Air China may take off into the corporate flying market

PUBLISHED : Saturday, 21 August, 2010, 12:00am
UPDATED : Saturday, 21 August, 2010, 12:00am

Beijing-based Air China may establish a corporate jet joint venture with the Beijing city government to tap surging demand for business and luxury travel across the mainland.

The potential of the country's business jet market has prompted state-owned airlines and international business jet operators to ramp up services. Corporate jets provide shorter check-in times at airports for executives and affluent people and offer flexible flight schedules for multiple-destination trips.

The Air China venture, reported by China Business News yesterday, comes after HNA Group's Beijing Capital Airlines, a business jet joint venture between the carrier and the Beijing city government's Capital Tours, was incorporated in May.

Air China currently operates less than a handful of corporate jets, said a spokesman for the carrier. Capital Airlines has 24 corporate jets on hand and plans to acquire more. Air China declined to comment on its proposed joint venture.

With top executives and the super rich increasingly shunning long check-in queues on commercial flights, more global carriers are offering private jet services. British Airways has offered an intra-US business jet service through a joint venture with Cessna since June, while Lufthansa has a private jet division operating throughout Europe.

'When you look at business aviation on a global basis, China is definitely the brightest star in terms of market potential,' said Lester Ingram, chief operating officer of Hong Kong Aviation Group, one of the largest business jet operators in Asia, controlled by hotel magnate Michael Kadoorie.

The business jet sector is still in its infancy in the mainland, with only approximately 60 jets registered in the country, said Ingram. That is a far cry from the 11,000 business jets registered in the United States. Ingram predicted the number of business jets in China will jump to 200 in five years' time.

In a bid to capture a share of the lucrative market, Hong Kong Aviation Group is in talks with several mainland airlines to form a business jet joint venture, Ingram said. It is also studying a plan to set up a maintenance facility joint venture for business jets on the mainland. 'In 12 months, we would aim to have some capacities on the mainland,' he said.

Under mainland aviation regulations, foreign companies cannot operate aircraft registered in China.

'The business jet market has undergone extraordinary growth over the years as mainland people have started to realise the benefits and convenience of business jets,' said Chris Buchholz, Asia-Pacific president of Universal Weather and Aviation, an American-based company that provides ground handling and flight permit services to business jets in Beijing, Shanghai and Guangzhou.

However, the market is underserved due to limited infrastructure, air space management and expensive handling fees, Buchholz said. There are only a handful of business operators, namely HNA Group, Air China, Citic Group and Shanghai Airlines.

Unlike the US or Europe, which allow business jets to take off from any legal airports, on the mainland business flights are restricted to certain airports only.

Many of these airports already have heavy traffic and suffer from congestion, meaning business jets suffer flight delays.

'Since the major airports in Beijing and Shanghai are so congested, the airports charge a business jet a landing fee on a par with a Boeing 737,' Buchholz said. But in Los Angeles, in contrast, a business jet does not have to pay a landing fee at the various secondary airports.

Beijing Capital International Airport and the two airports in Shanghai each account for one-third of the total business jet movements across the nation.

Flight paths

In China, business jets can only land at certain airports

Business aviation on the mainland is still in its infancy, with a total fleet of this many executive jets: 60