If you’re interested in the luxury and convenience of traveling by business jet in China, you might give the Canadian planemaker Bombardier a call asking for a trial flight to Tianjin.
Your journey would start from the Hong Kong Business Aviation Center (BAC), a special little terminal for private jets that most people have never heard of. It is 10 steps to the aircraft in complete privacy and security for yourself or your family, both during the boarding process and the flight.
When it lands at the Fixed Based Operator (FBO), an airport service center that maintains private jets at Tianjin Binhai International Airport, customs agentscome onboard for all clearances. Out of the aircraft, you get directly into your car, which should be convincing: there’s no turning back. You gotta have a jet of your own.
To make that magical flight happen, jet manufacturers, operator and local governments are working together, held back by a reluctant Chinese government that is only slowly becoming attuned to the commercial advantages to the country of allowing businessmen the convenience of traveling by executive jet. Tianjin, for example, is one that gets it. It is very supportive of the development of the industry, making land and facilities available for the FBO.
Despite the fact that there are around 235 US dollar billionaires in China and untold numbers with fortunes somewhat lower than that, China’s business jet market is just getting underway. In fact there are fewer business jets in all of the greater China area –248 in Mainland China, 97 in Hong Kong, 15 in Taiwan and 11 in Macau – than what a single executive airport handles in Orange County, California.
Nonetheless, despite tight military restrictions on airspace and a pilot shortage numbering in the thousands, the country’s businessmen are beginning to take to their own friendly skies. In 2013, the fleet swelled by 21 percent to 371 aircraft, compared with 308 a year earlier. As with almost everything else, China is the world's last great market.
Gulfstream, the US business jet manufacturer and hitherto the biggest player in the Chinese market, sold 142 aircraft in the Greater China area. Bombardier is second with a record of 111.
Execujet Asia, one of the Greater China’s leading business jet operators, just opened a new maintenance facility in Tianjin International, including a state-of-the-art, custom-built hangar and dedicated apron. The maintenance facility is authorized by Bombardier and the Brazil manufacturer Embraer to provide maintenance support for a collection of different types of business jets.
“The Tianjin government is very forward-thinking and business-minded, and they see the long-term value in foreign investments,” said Graeme Duckworth, the managing director of Execujet Asia. Tianjin, 120 km from Beijing and the largest business aviation market in China, allows ease of operation that the overcrowded capital doesn’t. It is viewed as Beijing’s second airport, particularly for unscheduled operations.
However, such well-set infrastructure for business jets is still rare. Unlike Hong Kong International Airport and Tianjin Binhai International Airport, which have specially-designed facilities providing mechanic services for business jets and hangars for parking, many major Chinese airports like Pudong International Airport don’t. Beijing Capital Airport does have an FBO, but it’s part of the terminal building, meaning VIPs still have to slog through the terminal. Nor does it have a special hangar.
Using less-crowded local airports for business jet travel is not as promising as it might seem, however. Many local airports don't have customs clearance, which is compulsory for arrivals from Hong Kong or foreign countries. Local airports can’t afford to put in special maintenance facilities because they don't have business jet traffic, at the same time they would not see the increasing traffic until they put in the necessary infrastructures.
Ultimately the decision to putting real money in developing local airports is left to local governments. Tianjin government did it.
Nonetheless, “the Chinese government starts to get that when a little Gulfstream aircraft lands at an airport with only five guys coming out of it, they probably represent U$5 billion of foreign direct investment,” said Jeffrey Lowe, the General Manager of Hong Kong-based business jet consultancy Asian Sky Group. “Business jets are used by people to do business all around the world. The government doesn't want senior administrators of a multi-national corporation to refuse to come to China just over all the hassles they have to go through for traveling in a business jet.”
The industry’s prosperity is indeed intertwined with government policies. Despite the supportive attitudes many local governments hold toward business aviation, business jet regulation depends on where it’s registered. It normally takes 24 hours for a foreign-registered craft to get approval from CAAC headquarters in Beijing to fly into China. The number of destinations and time of stay are likely to be limited.
By contrast, owners of domestically registered craft can get approval from the local CAAC department within two to four hours, allowing for the military’s tight restrictions on airspace. But domestically registered jets have a dark side: customs duty and value-added tax add 25 percent to the price of a business jet.
How much would 25 percent of the price of a business jet be? According to ASG, Large cabin, S-Large and Ultra-Large cabin make up 21 percent, 19 percent and 29 percent of all the jets sold in China respectively. Thus prices of this fleet average from US$30 million to US$60 million. Tax is another US$10 million. The expense is enough to keep even some of those 225 super-rich from purchasing a jet.
Still, the market is maturing. “It’s an emerging market, but people are going down the learning curve,” Asian Sky Group’s Lowe said. “The trend is towards generally smaller and more cost-efficient aircraft, more corporate purchases, more financing, and more pre-owned jets.”
Prsident Xi Jinping’s intensive anti-corruption campaign has cut into sales of all luxury items, and there are few more luxurious items than a private jet. Conservative corporate purchases are obviously better than attention-drawing cash deals. The campaign shut down the market for the first half of 2013. But when businessmen realized that the government was supportive of the development of the industry, sales doubled in the second half of the year. The scene is replaying this year. Sellers expect that the downfall of ex-politburo member Zhou Yongkang in July will ease domestic political tensions and that jet sales will now recover .
With growth as exciting as it is, the Chinese market is still very small relative to the developed markets. There are something like 15,000 business jets in the US. But standing closer to the market makes a different view. In 2013, 11 new Falcon F7X jets were sold in China – a quarter of Falcon’s annual production, a delivery number significant enough for manufacturers to take the Chinese market more seriously.
“Why can’t China be the same with the US someday, where a guy can just own his airplane and get in and fly it?” Lowe asked. “It has taken the US a long time to get there. But if anything what most people have learned about China is that if it took the US 100 years to do it, it will only take China 50. Everything happens faster here.”
Yajiao Chen (firstname.lastname@example.org) is an Asia Sentinel intern