"China Should Have More Than 1,000 Private Jets": Industry Professionals Decry Outdated Policies

    Just like recent calls for China to reduce its high luxury tax to spur more domestic consumption, private aviation industry professionals within China are stepping up their criticism of what they perceive as an outdated system for doling out low-altitude airspace.
    Jing DailyAuthor
      Published   in Finance

    China Currently Only Has Around 100 Legally Registered Private Jets#

    The Chinese business jet charter provider Deer Jet recently bought China's first Airbus A319

    One very interesting segment of the China luxury market, one that Jing Daily finds particularly fascinating, is private aviation. Although low-altitude airspace in China remains tightly controlled, and applying for flight permission is a relatively costly bureaucratic nightmare, many of the world's top business jet producers see the country as a future goldmine. Compared to the more than 10,000 private jets currently registered in the United States, China only has around 100 legally registered planes (although the actual number is expected to be much higher), and considering China's economy surpassed Japan last year to become the world's second-largest, a growing chorus of business commentators in China are starting to opine that the differential between the country's GDP and private jet infrastructure should be lessened through airspace reform.

    Despite the Chinese military's tight grip on low-altitude airspace (a grip that has admittedly loosened somewhat over the past year), China's private jet market is growing at an impressive rate. In late June, the business jet charter service provider Deer Jet opened China's largest private jet hangar in Beijing, and this spring a record number of business jet makers took part in the Hainan Rendez-Vous, looking to cultivate a new consumer base alongside yacht makers and international luxury brands. Also this spring, the Hurun Report launched its latest magazine aimed at China's elite, "Wings & Water," the first publication dedicated solely to private jets ("wings") and yachting ("water"). And while most of China's private jet owners prefer to remain suitably private about their lifestyle, many of the country's high-profile businesspeople and celebrities are known to own, or regularly charter, private jets. Still, despite increasing demand and interest among China's ultra-wealthy, the realities of the current Chinese private jet market lag far behind its potential.

    But just like recent calls from business figures like Dalian Wanda chairman Wang Jianlin and industry commentators for China to reduce its high luxury tax to spur more domestic consumption, private aviation industry professionals within China are stepping up their criticism of what they perceive as an outdated system for doling out low-altitude airspace. From Yahoo! China (translation by Jing Daily team):

    "Currently there are only around 100 registered private aircraft in China. According to present calculations of China's GDP and industry estimates, China should have more than 1,250 private aircraft," Sun Xiaohua (孙晓华) said.

    Last year, China's State Council and Central Military Commission issued a document "on deepening reform of China's low-altitude airspace management," which broke the ice about the country's low-altitude airspace policy, causing a surge in interest in both the private and commercial aircraft industries.

    However, Sun Xiaohua, who worked for many years in the Chinese aerospace sector, thinks that [the government's] previous policy was mainly aimed at developing the country's aerospace industry, but now inhibits the development of China's private jet industry. While it is starting to make progress, Sun says, the government needs to follow up with supporting policies and measures.

    Zhang Feng (张峰), Executive VP of the Chinese Private Aircraft Owners and Pilots Association, also recently discussed the current difficulties facing the industry. Said Zhang, "Right now, people who want to buy a private jet need approval from relevant government departments, but they also need to list the plane under the name of their work unit (单位) and pay really high import taxes. Still, we're confident that these issues will be resolved."

    Added Zhang, the key issue facing the private aviation industry is the need for a supportive airspace policy, and for China to simplify its approval procedures to allow private jet buyers to "use their jets comfortably, if they can afford them."

    While the issue of China's private airspace policies and byzantine application procedures continues to be debated within the government and in the media, business jet makers steam ahead in their efforts to crack the China market. This week, Brazil's Embraer S.A. signed an agreement to sell 20 executive jets to China Minsheng Banking Co. Ltd. over the next five years. Still, with home-grown Chinese manufacturers starting to get into the luxury private helicopter industry, by the time China's airspace policies are sufficiently reformed to allow the development of a thriving private aviation industry, will the likes of Embraer, Gulfstream and Airbus face stiffer domestic competition?

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