Kong over the past five to six years,' said Tony Miller, chairman of BAC, at the opening ceremony of its HK$170 million hanger yesterday. Located on the mainland's doorstep, mainland investors have taken up a major share of the 60 private jets registered in Hong Kong.

It is expected that the mainland will become the largest importer of private jets by 2018. BAC's third hangar, which can accommodate six private jets, will boost the operator's capacity by 55 per cent. However, the total parking space will remain the same as the new hangar has been built on the existing apron area.

BAC has struggled to find space to cope with rising demand for private jets as the airport is running out of land. After years of liaison with the Government Flying Service and the Fire Department for land. the BAC has been forced to accept the fact that it has to make the best of its existing resources to handle growth.

'We are facing a 'happy' challenge from the lack of parking space,' Miller said. 'We are making sure that the happy problem does not translate into unhappy customers.'

The number of remote parking spaces approved by the airport authority for private jets outside the BAC apron has been increased to 31 from 13 a few years ago. However, the arrangement has been under fire because the private jet operators have to spend several hours loading and unloading their jets from inaccessible parking spaces.

Alongside the master plan for a third runway, the authority has earmarked a site at the end of the runway for a potential second fixed-base operator (FBO), the technical name for a business jet terminal and parking area.

'We need to compete externally not internally,' Miller said. Many FBOs are under construction in mainland cities, including Beijing, Shanghai and Shenzhen, which are poised to challenge Hong Kong's role as the leading business aviation hub.

Hawker Pacific, which operates an FBO near Shanghai Hongqiao Airport, said it was keen to bid for the second FBO in Hong Kong and had expressed their interest to the airport authority. Some private jet operators said a monopoly service provider in Hong Kong meant higher prices.

However, Miller said the operator had to stay competitive amid rising regional rivalry in the sector.

'All of our clients are wealthy people and they don't become wealthy by wasting money. In fact they are very cost-conscious,' Miller said. 'BAC is in discussion with the airport authority to expand its terminal where the passengers embark or disembark. The existing lounge area cannot guarantee the privacy demanded during rush hour due to lack of space.'

Demand for business jets has exploded in the region, largely powered by mainland China, where the number of private jets has more than tripled to 109. But some players were concerned that too many private jet owners were rushing to set up chartering firms, possibly underestimating the complexity of the industry and the strength of demand.