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Spoiled for choice: The options for aircraft ownership in China

If you are the kind of person who is regularly flying privately and has realized the convenience of using Business Aviation- sooner or later you may come to the decision that it would be more cost effective and appropriate to own your own aircraft. You would be in good company.

Liz Moscrop   |   1st March 2012
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Liz Moscrop Liz Moscrop

Liz Moscrop has written extensively about Business Aviation for several years and specializes in...
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Spoiled for choice:
The options for aircraft ownership in China

If you are the kind of person who is regularly flying privately and has realized the convenience of using Business Aviation- sooner or later you may come to the decision that it would be more cost effective and appropriate to own your own aircraft. You would be in good company.

According to Jeff Lowe- general manager of Asian Sky- a Business Aviation consultancy- there are currently 221 business jets in service in Greater China (including Mainland China- Hong Kong- Macau and Taiwan) - 156 of which are privately-owned large-cabin aircraft.

Although growing- Business Aviation in China is still in its infancy- so buying and owning a business aircraft is much more of a challenge than buying almost any other form of transport. There are strict safety regulations to consider- and it is vital to hire external experts – not only to fly the aircraft- but also to manage and maintain it.

Choosing a management company wisely is crucial in terms of maintaining the safety and the value of your asset. Jolie Howard- director of business development at TAG Aviation Asia has many years of industry experience. “My advice would be to look for operational experience- record and reputation- such as whether the operator holds an Air Operators’ Certificate (AOC) in any established aviation jurisdiction-” she suggested.

If you wish to earn money from your aircraft by chartering it to other users- the management company can do this for you- provided it has an AOC.

Howard added- “A management company should also have the resources to support the operation of an aircraft- such as in-house dispatch and operational personnel- as well as knowledge of operating in the region. The management program the company provides should suit the specific needs of the aircraft owner- such as where the aircraft will be based and what accounting requirements are appropriate.”

Where your aircraft is based is vital. There are limited options in China- so it is sensible to think carefully about where would be the most useful location for your needs. A company that has strong relationships with a manufacturer will gain assistance once the aircraft has been purchased- and a solid management firm will have established links with all of the major airplane manufacturers- including Airbus- Boeing- Bombardier- Cessna- Dassault- Embraer- Gulfstream and Hawker Beechcraft.

The size and range of your aircraft should also be a factor in your purchase decision. Currently- the most popular types in China are the large cabin- long-range business jets- such as Gulfstream G550s- Bombardier Global 6000s and Dassault Falcon 7X types- as well as the Airbus ACJ series and the Boeing Business Jet designs.

Business Aviation Asia (BAA) holds both a Hong Kong AOC and a Chinese AOC for its fleet of managed aircraft. Most are registered and based in Mainland China- and Lowe noted- “BAA is in the enviable position of having to turn business away. The CEO is so concerned about managing the businesses properly that he is choosy about which aircraft he manages.”

Hong Kong based Metrojet also offers management- operational and maintenance services. Bringing previous management expertise into Greater China is crucial- and the company announced at the beginning of the year that it had just appointed international operator ExecuJet’s founding partner Denzil White as director of flight operations. White has previously served as president of the Business Aircraft Association of South Africa.

Fellow Hong Kong-based management firm Hong Kong Jet has a similar strategy. CEO Chris Buccholz said- “One of my key goals is to hire and retain the best of the best- and equip them to succeed: First and foremost to ensure we always keep to the highest safety standards- while providing a truly faultless service experience to our clients.”

Hong Kong Jet and its sister Hainan Group subsidiary DeerJet also offer management services- including crew selection- accounting services- maintenance management and flight scheduling services. Additionally- Air China offers management services under its AOC- while Western companies such as the UK’s Gama Group can see the potential of the Greater China region and has said that it will establish a base in Asia.

Shared Ownership
Full aircraft ownership may not be the optimum program for you at the present time. Fortunately- other options are available such as shared ownership- which is similar to time-share on a property. You have the use of the aircraft typically for a quarter- an eighth or a sixteenth of the time.

Alternatively you can purchase a block of hours. Asia Jet in Hong Kong offers this option through its jet card service. However- CEO Mike Walsh explained that there are restrictions placed on foreign-registered charter aircraft operating within Mainland China.

New owners who place their aircraft with a management company in expectation of offsetting expenses or gaining revenue through third-party rentals should not be deceived by promises of high charter usage. Walsh cautioned- “I have witnessed some unrealistic expectations on charter utilization in some providers’ models - for example- super mid-size jets of 600+ hours per aircraft per annum predicted (excluding the owner’s usage)- which is hard to achieve within the Mainland.”

Walsh added that he had seen more existing owners place orders with aircraft manufacturers but then have to wait for their aircraft to be delivered. Their solution has been to purchase jet cards as an interim solution. Owners even keep their jet cards after taking delivery of their aircraft as an insurance policy should their aircraft become unavailable for any reason.”

Foreign jet card program operators- such as NetJets and Vistajet- are also seeking to operate in China with strategic partners that hold AOCs issued by Chinese authorities. Vistajet- for example- said its strategy is to focus on fast-growth markets- including China.

Help is available
Although Business Aviation in China is still emerging- there are several companies with the expertise to support your purchase – from consultants to management and charter firms.

Shenzhen-headquartered Avion Pacific- for example- opened in 1993 and now has offices and operating bases in Beijing- Shanghai- Xian- Chengdu- Tianjin and Penglai. Avion Pacific offers multiple services- including aircraft acquisition- leasing and financing- and is working with Zhuhai Aviation Park to invest in setting up business jet management services.

Although there are currently few true Business Aviation experts around the region- it is worth shopping for a firm that can truly meet your needs. As TAG’s Howard concluded- “Safety is most important.”

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