Business jet player plans to spread its wings in China
Hawker Pacific, which runs dedicated facilities for business jets in Shanghai, Dubai and Singapore, is betting heavily on the China market amid surging demand for private jets in the region.
The mainland has experienced a big leap in business jet aviation over the past two to three years with the number of jets jumping to more than 100 from below 30 in 2008. Ground handlers such as Hawker Pacific have benefitted from the substantial growth.
The US$16 million joint-venture fixed-base operation (FBO) operated by Hawker Pacific and the Shanghai Airport Authority is the largest in China and signals the Shanghai government is positioning itself as an international air hub for commercial and as business jet aviation.
'The scale of the FBO is based on the long-term view shared by our partner and us that business aviation on the mainland will grow in the long-run,' said Hawker Pacific chief executive Alan Smith in Shanghai.
The Shanghai Hawker Pacific base at Hongqiao airport, which started operation in March 2010, catered for 3,000 private jets last year. That compared with 700 movements per year at the smaller of the twin airports in Shanghai in 2004. The operation has also been given approval from the Civil Aviation Administration of China to conduct maintenance, repair and overhaul and has agreements with manufacturers, including Dassault Falcon and Hawker Beechcraft, to provide such services for their aircraft.
The investment in the Shanghai operation, which can cater for at least 60 large-cabin private jets at its apron, is expected to be recouped in two or three years, Smith says.
However, Hawker Pacific has to cope with a business model on the mainland very different to those elsewhere. For example, it cannot make money from selling jet fuel to private jet owners, as it do overseas. The fuel refilling business is a vital income stream for FBOs all over the globe. It is so lucrative that those in the United States waive all user fees as long as a business jet operator buys jet fuel from them. On the mainland, however, jet fuel supply is monopolised by China National Aviation Fuel.
Still, Hawker Pacific is already looking to expand to other mainland cities. Smith said several potential sites were being considered.
It was expected that three to four new FBOs would be built within the next two years, including in second-tier cities such as Tianjin and Chengdu, said Helena Lang Haiying, chief representative of Hawker Pacific (Asia).
Any new mainland FBO would involve a joint venture with the airport authority of the local government, Smith said.
The Business Aviation Centre (BAC) at Hong Kong International Airport, which handles more private jets than the Shanghai FBO, has been suffering from a shortage of parking space and service disruptions. Only 21 large-cabin private jets can park on the Hong Kong facility's apron.
Following construction of the third runway in Hong Kong, the Airport Authority is expected to open tenders for a second private jet base at Chek Lap Kok.
'We have expressed our interest in the bidding for the second FBO in Hong Kong,' Smith said.
The mainland had this many registered business jets last year, but industry insiders expect the number to surpass 1,000 in a decade