Expansion gives operator access to key markets

PUBLISHED : Tuesday, 08 March, 2011, 12:00am
UPDATED : Tuesday, 08 March, 2011, 12:00am

Fuelled by strong indications that the Asian private aviation market will develop rapidly in the coming years, Hong Kong-based Asia Jet is expanding its fleet to meet expected demand.

Already one of the continent's largest charter fleet operators, with 10 aircraft, Asia Jet, which was established in 2008, has placed orders for three new Gulfstream G150, G200 and G250 with delivery expected this year and next year. In addition, in May, Asia Jet will be taking delivery from Cessna of an XLS+, the first aircraft of its type in the region on the Hong Kong charter registry.

Asia Jet CEO Mike Walsh says the acquisition of new aircraft is part of a strategy to expand services and access key markets. The Gulfstream aircraft will provide charter services from Shanghai Hongqiao Airport. This follows a business partnership agreement with China Eastern Airlines to manage the aircraft on the mainland.

As part of the agreement, Asia Jet has been appointed the exclusive sales and marketing agent for aircraft under China Eastern Airlines' newly formed Aircraft Operating Certificate for the region.

Walsh says the partnership agreement will provide several important advantages. These include easier access to mainland domestic airports and close proximity to a large population of potential customers.

'The mainland is a very exciting market and presents huge potential for growth,' Walsh says. He believes the central government's commitment to build about 50 new airports in the next five years and simplify flight plan logging, in addition to freeing up airspace for private helicopter flights, will add momentum to the market.

Industry statistics suggest that worldwide there are about 11,000 private aircraft that meet international charter regulations. About 7,500 of these are located in North America and 2,500 in Europe. In Asia, where the industry has been in existence for less than a decade, only a few hundred aircraft are in service.

While generally optimistic about the private jet charter industry's future, Walsh says the Hong Kong headquartered company faces several challenges. One of these involves competition from foreign registered carriers from the United States and Europe, who use Hong Kong as a transit base to operate charter aircraft services.

He says as a Hong Kong-based carrier, Asia Jet pays local salaries, taxes and often higher operating costs, which may not be the case for foreign registered carriers, whose operating costs are often lower and their tax liabilities payable in other locations.

Volatile fuel prices are another concern. 'It is no secret that Hong Kong is one of the most expensive airports in the region to uplift fuel, which at US$4.50 per US gallon, is considerably more than Macau, Clark Airbase in the Philippines or Shenzhen,' Walsh says. 'This has made us look at fuel policies and tankering strategies in order for us to keep the prices we offer to our clients competitive.'

According to Asia Jet's recent trend analysis, the typical usage for charter flights are seven- to 10-day holiday expeditions within the Asia-Pacific region, music tours, finance road shows and sports events. Presently, charters are divided 60-40 in favour of leisure compared to business.

Walsh says clients often opt for private charters because they have difficulty in scheduling flights during peak periods, or flying long distance with domestic connections in Australia, India and Russia.

Walsh has also noticed demand emerging from entrepreneurs in Malaysia wishing to make short overseas trips to look for investment opportunities. As part of its brand building, the firm has launched an Asia Jet Card Programme, offering assistance with booking exclusive resorts and ground transportation.