Failure To Launch: Private Aviation In China Smothered By Red Tape

China Only Has Around 100 Legally Registered Private Jets Despite demand that is, by all accounts, rising rapidly and a notable increase in takeoffs and landings at Shanghai's airports, red tape and a dearth of trained pilots, maintenance crews and facilities, and suitable airports continue to smother the nascent industry. Considering the number of legally registered private jets in China currently sits at around 150 -- far less than the more than 10,000 in the United States yet up from only around 12 in 2005 -- major manufacturers have spent the last several years pushing to expand into the Chinese market in the hopes that the country's rising wealth would translate to massive sales. Canada's Bombardier Inc. has said that it expects to sell some 2,400 new private jets to Chinese buyers over the next 20 years, while Embraer thinks China will buy 635 new executive jets worth an estimated US$21 billion over the next decade. However, as some industry observers have pointed out, it's still far too early to expect a private aviation "boom" in China any time soon. The demand may arguably be there, but the industry is still in its infancy, to say the least. As Jing Daily noted last year, along with government regulations, one of the areas holding back the development of China’s private jet market is a dearth of qualified service and repair personnel and maintenance facilities. Though major manufacturers, among them Dassault Falcon -- which launched a new maintenance center in Shanghai last week -- are beefing up their investments in this arena, as are charter jet providers like Beijing’s Deer Jet, which built China’s largest private jet hangar in June 2011, it'll be years before service facilities and standards meet requirements. Then there's the red tape, the nightmare of which has forced some business jet owners in China to fly illegally. As Reuters notes of this bureaucratic maze: Before they can fly, buyers need to secure an Air Operator's Certificate from the country's aviation regulator or a management company that has already been granted one. Then the jet owner has to wait for an import licence. "The process you have to go through to get the importation approval has to be signed off by nine departments," said Jeffrey Lowe, general manager of Asian Sky Group, a business aviation consulting firm. Private jet ownership was illegal in China until 2003, and the aviation regulator has been slow to process paperwork for new operators. About 80 are awaiting certificates, with only up to 20 expected to get one in the next three years, taking the total number of business jet operator certificates in China to 30 by the end of 2015, under the regulator's working plan. The Civil Aviation Administration of China, or CAAC, has also capped at 12 the number of jets that can be imported annually by each certificate holder. Most of the existing 10-12 holders are new to the industry and lack sufficient skilled staff to take their full quota. China had just 180 airports as of the end of 2011, and the powerful military controls 70 percent of its air space, leaving limited room to navigate and land planes. Though it's probably a safe bet that China's private aviation industry will gradually work through its kinks, it's unlikely that the industry will fully "take off" in the next few years. As business aviation market analyst Brian Foley of Brian Foley Associates told Reuters, "The giddy aviation-company lemmings who rushed into China should now trim their near-term expectations."

Failure To Launch: Private Aviation In China Smothered By Red Tape

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Published September 10, 2012

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Failure To Launch: Private Aviation In China Smothered By Red Tape