China’s private jet market faces another tough year amid changes

on April 27 2015 | in Daily Headlines Trending | by | with No Comments

A political clampdown on all things luxurious on the mainland that is in its third year has the Chinese private jet market bracing for another tough 12 months.

Last year was already the slowest for growth in the market since it came into being in the late 2000s. Now, the spending fears have been joined by a clearly slowing economy – a combination expected to further weaken demand that leaves aircraft manufacturers, charter operators and leasing companies in a scramble for customers.

“Companies that have dived in at a boom time between 2009 and 2012 are now having a harder time selling or leasing these aircraft in a tighter business jet market,” said David Yu, the managing director of aviation investor Inception Aviation. “Financing is selective, potential buyers are cautious and some owners want to get rid of their planes for a variety of reasons.”

Jeffrey Lowe, the managing director of Hong Kong-based consultancy Asian Sky Group, which produces the annual Asia-Pacific business jet fleet report, said backlogs of new orders and new aircraft deliveries were a thing of the past.

According to the report, the greater China region was home to 439 of Asia’s 744 business jets at the end of last year, with 297 on the mainland and 114 in Hong Kong. That represents a net addition of 59 jets in the year, or growth of only 15.5 per cent, compared with 49.8 per cent in 2012 and 42.3 per cent in 2011.

At this month’s Asian Business Aviation Convention and Exhibition (ABACE) in Shanghai, aircraft vendors and Civil Aviation Administration of China officials were stressing the utility rather than the luxury aspect of business aviation.

“Business jets are not fancy toys. They are just useful tools for efficient air transport,” CAAC deputy administrator Wang Zhiqing said.

While the buyers of business jets on the mainland have always been private companies rather than state-owned enterprises, SOEs and the government had been key customers for private charter services before President Xi Jinping’s anti-corruption campaign erased that demand.

“The charter market is particularly bad,” Lowe said. “The biggest charterer was the government. Now that has disappeared.”

The mainland business jet market had a preference for bigger, more expensive aircraft from day one, resulting in large-cabin, long-range models dominating the greater China fleet. Gulfstream and Bombardier are the manufacturers with by far the biggest market share.

Read more at South China Morning Post.

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