Sky opens for jet-set
Nothing says rich like a private jet. They are the sign of true wealth and power, and are usually associated with rock stars and powerful western businessmen. But with the repercussions of the 2008 financial crisis still being felt in the West, a new flight plan is being charted in our skies. China is slowly becoming the new aviation hub of the world and its entrepreneurs are discovering private jets.
The impetus behind this development is largely down to an uncharacteristic move by the Chinese government. In March, authorities revealed a trial program that would ease airspace restrictions. Li Jiaxiang, director of the Civil Aviation Administration of China, announced that the trial would allow private aviators to fly over certain areas of the country's low-altitude airspace without official approval. He said the government is planning to open the low-altitude airspace of the entire country by 2015.
This relaxation of restrictions is undoubtedly based on a flourishing economy. China's GDP is currently valued at US$5.87 trillion, an increase of 10 per cent compared to last year. China is now the world's second-largest economy.
On an individual scale, Forbes 2010 Billionaire List included 64 members from the mainland. This year, that figure nearly doubled, to 115. Most of the newly rich are making their fortunes through international industries such as mining, oil and property. These industries require businessmen to jet from one country to another at a moment's notice. So it is no surprise to discover that China's aviation industry is booming.
Dozens of new airports are springing up in remote regions of the country, and Chinese passengers are expected to make up a quarter of the world's 800 million travellers by 2014. Despite all this, China has only 200 registered private jets, compared to 11,000 in the US.
'The number of private jets in China is still far fewer than the number in Europe and the US,' says Jackie Wu, chief operating officer of business aviation service providers Hong Kong Jet. 'But I believe that China could become the major market for private jets in the future, as long as its economy maintains rapid growth and better facilities and more flexible regulations come into being.'
Demand for private jets is growing considerably. According to the Civil Aviation Administration of China, there were 32 newly registered jets in 2008; in 2010 that number rose to 56, with a forecast of an additional 60 new registered jets by 2012. The past few months have seen a high number of major private aviation air shows taking place across China, including in Hong Kong, Shanghai and Sanya, in Hainan. At each show, major airline corporations announced record figures and forecasts for China sales. Airbus saw 25 per cent of their 2010 sales go to Chinese customers, Boeing said all of their private jets sold in 2010 were to Asian clients, and Bombardier reported a 27 per cent market share in China. It is forecasting an additional 600 business jet deliveries by 2019.
This has spurred wealthy entrepreneurs to jump into the aviation market before it becomes too late. For example, the China Aviation Industry General Aircraft Co. (CAIGA) was established in 2010 as a business focused on aviation design and resources. The company recently bought out US-based Cirrus Industries Inc., the world's second-largest general aviation aircraft manufacturer. Insiders have said the buy-out will considerably increase production capacity in China. It will also satisfy the country's increasing demand for private jets.
Wu agrees, saying the combination of relaxed restrictions and improved resources will stimulate sales in China. More entrepreneurs will realise that private jets are the ultimate status symbol. With no fixed routes or schedules, owners are free to take off and land in areas otherwise inaccessible by commercial planes. Many airline corporations are also tailoring their jets to Asian tastes, with casino gaming and karaoke rooms.
The future for private jets in China is relatively unknown, but if aviation market researchers JetNet are to be believed, there's a strong possibility the country will soon become the new capital of aviation. JetNet recently reported that China has seen the highest year-on-year growth of any country since 2005, and predicts that the country will have 20,000 general aviation aircraft by 2020.
'Strong economic growth and demand will make China the key driving force of the global private jet market in the next few years. The potential development of the private jet market in China is enormous,' says Wu.