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Asia-Pacific Business Aviation Update
Latest news on ten ton helicopters and charter developments...

This past quarter’s news from the Asia-Pacific region is dominated by announcements from the recent Airshow China (a biennial event held in Zuhai which borders Macau) and the evolving business aviation charter sector in the region.

The People’s Republic of China (PRC) is involved in the design and production of a whole future generation of helicopters; most are joint ventures with western companies- but with government approval PRC has opted to go it alone on a new ten ton class helio. Western engine and avionics manufacturers- and undercarriage builders- are vying to get their equipment aboard these helios and fixed-wing regional jets.
It seems fair to say that no western company can afford to ignore this thriving mega economy. Many see business aviation in the PRC as a vital tool in covering a lot of ground in the shortest possible time.

To meet this demand- while admittedly mainly for the airlines’ benefit- the Government is to spend $17.5bn on airport construction over the next five years- including 71 expansion projects- 49 new airports and the relocation of another 11. Shanghai is to have a dedicated business aviation hub at Hongqiao International Airport- in partnership with Hawker Pacific Pty Ltd of Australia. The first phase is due to be complete by 2008- and designed to accommodate 6-000 business aviation take-offs and landings per year. The FBO will provide ground handling- and repair and maintenance services say Shanghai Airport Authority officials.

Airbus had already announced orders for three ACJs for a Hong Kong customer but it was revealed at Zuhai (not through Airbus) that another five A318 Elites have been ordered by Chinese customers. Insiders say that two of the three ACJs have already been delivered ‘green’ to completion centers. Counting these aircraft- Airbus has had a record corporate aircraft year having won 22 sales- including one VIP A330-200 widebody.

China made it clear at the show that it wants to become a world leader in civil helicopter manufacturing with the announcement that the industrial group AVIC II is investing $380m (2006-2010) on various programs during the country’s 11th five year program. The previous five years have been spent working in collaboration with technology partners Eurocopter- AgustaWestland and Pratt & Whitney Canada on the 5.5-6 ton China Medium Helicopter (CMH) program.

AVIC II is setting up production for the EC-120 (known as the HC 120 in China)- production of the Agusta A109E (as the CA 109)- manufacturing airframes for Sikorsky’s S-76 and Bell’s 430- as well as assembling MD500 series and Schweizer light helicopters for Sikorsky.

Eurocopter recently gained its first EC135 sales for purely civilian and VIP operations (rather than parapublic) in the Shanghai area. Shanghai Jin Hui General Aviation signed for two of the helicopters which will be used to meet increasing VIP transportation needs- and ferry harbor pilots out to ships.

Norbert Ducrot- Eurocopter senior vice president for Asia- said- “We clearly see that there’s a strong potential for helicopters in the Shanghai area. For this reason- we are to develop maintenance activities to bring the best support to our customers in this region.” Eurocopter also made its first sale of an EC120 to a private Chinese owner in June 2006.

Eurocopter and its Aerospatiale predecessor have worked with Chinese companies over the last 40 years to produce license built versions of the company’s products- mainly for the military. As a result Eurocopter’s share of the Chinese civil and parapublic market is now just above 50%. The European company is also leading development in the six ton- 15 passenger- EC175 (known as the Z-15 in China) civil helicopter. It’s a 50/50 co-development with China’s AVIC II industry group and teams from both companies started work in January at Eurocopter’s facility in Marignane.

China’s AVIC II displayed a model of its proposed ten ton helicopter at Airshow China and is awaiting Government approval to launch prototype production. Unlike other Chinese helicopter projects- AVIC II officials say this helicopter is a completely new- independent and indigenous design- and has been in preliminary and advanced design for about five years. The helicopter is being aimed at commercial tasks within China.

Mercy Flight Opens
China-Taiwan Flights

The PRC’s relationship with long-time foe Taiwan is definitely warming with the first direct Medevac flight between mainland China and Taiwan being allowed since 1949. The mercy flight took place in mid-September repatriating an ill Taiwanese man to his homeland. A Deer Jet Hawker 800XP was used which was chartered by Singapore-based International SOS.

Prior to this any Taiwanese having the misfortune to fall ill in China had to be flown home the long way round- through either Shenzhen- Macau or Hong Kong and then on to Taiwan. The direct flight became possible after China and Taiwan signed an agreement in July to allow direct medical emergency flights between the two countries.

Bizav Companies
Linking With Specialists
BAA Jet Management Ltd- a Hong Kong company- has formed a partnership with Priester Aviation LCC of Illinois- to expand its aircraft management and charter services throughout Asia.

Under the terms of the agreement Priester is responsible for all flight operations and maintenance and will operate the aircraft with Priester’s flight crews under Part 135 regulations. BAA will provide customers and work with local high-net worth individuals to expand corporate jet services- with Priester and BAA jointly responsible for sales and marketing.

“With the assistance of Priester- we enjoy an extra strong tie with the U.S. and are confident it will bring BAA more business-” predicted Ricky Leung- general manager of BAA.

