Contributor

Liz Moscrop

User fees, depreciation schedules, and instability in world financial markets have called for some tough talking at NBAA 2011. One country, however, seems to be promising great rewards for those who dare enter. China seems to be the golden land–the new Wild East set to save the market from oblivion.
Several consultants held press conferences during the show, highlighting incredible opportunities in China. Jason Liao, CEO of China Business Aviation Group said he foresaw a market for at least 1,000 jets over the next decade. Francis Chao of the China Civil Aviation Report and Zhao Quijiang, president of Beijing Capital Group pointed to the rapid growth of the installed fleet over the last three years. They cited figures of 28 jets&nbsp; in 2008, 46 in 2009 and more than 90 today.
Other experts put the number at something between 130 and 150. Jean-Noel Robert, president of the Asian Business Aviation Association (AsBAA) said that in April this year there were 130 private jets on the B-register, and he expects that figure to rise to 170 by year-end.&nbsp; There are several new deliveries slated for the next 12 months, with all the major OEMs reporting sales.
The difficulty is in finding people to manage and support the jets. Management firms in Hong Kong are reportedly turning down aircraft as they do not believe they can support them effectively. Zhang Bo, V-P of Minsheng Financial Leasing, (which has announced $2.6bn of orders at the show) said that aircraft support was “as important” as the product itself when his company was inking finance agreements with buyers. However, firms are reporting that it is difficult to recruit western pilots and technicians to live and work in the country.
Both Liao and Chao were extremely bullish about the market potential, not only for aircraft, but also for related services – MRO, training, pilots, and the like. The truth is that they are right. However, as they pointed out, there are enormous challenges to overcome before the market evolves to anything like the levels we see in North America. Problems include lack of available lift to develop a charter market, plus a dearth of FBO and MRO facilities, including fuel shortages in some areas.
The ten-year projections from Bombardier and Embraer forecast around 1,000 bizjets in China by the end of the decade. To get there, however, there has to be a huge amount of investment in resources, most particularly in manpower. Fortunately the Central Chinese government has promulgated an outreach policy to attract western skills. Part of the 12th five-year plan is to make business aviation one of the country’s economic pillars.
To bring some of the issues to light, NBAA ran a panel discussion on day one of the show, comprised of 16 experts who have lived and/or worked in China for many years and know the market well.&nbsp; Put together by Jay Mesinger and Jeff Lee, the panelists pointed to difficulties in operating in the country. Robyn Cicero, the FAA’s foreign affairs specialist pointed out that municipal governments privately own all but three airports in China. Beijing and the two high altitude fields in Inner Mongolia are still under government umbrella. (Inner Mongolia is one of the fastest-growing areas in the world in terms of new wealth thanks to the commodities there).&nbsp; Monopolies are banned in China, so extra services, such as tow trucks are considered separate companies and are therefore frequently patchy at best.&nbsp;
The caliber of speakers on the panel was excellent. However, it would have been good to have had more Chinese faces on the podium and heard from local operators how they are coping. The session concluded with an invitation from Noel to join AsBAA, which is as good a place as any to stimulate the much-needed dialog between East and West in order to make things happen for everyone.

Enter the Dragon: China Dominates at NBAA 2011

China seems to be the golden land–the new Wild East set to save the market from oblivion. Several China consultants held press conferences during the show.

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