Wealth Blog
PUBLISHED : Tuesday, 03 December, 2013, 11:01am
UPDATED : Tuesday, 03 December, 2013, 11:08am

Chinese business aviation – hurry up up and wait

BIO

Anna is a business writer. During her 20-year Hong Kong career, she’s written everything from stock market reports and luxury goods sector analysis to speeches for the HKSAR Chief Executive and served as president of the Foreign Correspondents’ Club for two years.
 

China’s business aviation is one sector that seems to lag way behind the curve. Pent-up demand for private jets is mounting, but when it comes to China, they’re all revved up with nowhere to go. That is in comparison with Europe, and America, which are decades ahead when it comes to servicing, ground handling, staff training and airspace management. Granted, China’s business aviation industry is relatively young and small, but as I have reported before, the world’s business jet manufacturers view it as the next bonanza.

Plans in place

To give them credit, China’s 12th Five-Year Plan targets include ramping up aviation infrastructure, improving the efficiency of utilisation of airspace and reforming airspace management. But global aircraft charter specialists such as Chapman Freeborn Airchartering highlight the hurdles to cross before growth explodes in China’s business aviation. An insider from China Civil Aviation (CAA) says: “From the airspace standpoint, it will not be easy for business aviation to achieve rapid development under the existing regulation for Air Traffic Control (ATC). Unlike America’s low-altitude airspace, China’s operates under strict limits. The opening of airspace will require high-level government decision-making; the CAA and ATC alone will not be enough to change the status quo.”

Big guns needed

The various government departments are also still fumbling through the standard for China’s future low-altitude airspace. At the moment, it is apparently still unclear how the airspace below 1000m will be measured.

The CAA insider adds that from the infrastructure perspective, China still lacks enough airports and there are none exclusively for business jets. However, discussions are in progress to speed up airport construction and facilities to support private aviation. “Airport construction remains a long-term work – it involves land, commerce, airspace and many other issues; there is also a big restriction on investors.”

Don’t hold your breath

It seems that the symbolic importance of opening China’s low-altitude airspace far exceeds its practical significance, but at least the first steps are being taken. Now an action plan is needed for the next steps in the opening of low-altitude airspace; but patience is needed until the relevant government policies are rolled out. But don’t hold your breath. “It is fine to be expectant but don’t get overly excited,” the CAA insider says.

Popular with government

Fiona Zhi, senior business development manager from Chapman Freeborn’s Beijing office agrees, saying the Chinese government supports business aircraft, because they generate tax revenue and drive the development of related infrastructure. “However, the lack of airports and many strict restrictions on air routes for non-B-registered aircraft are hindering the development of business aviation in China.”

At the same time, few resources exist to service business jets at the existing airports. Many smaller ones have no facilities and equipment at all. This is severely restricting business jet development and explains why China lags behind the more mature markets.

Protecting the locals

Zhi also says China’s current policies protect the domestic business jet operators – this has greatly reduced the competitiveness of foreign operators with the experience to provide sophisticated service. As a result, domestic operators can’t raise their game to the world standard. Consequently, many business jet owners would rather entrust their aircraft to foreign management companies. Some even fly them empty overseas for cleaning, maintenance and inspections.

In spite of China’s slow start, many government departments and related industries have high hopes for this sector. Chapman Freeborn also sees Chinese business aviation as a growth story.

But first, work needs to be done, from enhancing infrastructure developments to rapidly upgrading   business jets facilities, opening low-altitude airspace and refining service standards. These are critical to the development of China’s business aviation.

Anna.fenton@scmp.com

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