Business jet slump fails to deter new players
Business jet clubs still being launched despite slowing economy and anti-graft campaign
The crackdown on corruption may have already dented the mainland's already struggling private jet industry but that has not stopped new players entering the market with innovative business models.
Warren Buffett's NetJets pioneered the model of shared ownership of aircraft in the US in the late 1980s and is preparing to try it out on the mainland after winning an operational permit last week to provide charter services with two Hawker jets based in Zhuhai.
Minsheng Bank's Minsheng Financial Leasing (MSFL), which dominates the mainland market with more than 180 business jets, also recently launched Minsheng Jet Club, providing membership-based access to a pool of 100 jets.
These firms have worked out that such partial use arrangements may be better suited for the needs of an emerging market like mainland China not yet ready to commit to private jet ownership.
"In financial leasing, we provide the aircraft and financing, how the client uses the aircraft is none of our business. But Minsheng Jet Club is targeting clients whose demand for aircraft is not that high. You can buy, for example, 100 hours of usage," said Johnny Lau Ho-yin, vice-president of MSFL's aircraft leasing division.
The mainland business aviation market was virtually non-existent a decade ago. It expanded at a rate of more than 30 per cent a year in the past few years in step with the booming economy but has now hit the doldrums as the economy shows signs of slowing, said Kevin Wu, chairman of Asian Business Aviation Association.
"The anti-graft campaign is also hurting," Wu said.