BAIC to move into aircraft manufacturing when skies open up

Beijing Auto will develop aviation sector when capital's airspace is liberalised, chairman says

PUBLISHED : Thursday, 07 March, 2013, 12:00am
UPDATED : Thursday, 07 March, 2013, 6:12am

Beijing Automotive (BAIC) hopes to benefit from the long-awaited opening up of low-altitude airspace on the mainland by extending its reach into aircraft manufacturing.

The liberalisation of mainland airspace may finally become a reality in May, National People's Congress deputy Xu Heyi said yesterday.

Xu, chairman of state-owned BAIC, which is seeking to go public in Hong Kong, told the Post at the congress yesterday that his group would invest more than 10 billion yuan (HK$12.5 billion) to build private aircraft, which usually fly at between 2,000 to 3,000 feet, with Beihang University, formerly the Beijing University of Aeronautics and Astronautics.

"Around May, the central government will announce plans to liberalise low-altitude airspace, in light of the big opportunities," Xu said. "The Beijing municipal government has assigned the task of developing the general aviation business to Beijing Auto, and we will do our best."

China News Service reported in January that Beijing would be the first city to try out a partial opening of low-level airspace, and 19 stations would be built across the city to provide pilots with flying information, in an effort to enhance safety.

Cheng Peng, a close watcher of the country's general aviation policy, said if Beijing is allowed to open up, other areas will follow.

At present, 90 per cent of airspace is reserved for military purposes, and all civil aviation activity is subject to approval. This makes general aviation, which serves purposes ranging from flying banners to transporting workers, an underdeveloped business on the mainland.

Xu said that was going to change. "Automobiles are already a pillar industry for China. I believe general aviation will also grow into a pillar industry within a short period," he said.

"I can tell you for sure the Beijing government is really working towards this goal."

Separately, Xu told Bloomberg yesterday that BAIC would sell shares in its car division on the mainland after completing a Hong Kong initial public offering by the end of this year. The carmaker seeks to raise US$1 billion through the IPO to help boost its vehicles sales by 70 per cent by 2015.

The timing for the car division's A-share listing will depend on market conditions, Xu said.