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China business jet market ascends
China business jet market ascends
China may one day be the largest buyer of business jets in the world, eclipsing the U.S. market, a Chinese business aviation expert said this month. Right now, China is not a meaningful part of the business jet industry. Roughly 200 business jets operate in China's vast mainland. That is expected to change. China is expected to eventually take 20 percent of all business jets delivered in the world, up from about 7 percent today, said Rollie Vincent, president of Rolland Vincent and Associates, a market research, analysis and consulting firm. That would bode well for Wichita manufacturers, which have seen sales fall during the economic downturn, Vincent said. "I think there's a lot of export opportunity," he said. Planemakers will soon have to increase production for China, especially for large-cabin aircraft, Jason Liao, chairman and CEO of China Business Aviation Group, told Aviation Week this month. By 2018, Liao told Aviation Week, he thinks China's business jet market will be worth more than $11 billion, roughly the same as the U.S. But it will take time for China to get the systems and infrastructure in place to facilitate business aviation, experts say. "I do not doubt their resolve," Vincent said. China's central government has named general aviation as one of the country's pillars of economic development in its 2011 to 2015 plan. The plan includes developing the industry, building a substantial number of airplanes and relaxing its airspace. China conglomerate AVIC is seeking proposals from business-jet makers to set up a final assembly line for aircraft delivered in China and is seeking a foreign partner to co-develop a business jet made in China. Hawker Beechcraft, Cessna Aircraft and others have answered AVIC's call and are in talks with the Chinese. Developing China as a long-term strategy makes sense, planemakers say. China has emerged as a major financial world power with the capital to finance investments internally. The development of its industrial base and natural resources is creating substantial wealth, said Hawker Beechcraft's CEO Bill Boisture. "If you look forward in time to a better infrastructure of airports and a more relaxed airspace and a continuing creation of wealth, you have the beginnings of an airplane market," Boisture said. Building their own As China works to build its own nuclear power plants, high-speed trains, aircraft engines and commercial aircraft, it also wants to build its own business jets. Last week, Beijing set up its first general aviation manufacturing company to launch development, manufacturing, sales and operation in China's capital, according to the China Daily newspaper. Beijing General Aviation Group and Beihang University signed a contract Tuesday and set goals. They will initially invest about $15.7 million in the venture. China's first interest is in long-range business jets, larger than those built in Wichita. The focus has been on larger Gulfstream and Bombardier's Global-size airplanes for customers wanting to fly long distances, said Brad Thress, Cessna senior vice president for business jets. But as the market matures and opens up, midsize airplanes will be attractive, for example as engineers want to travel from one factory to another, Thress said. "That's our niche," he said. "It will be a little while for the market to mature, to take advantage of the light and mid-size jets that we offer." Cessna has about 20 business jets in China and about 170 single-engine aircraft in operation there. "It's not a big market for us," Thress said. "But I think in the future it will be. "It's a very, very long-term strategy." Today, China builds Cessna's light sport aircraft, the Skycatcher, in a factory in Shenyang. Cessna has not planned for further assembly in China or determined which aircraft model it might propose to assemble there or when. To grow there in the future, China will likely expect a manufacturer to at least operate a final assembly line of products delivered in the country, Thress said. "You're going to have to participate in things," he said. "I can't tell you what that looks like today. I think it will take years to unfold, but I think to be actively involved in those kind of activities will be key." Hawker Beechcraft's Boisture said he has been to China four times this year, and AVIC has been to Wichita to visit the company twice in the past 10 months. Boisture also is talking with other Chinese entities, but he says it's too soon to identify them. AVIC selected Hawker Beechcraft as a one of the final contenders that answered its initial proposal, Boisture said. Cessna also is in talks with AVIC, Thress said, and, according to a report in Aviation Week, so are Bombardier and Israel Aerospace Industries. Development needed China has talked about making a major leap into aviation for the past 30 years, said Richard Aboulafia, aviation analyst for the Teal Group. "So far, it's just in baby steps," he said. "And that's true of the commercial jetliner side; that's true on the general aviation side." Several issues hinder China's business jet market, experts say. For one, it must continue to liberalize its airspace so travelers can fly where and when they want to, Aboulafia said. And it must create the infrastructure to support business jet travel. Development will be paced by the availability of trained technicians, mechanics and pilots, and the development of airports, Boisture said. China also needs to develop a network of fixed base operators. "When you get to an airport is there somebody who will refuel you, take care of you and give you a tasty mint?" Aboulafia said. "(Landing) at an isolated airstrip with nothing but an air traffic controller isn't very useful." Manufacturers are working to open service centers in China so there are places to service their aircraft. There are also many unknowns about China's general aviation future. One is how business jet travel will develop in China. How it develops will determine which aircraft will be most in demand first. One view is that China's eastern coast would develop first because that's where several major cities are located, such as Hong Kong and Macau, and it's where the most people are, Boisture said. If that happens, then short-range airplanes would be useful to fly up and down the eastern coast, he said. If the western portion of China develops more quickly, then Hawker Beechcraft's super mid-size Hawker 4000 and the mid-size Hawker 900 would be useful to fly east-west routes, Boisture said. The issue of the country's development was part of discussions Boisture had with AVIC. "So my discussion with them was maybe you should consider how your market is going to develop before you make decisions about what airplanes you want to build," Boisture said. Boisture also noted what has been happening in China with the build-up of high-speed rail, where builders are being forced to suspend construction work of more than 6,000 miles of railway. That's because funds have dried up, in part because of China's overall money-tightening efforts as it tries to rein in inflation, according to the Wall Street Journal. "This is not good news for any of us," Boisture said. Still, the market slowdown is only momentary, he said. "It's a slowdown from above double-digit growth to growth," Boisture said. Cessna's Thress said he predicts modest growth in the next three to five years. "But it will be a long time before it will look like Western Europe and the United States," he said. The ability to file a flight plan 30 minutes ahead of time and go? "That will be 15 to 20 years away," Thress said.

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