LexisNexis(TM) Academic - Document
LexisNexis(TM) Academic - DocumentCopyright 2005 The Financial Times Limited
Financial Times (London, England)
June 13, 2005 Monday
SECTION: FT REPORT - BUSINESS TRAVEL; Pg. 1
LENGTH: 749 words
HEADLINE: China likely to lead demand in south-east Asia China likely to lead demand GROWTH MARKETS: Andrew Yeh looks at the implications for the air industry as the sector opens up
BYLINE: By ANDREW YEH
BODY:
China's demand for small business aircraft is projected to gather momentum as its aviation sector opens up and more people seek greater travel convenience, according to a consensus of industry experts.
Many foreign business jet makers believe China's growing class of multi-millionaires and its rapidly internationalising enterprises will fuel demand for one of life's most extravagant status symbols in the years ahead.
Several local airlines already offer charter services within the country and have purchased foreign aircraft but there are probably only a handful of people in the country who own their own aircraft, according to industry estimates.
But the world's leading makers are predicting China will be an important driver of sales.
In August, Shanghai will host a large-scale business aircraft trade show, the first of its kind on the mainland. The event, organised by the Washington-based National Business Aviation Association, will feature a display of popular models at the city's Hongqiao International Airport.
Orders for aircraft have been on the rise. Todd Duhnke, director of international sales for US manufacturer Cessna Aircraft, for example, says eight orders last year nearly doubled its fleet of Citation aircraft in the country to 17.
Jeff Lowe, Hong Kong based vice-president of Gulfstream Aerospace, another US company, says he expects to see a gradual progression in China over the next few years.
Companies and individuals will first use charter jets on an ad hoc basis, then start buying blocks of charter time at a discount, and finally some rich Chinese will consider fractional or sole ownership of a jet, he says.
"We all see a lot of business there," says Mr Lowe during an interview aboard a Gulfstream G550, one of the company's most advanced aircraft.
"There's more wealth being generated in China and a global expansion of Chinese corporations."
Gulfstream, in common with a number of leading business aircraft manufacturers, has until now relied primarily on selling to China's charter operators.
But foreign manufacturers have been looking to make more sales to wealthy individuals, which have been very rare.
Jackie Berger, of Raytheon Aircraft in Kansas, says her company has sold nine aircraft to Hainan Airlines (Deer Jet) and Shanghai Airlines, two of China's domestic charter operators, but made only its first sale to a private buyer this year - a Beechcraft Premier I to entrepreneur Qiu Dedao.
Mr Qiu, who heads a chemical fibre company in Hangzhou near Shanghai, paid about Dollars 6m for his jet after attending an air show in Singapore last year, according to Raytheon.
Rich Chinese who buy jets are in large part drawn to their efficiencies.
Zhang Yue, a businessman from the central province of Hunan who owns several Cessna aircraft, says the "better mood" that comes with having a jet far outweighs any complications.
Mr Zhang pointed out he can now decide to go anywhere in the country within an hour and often takes guests on board.
Ms Berger added that corporate jets can conveniently travel to more remote areas and land with ease on shorter runways.
The downside is that owning a jet in China can be troublesome and the cost of maintaining one can be high - there are necessary expenses for hiring pilots, servicing the aircraft,
miscellaneous flight and landing fees. And as in other
developed countries, the cost of chartering is steep. A Shandong Airlines representative says a Bombardier Challenger will cost Rmb38,000 an hour and an official with Hainan Airlines says its Gulfstream will cost Rmb40,000 an hour.
The country's charter airlines report they have been getting a steady stream of requests mainly from large enterprises, with occasional calls from high society Chinese.
As of now, foreign charter operators have mostly been only looking at China. US-based NetJets, which has a network of 50 aircraft in Europe alone, does not have any business in China, says a company representative.
But there are signs the market has been opening up for foreign jet companies, and many are eager to market themselves in China. Beijing has already eased controls on market entry by approving more models of foreign aircraft.
John Rosanvallon, chief executive officer of Dassault Falcon Jet, says he expects all of his company's models to get regulatory approval by the end of this year, and other foreign aircraft makers have reported similar progress.
On the regulatory side, Beijing has allowed private jets access to its skies, albeit under restrictions.
