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Bizav Looks To New Chinese Leadership For Reform

Airshow China last month provided yet more evidence of how eager the business aviation industry is to tap the enormous potential growth in China. Every major business aircraft maker made the trip to Zhuhai in the prosperous southern province of Guangdong, and their products formed one of the more prominent clusters among the 80 or so aircraft on display.

But no less clear a conclusion from talking to industry executives gathered in Zhuhai is that business aviation in China remains a case of arrested development. Many spoke of continuing impediments to the fundamental freedoms on which efficient use of business aircraft depend–the first being fair access to airways and airports, and clear rules governing who can operate aircraft and on what terms.

“You have to have airspace to fly a lot of aircraft and it is just not available right now,” Honeywell Aerospace Asia-Pacific president Briand Greer told AIN when asked why China’s bizav fleet appears not to be growing as fast as anticipated. The U.S. company is eager to help China improve its airspace and airport infrastructure, but ultimately any lasting progress will depend on political will on the part of the Chinese government.

Making the Airshow China 2012 even more timely was the fact that during the same week, 1,200 miles north in the capital Beijing, Xi Jinping was being crowned the new leader of the Communist Party of China. The 59-year-old was also appointed chairman of the Central Military Commission and in March next year he will take over from Hu Jintao as China’s president.

The highly anticipated leadership change in the People’s Republic has fueled hope in the business aviation community that long-requested reforms on issues such as airspace access at last will be addressed by the new government. However, close observers of President-elect Xi and his politburo have suggested that the new regime may be more conservative and cautious about reform than might have been expected.

Business Aviation Companies Plan for the Future

Nonetheless, NetJets showed its confidence in China’s long-term future by announcing the establishment of an operational headquarters for its new aircraft management and charter joint venture at the Zhuhai Aviation Industrial Park. NetJets China Business Aviation Limited is a joint venture between NetJets Inc. and Beijing-based Hony Jinsi Investment Management (a subsidiary of private equity group Hony Capital) and Fung Investments.

In September the partners got official approval to set up an operational and maintenance base in Zhuhai. According to NetJets China CEO Eric Wong, the new company expects to receive its Chinese air operator certificate next year. Initially, the fractional ownership group will only offer charter service using managed aircraft in China.

Cessna firmed up its plans to build business jets in China by sealing a joint venture with China Aviation Industry General Aircraft (Caiga) to assemble and sell the Citation XLS+ for the Chinese market. The deal builds on the strategic agreement that Cessna signed with Caiga parent company Aviation Industry Corp. of China (Avic) in March this year.

Under the terms of the new joint venture, which is subject to governmental approval, Cessna’s Wichita factory will provide components, parts and subassemblies for aircraft that will then be assembled at a factory in Zhuhai. The Caiga plant will also handle painting, testing, cabin interior installation and delivery of the XLS+ to Chinese customers. Apart from reduced final assembly costs, the joint venture also provides a way to avoid cumbersome Chinese import rules for foreign-built aircraft. At the time of the March 2012 agreement, Cessna indicated that Citation Longitudes and Sovereigns could eventually be produced in another factory in Chengdu, but these plans were not mentioned in last month’s announcement.

The management of the joint venture will include board members from both Cessna and Caiga, with its general manager being nominated by Cessna and a deputy general manager coming from Caiga. “We are extremely pleased with this joint-venture contract and we look forward to producing high-quality business jets for the Chinese market,” said Bill Schultz, Cessna’s senior vice president of business development for China. “Customers can expect rigorous testing and quality controls that are the hallmark of our reliable aircraft family.”

China’s Nanshan Jet ordered a Gulfstream G650 at Airshow China 2012. The charter operator, with bases in Beijing, Shanghai and Shenzhen, is a subsidiary of the Nanshan Group. It is expected to take delivery of the new long-range jet in late 2014 or early 2015 and a third G450 next year.

“Nanshan Jet owns two G450s and one G550,” said Scott Neal, Gulfstream’s senior sales and marketing vice president. “That’s reflective of our overall success and brand recognition in China.” Gulfstream claims to have 60 percent of the market for large-cabin business jets in China.

Gulfstream also announced that it has opened a satellite flight department in Hong Kong to support its operators in Asia. Five pilots–three large-cabin demonstration pilots, one mid-cabin demonstration pilot and a chief pilot–staff the office.

An undisclosed Chinese customer ordered an Airbus ACJ319 on the second day of the Zhuhai show. The aircraft will feature the new fuel-saving sharklet wingtips. The deal takes the European airframer’s ACJ sales tally in China to more than 25, with both ACJ318s and ACJ319s already active in the country with operators such as BAA Jet Management, China Eastern Executive Aviation, Comlux Asia, Deer Jet, Hong Kong Jet and TAG Aviation. Hongkong Jet announced that it is to add a fourth ACJ to its managed fleet.

With Chinese buyers in mind, Airbus has developed a so-called Phoenix cabin interior with features such as a circular table. The company, which has sales offices in both Beijing and Hong Kong, has now sold more than 170 ACJs.

During the show Piaggio made its first Chinese delivery of the Avanti II twin turboprop. The Italian manufacturer handed over one of two Avantis acquired by its exclusive Chinese distributor, CAEA Aviation Investment. The aircraft is to be operated by CAEA subsidiary Free Sky Aviation in a new club-style, shared-use program for private clients.

“We had been looking for the right partner in China for some time as a way to enter the Chinese market,” said John Bingham, CEO of Piaggio America and chief marketing officer of Piaggio Aero Industries. He told AIN Piaggio is optimistic about the Avanti’s prospects in the fast-growing Chinese market for private aviation, following its October 2011 certification by the Civil Aviation Administration of China (CAAC).

Beijing-based CAEA was formed in July last year and, in addition to new and pre-owned aircraft sales, it is also active in aircraft management, financing and leasing, as well as in business aircraft maintenance and handling. Free Sky Aviation will provide charter flights for “club” members at preferential rates. In addition to the Avanti, it also intends to operate various jets, including the Dassault Falcon 7X.

CAAC issued Embraer with a type certificate for its Phenom 300 light jet on the first day of Airshow China 2012 in Zhuhai. The Chinese authorities have now approved all five of the Brazilian manufacturer’s in-production business aircraft. Embraer China president Guan Dongyuan told a press conference that to date it has sold 28 of these (plus options for five more) to customers in China.

According to a new market forecast from Embraer, China will generate demand for 650 business aircraft between now and 2022, with a total value of $24 billion. This represents about 9 percent of worldwide deliveries anticipated over this period. The company displayed a new interior for its Legacy 650 in Zhuhai, as well as a Phenom300.

Sikorsky and Ruili Jingcheng Group (RJG) signed two contracts for the introduction of an S-92 and S-76D, marking Sikorsky’s first S-92 sale to a private Chinese operator and the first S-76 sale into China. Both aircraft will be configured for airline use. RJG–a private conglomerate based in Ruili, Yunnan province in southwestern China–is expanding its business into the aviation sector by establishing three aviation subsidiaries, one of which includes a helicopter operating company.

Meanwhile, Sikorsky and Zhuhai Helicopter Company (ZHC) announced a new contract for two Sikorsky S-92s to be used as offshore utility helicopters. The acquisition marks the fourth procurement by ZHC from Sikorsky since2007. ZHC, which acquired the helicopters to support offshore oil operations in the South China Sea, has a workforce of 98 pilots and 115 maintenance technicians who work from four main operating bases in northern and southernChina.

December 1, 2012, 6:05 AM




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