BAA manages three Gulfstream G200s with contracts pending for six more aircraft. It also handles aircraft acquisitions and sales and plans to take on another G200 and a Chinese registered G450 next year. Andy Priester- president and COO of Preister says- “The demand for corporate aircraft in China has been growing rapidly in the past few years- and it is anticipated that demand will increase over the next several years due to the booming Chinese economy- and the Beijing Olympic Games in 2008”.

In another move- BAA has recently set-up a joint venture in China with Shenzhen Airlines to provide private aircraft management- air charter services- maintenance and FBO services- effective from 2007.

“Shenzhen is a very important strategic partner as it has a well-established airport infrastructure in the PRC. Shenzhen Airlines will provide our new partnership with new airport facilities and aircraft maintenance hubs in Shenzhen and Beijing-” explained Leung. Reports suggest that BAA is also looking for foreign FBO companies as potential partners in spreading a chain of FBOs across the PRC.

Macau-based air charter operator Air Asia has inked a strategic alliance with XJET Ltd- a new business aviation brand with its principle offices in Bangkok- according to Air Asia’s CEO Chuck Woods. There are fleet growth expectations through the alliance- and more to be announced on the subject.

Air Asia recently turned over its marketing and sales to XJET- which- according to Woods- registers between $10-14m in charter demand each month. “Clearly our Challengers will only put a dent in that business- but I think it's an interesting glimpse of the overall growth in charter activity throughout the region-” Woods observed. “Macau is growing by leaps and bounds with the Las Vegas casino operators in town. Recently the gaming revenue in Macau exceeded that of Las Vegas ... and it's just getting started!” Air Asia manages four business jets including two of its own; one Bombardier Global Express- two Challengers and one Embraer Legacy. “The Challengers are available for charter on our Macau AOC and the other aircraft are operated for the owners under US FAR Part 91-” Woods continued.

“Access to China is more a function of the improvements made in Beijing- than anything we do as operators from the outside-” Woods explained. “As we operate Macau- and US-registered aircraft- all our movements are treated as those of a foreign operator- so there are certain airports that aren't available to us.”

TAG Aviation set up TAG Aviation Asia in Hong Kong in February this year- and says it is in discussions with Chinese operators to offer aircraft management and charter within the PRC - and that it could announce it this month. The company- which already manages a Falcon 2000 in China- has a Global Express based Taiwan- a just-delivered Challenger 604 based in Singapore and a Gulfsteam GIV in Hong Kong. The company is hoping to add more aircraft next year and is scheduled to take delivery of a Global 5000 in 2008.

Ms Jolie Howard- TAG Aviation Asia’s business development director says- “This is a very exciting time and we’ve achieved a lot in less than a year. There are a lot of people buying aircraft in this area right now.” This is despite “the environment in the area still being very challenging because of the lack of infrastructure and support. “At the moment there is a general difficulty in getting crews- and there are no specialist FBOs in China. The environment and policy in China is still not favorable for operators to just come in and set up FBO and maintenance businesses.” Another problem is “that it is still- almost impossible to get financing for Chinese registered business aircraft-” according to Howard.

Ameco Beijing says that it is handling an increasing number of business jets- and that more than 30 attended last year’s FORTUNE Global Forum. Another 100 business jets were expected to fly-in VIP delegates to a Forum on China-African Cooperation at Beijing last month. Ameco Beijing was in charge of operations as well as maintenance- and brought in an extra 11 dedicated technicians to handle line maintenance and minor repairs for the week long event.

As you’ll read elsewhere in this issue- Honeywell’s latest business jet forecast (released at October’s NBAA Convention) suggests that business jet orders from Asia (which includes the Middle East and Africa) will reach 13 per cent of world orders within five years thereby equaling that of Europe’s.

Bryan Moss- president and CEO of Gulfstream- is also optimistic about the region- “I think we are right at the point where this market can start to take off.” Asia-Pacific Business Jet Fleet.

Bombardier reports that it has sold more business jets in Asia-Pacific than any other aircraft manufacturer. The total is 105 so far and includes 19 Global Express. The company says that it delivered 26 business jets between 2001 and 2005 which represents 29% of all business jet deliveries. Nearly a quarter (24 aircraft) of the entire 105 aircraft fleet is based in China- Macau and Hong Kong. Cessna more than doubled its Chinese fleet last year with the delivery of eight new Citations – six CJ1s for flight training and two XLS for airways and airport inspection. “It took us 20 years to deliver nine Citations to China-” remarked Roger Whyte- Cessna’s senior vice president- sales and marketing. “Last year we delivered eight.”

Region’s Airports Up-Date
An update from the previous Asia-Pacific round-up is that Kuala Lumpur’s old Subang International Airport is still operating as a business aviation hub: According to Chuck Woods business jets are currently using the airport- and there are rumors that additional aircraft and MROs are showing interest in basing there.

Again there were doubts about the future of Bangkok’s old Don Muang International Airport. It closed its doors to scheduled airline traffic to coincide with the opening the brand new Suvarnabhumi International Airport- which took over full commercial services on September 28th.

According to Woods- it has been reported available for ‘non-scheduled and VIP charter flights’. “We don't know the scope of the Thai DOA's intention for the old airport- but we do know that when we file for BKK permits from Macau- we're slotted into Don Muang.”

 


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