January 21, 2013
Credit: Credit: Hongkong Jet
China's HNA Group has big plans in business aviation. It also has a healthy dose of prudence. The Chinese travel conglomerate, which is an outgrowth of Hainan Airlines, is aiming at building a global business-aircraft management operation. But in deciding three years ago to do that, HNA realized that there was too much that it did not know about the industry.
The result has been an unusual instance of a Chinese company setting up an offshoot staffed entirely by costly foreigners. HNA aims to use this offshoot, Hongkong Jet, as the core of its global business aviation activities. The group's long-established bizjet operator, Deerjet, could have been tasked with international expansion but is sticking to its mission of growing in mainland China. And at some point, Hongkong Jet is supposed to transfer its expertise back to China.
HNA's challenge stems mainly from the finicky details of exquisite service. China's business aircraft management companies are proliferating, thanks to easier regulation and a growing awareness among the country's upper class and big companies that private jets are attainable and useful. But the many fine points that make up a luxury offering can escape the operators. It may be a good thing that the Chinese companies are competing mainly with each other, so they do not suffer too much pressure while learning to get the service just right.
One Western traveler recalls the service on a chartered Chinese business jet last year. When he asked for orange juice, the cabin attendant fetched a cardboard carton for him. His companion asked for coffee and was given tea. No one asked what they wanted to eat; they got what was available, and it was, at best, airline food.
Is this a big deal? In business aviation, you bet it is. When people pay thousands of dollars an hour to use a private aircraft, they expect the best service.
Hongkong Jet is based in the semi-autonomous city it is named after, but is drawing up plans to move into North America, Europe and maybe elsewhere in Asia, says Chief Executive Chris Buchholz. It will probably do so by buying existing management companies, he adds, reckoning that the group will have three or four air operator's certificates by 2016, even if 100% stakes will not be allowed in some countries, notably the U.S.
The expansion plans of Hongkong Jet are just part of the HNA Group's broad strategy of international acquisitions. The sprawling conglomerate has subsidiaries in hotels, entertainment and much more, plus just about every aspect of civil aviation that it can reach. The group states that it is undertaking a multi-year program of buying businesses abroad, noting that amid widespread economic troubles, some targets are cheap. That is as true in business aviation as anywhere. With HNA behind it, Hongkong Jet should be able to pay for any aircraft management company it sets its sights on.