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China also plans to boost its general aviation
industry by subsidizing three to five key enterprises
in the GA arena, with a preference towards
enterprises that produce social benefits such as
helicopter rescue flights. In addition, a move towards
international partnerships is expected to accelerate
manufacturing and supply in the sector.
Eurocopter, for instance, is expected to establish
a completion center for Ecureuil light helicopters
in Tianjin by next year having signed an MoU with
the Tianjin Free Trade Zone (TFTZ). Through a joint
venture, the first helicopters are expected to be
delivered by end 2013.
There's more news on the manufacturing front.
AviChina Industry & Technology, Aviation Industry
Corporation of China (AVIC) Tongfei and Hebei
Aviation have entered into a joint venture agreement
to form Huabei Aircraft, that will primarily manufacture
general aviation aircraft. The joint venture will also
be involved in general aviation operations, while
providing services such as airport and aircraft
However, Hawker Beechcraft which makes
general aviation turboprops and military aircraft as
well as business jets, has pulled out of a deal that
would have seen it end up under Chinese control.
The manufacturer said in July that it was in exclusive
talks with the China's Superior Aviation Beijing Co
over the sale of the company for US$1.79 billion, but
the talks broke down in late October.
Hawker Beechcraft said it could not agree
on terms with Superior, a 60-40 joint venture
between privately owned Beijing Superior
Aviation Technology Company and government-
backed Beijing E-Tong International Investment &
Looking at the Chinese business jet market,
Analysts say while potential for pre-owned
jets is massive, taxes are high and there is no
differentiation for import of new jets, negating
the cost advantage. Buyers are taxed 5% of
the price of an aircraft with a Maximum take-off
weight (MTOW) of more than 25 tons and 22%
below 25 tons. Tedious procedures for clearances
by the Civil Aviation Administration of China (CAAC)
require a CAAC inspector to check all records and
parts involving red tape, preventing many potential
customers from purchasing pre-owned jets.
The Chinese corporate jet industry is still in its
growth stage. "Chinese jet buyers like medium-
to large-sized jets more than their western
counterparts. For example, some jet makers have
noted that Chinese clients are more selective and
highlight comfort and high quality in order to present
themselves well. We believe the most popular jets
cost around US$10 million," said International
Economic Law Institute (IELI) head strategist
Samuel K.T. Lee.
Change is in the air. As the market matures and
airspace starts to open up for general aviation,
the demand demographics in China are changing
from top line jets to a shift towards midsize aircraft.
Encouraged by low prices, pre-owned jets are being
considered for domestic and short international
flights to neighbouring Hong Kong or Japan. China is
expected to become the largest market for deliveries
by 2018 worth around US$11.68 billion. Its business
jet fleet is expected to grow at a rate of 20% over
the next 10 years to reach 700 aircraft by 2019,
Concerns remain. Chinese registered aircraft
have a clear advantage over foreign-registered that
include aircraft from Hong Kong and Macau (both
Chinese special administrative regions). "It takes
around three working days to get over-flight permits
and five days for landing permits depending on the
destination within China," says Chung.
Airports providing ground support for business
jets are growing. Fixed-Base Operators (FBOs) are
present in Beijing, Shanghai, Zhuhai and Shenzhen
with a Chengdu FBO under development. Of China's
39 international airports - China presently has 186
paved runways of over 8000 ft. - only 20 can support
private jet aircraft.
The CAAC, in its latest five-year master plan aims
to provide basic infrastructure for private jets in all
paved runways, over 8000 ft. Beijing and Shanghai
are also expected to get dedicated airports for
business aviation, Recently, the director-general
of the Civil Aviation Administration of China, Li
Jiaxiang said at the Beijing International Business
Aviation Show: "Business aviation needs greater
convenience, speed and smoothness. The new
airports will meet those needs."
Plans to speed growth are on the way with the
recent pull-out of the US$4,400 flight plan fee.
"However, regulatory issues and clearances for
flight with offices closed on weekends, still hamper
the flawless execution of flight operations," adds
"Chinese jet buyers like medium- to
large-sized jets more than their
western counterparts." Samuel K.T.
Lee, head strategist, International
Economic Law Institute
Bombardier's Global Express XRS is expected to be popular in China.
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