The vast Asia-Pacific region—and more recently China in particular—represents an almost bewildering set of opportunities and challenges for business aviation. ABACE 2018 this week at Shanghai Hongqiao International Airport was another successful showcase of the wide breadth of products, services, and people that are employed throughout the region.
From Bankstown to Beijing, there are now more than 1,800 business jets and almost 1,500 business turboprops based throughout Asia-Pacific. Over the past 10 years, nowhere has the attention of business industry leaders been more geographically focused than on developing growth opportunities in China.
Superlatives are difficult to ignore in any assessment of the size and potential of the Chinese aviation market. Though it has only 200 business jet-capable airports, China ranks number-one worldwide in population, GDP (on a purchasing power parity basis), goods exports, electricity production, consumer sales (cars, trucks, phones, internet usage), and foreign exchange/gold reserves. There is much work to be done to open the airspace above China, with benefits that stretch far beyond the country’s frontiers.
Today, China remains a fast-growing but underdeveloped business aviation market, with just 430 business jets and only 50 pressurized business turboprops currently based in the country. More than 80 percent of this fleet has been delivered new over the last 10 years, providing a much-welcomed sales counterbalance for Western-based OEMs and their sales and service partners to offset the worst headwinds of the 2008 financial crisis.
With a top-heavy distribution weighted towards large-cabin business jets from Gulfstream, Bombardier, and Dassault, China’s business and general aviation fleet is at an early stage of maturity and development, with lucrative growth opportunities in the months and years to come.
Restrictions on airspace access, delays in securing flight permits, and a shortage of business and general aviation infrastructure are just some of the challenges facing aircraft owners and operators in China.
New business aircraft imported into China already face a 22 percent levy in the form of an import and sales tax. A recent threat to impose an additional 25 percent duty on U.S.-built aircraft in the 15,000-kg to 45,000-kg empty-weight class could crystalize to become part of a tit-for-tat volley of responses from the Chinese government in a downwardly spiraling trade spat with the U.S. Administration. While this could, at least temporarily, play into the hands of non-U.S.-based OEMs eager to supply aircraft and offshore registries and transactions specialists anxious to expand their client bases, the most likely outcome is a zero-sum game where losers are to be ultimately found on all sides of the negotiating table.
The good news about an international trade war—if there is actually any good news and if that’s where this is headed—is that juries have had clear majority opinions on these matters. Despite the angry rhetoric, the reality is that no one party ever seems to win in these “wars.” This is especially so when conflicts involve, as this one does, the world’s two largest national economies and two largest goods importers. As they say in the streets of Kowloon, “You buy my bling, I buy your Boeings.”
In 2017, U.S.-based General Motors Company sold three million new cars and trucks in the U.S., while GM and its Chinese partners sold more than four million new vehicles in China. New motor vehicle sales in China surpassed that of the U.S. in 2009; in 2016, 28 million new cars and trucks were sold in China, 57 percent higher than in the U.S.
With highly integrated industrial and commercial supply chains, vast interdependencies in trade and services, and national economies that are and are likely to remain on the growth path, China and the U.S. have much more common ground between them than the deep blue Pacific Ocean might otherwise imply. Rhetoric might temporarily soothe certain constituents’ angst, but trade sanctions don’t help put new vehicles in people’s driveways, or new Gulfstream G650s in people’s hangars.
The tough advocacy groundwork that never makes the media headlines—including basic education on the benefits and opportunities of business aviation—is an underappreciated activity at industry events like ABACE. China is already well established as a key market for today’s business aircraft, and as an active investor in aerospace and general aviation aircraft technologies.
Although it might be some time before any of us fly in a Chinese-built business aircraft, we don’t need to strain too hard to hear the sounds of international progress and cooperation: “I’ll build your horizontal stabilizers, and you show me how to manage a Part 135 operation.”
The world turns, and we are all better for it.
Rolland “Rollie” Vincent is president of Rolland Vincent Associates, a Plano, Texas-based aviation consultancy with a focus on market research, strategy and forecasting. He can be reached at rvincent@rollandvincent.com or by telephone at (972) 439-2069.
