US business jet rental company NetJets is looking to shuttle China’s wealthy and Chinese corporate clients. The company hopes to get the green light to operate in China in August.
Founded in 1964, the Ohio-based NetJets offers rental of business jets; fractional ownership in which a customer buys a share of a plane rather than the entire aircraft and pays to have the use of a plane each year for certain number of hours; as well as aircraft management services such as hangaring, maintenance, cleaning for individuals and companies. It was acquired by billionaire investor Warren Buffet three years ago.
In China, the company will start by offering management services but eventually hopes its China business “will mirror its business in the US and Europe, selling fractional ownership of aircraft and sales of so called “flight cards” with prepurchased flight hours, according to The Wall Street Journal.
China is a small but growing market for private aviation. There are fewer than 300 privately owned jets that are authorized to fly in China. In comparison, there are an estimated 14,000 individual or corporate owners in the US who own about 12,000 business jets, according to Dan Hubbard, a spokesman for Washington-based National Business Aviation Association.
But as China emerges as a global economic center, the demand for private jets in China is taking off. Some are beginning to realize that it is a necessary tool for conducting business in a global economy.
“We firmly believe that China is an important growth market for private aviation,” NetJets spokesman Tom Hoyt says.
However, the Chinese government has not made it easy for private aviation to flourish given its tight flight-approval procedures that could takes days, which essentially takes away the value of business jets.
“Business aviation is an asset to a company largely because you can decide on a moment’s notice to go somewhere to pursue an opportunity or to get in front of a customer, or to conduct a meeting or visit a branch office for managerial reasons,” Hubbard says.
The Chinese government is taking steps to ease control on airspace and making the aviation system more flexible.
Others are also seeing the promise of China’s private aircraft market.
Gulfstream Aerospace Corp, maker of business jets, has “65 percent market share of the private-jet market in China and has seen its fleet in China grow fourfold over the last five years. It delivered its first aircraft to China in 2003 and has more than 130 planes at mainland, Hong Kong, Macao and Taiwan today,” according to China Daily.
In April, Gulfstream received an order for 60 business jets — one of the largest order in the company’s history — that included “the super mid-size G280, which costs $24.5 million, as well as the G650, priced at $64.5 million” from the Minsheng Financial Leasing Co.
NetJets entered the Chinese market in 2012 through into a joint venture with Hony Jinsi Investment Management and Fung Investments.
image credit: netjets