LOAD-DATE: June 12, 2005
Financial Times (London, England)
June 13, 2005 Monday
SECTION: FT REPORT - BUSINESS TRAVEL; Pg. 1
LENGTH: 749 words
HEADLINE: China likely to lead demand in south-east Asia China likely to lead demand GROWTH MARKETS: Andrew Yeh looks at the implications for the air industry as the sector opens up
BYLINE: By ANDREW YEH
BODY:
China's demand for small business aircraft is projected to gather momentum as its aviation sector opens up and more people seek greater travel convenience, according to a consensus of industry experts.
Many foreign business jet makers believe China's growing class of multi-millionaires and its rapidly internationalising enterprises will fuel demand for one of life's most extravagant status symbols in the years ahead.
Several local airlines already offer charter services within the country and have purchased foreign aircraft but there are probably only a handful of people in the country who own their own aircraft, according to industry estimates.
But the world's leading makers are predicting China will be an important driver of sales.
In August, Shanghai will host a large-scale business aircraft trade show, the first of its kind on the mainland. The event, organised by the Washington-based National Business Aviation Association, will feature a display of popular models at the city's Hongqiao International Airport.
Orders for aircraft have been on the rise. Todd Duhnke, director of international sales for US manufacturer Cessna Aircraft, for example, says eight orders last year nearly doubled its fleet of Citation aircraft in the country to 17.
Jeff Lowe, Hong Kong based vice-president of Gulfstream Aerospace, another US company, says he expects to see a gradual progression in China over the next few years.
Companies and individuals will first use charter jets on an ad hoc basis, then start buying blocks of charter time at a discount, and finally some rich Chinese will consider fractional or sole ownership of a jet, he says.
"We all see a lot of business there," says Mr Lowe during an interview aboard a Gulfstream G550, one of the company's most advanced aircraft.
"There's more wealth being generated in China and a global expansion of Chinese corporations."
Gulfstream, in common with a number of leading business aircraft manufacturers, has until now relied primarily on selling to China's charter operators.
But foreign manufacturers have been looking to make more sales to wealthy individuals, which have been very rare.
Jackie Berger, of Raytheon Aircraft in Kansas, says her company has sold nine aircraft to Hainan Airlines (Deer Jet) and Shanghai Airlines, two of China's domestic charter operators, but made only its first sale to a private buyer this year - a Beechcraft Premier I to entrepreneur Qiu Dedao.
Mr Qiu, who heads a chemical fibre company in Hangzhou near Shanghai, paid about Dollars 6m for his jet after attending an air show in Singapore last year, according to Raytheon.
Rich Chinese who buy jets are in large part drawn to their efficiencies.
Zhang Yue, a businessman from the central province of Hunan who owns several Cessna aircraft, says the "better mood" that comes with having a jet far outweighs any complications.
Mr Zhang pointed out he can now decide to go anywhere in the country within an hour and often takes guests on board.
Ms Berger added that corporate jets can conveniently travel to more remote areas and land with ease on shorter runways.
The downside is that owning a jet in China can be troublesome and the cost of maintaining one can be high - there are necessary expenses for hiring pilots, servicing the aircraft,
miscellaneous flight and landing fees. And as in other
developed countries, the cost of chartering is steep. A Shandong Airlines representative says a Bombardier Challenger will cost Rmb38,000 an hour and an official with Hainan Airlines says its Gulfstream will cost Rmb40,000 an hour.
The country's charter airlines report they have been getting a steady stream of requests mainly from large enterprises, with occasional calls from high society Chinese.
As of now, foreign charter operators have mostly been only looking at China. US-based NetJets, which has a network of 50 aircraft in Europe alone, does not have any business in China, says a company representative.
But there are signs the market has been opening up for foreign jet companies, and many are eager to market themselves in China. Beijing has already eased controls on market entry by approving more models of foreign aircraft.
John Rosanvallon, chief executive officer of Dassault Falcon Jet, says he expects all of his company's models to get regulatory approval by the end of this year, and other foreign aircraft makers have reported similar progress.
On the regulatory side, Beijing has allowed private jets access to its skies, albeit under restrictions.
LOAD-DATE: June 12, 2005
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