April 22, 2013
When a group of buyers insists on buying new products, never secondhand, and likes to update frequently, it wields disproportionate influence on the market. Business aircraft buyers in China, it seems, comprise such a group.
Chinese buyers like big aircraft. Unless their tastes change considerably—and so far there are scant signs that they are—mainland China is likely to heavily import newly built large, super-large and ultra-long-range business jets, plus corporate versions of airliners. It will export them as used aircraft. Logically, that will boost the supply of big business aircraft in the global secondhand market, perhaps nudging their prices lower.
The phenomenon, if it fully develops, will be driven by a widely understood cultural factor, the Chinese keenness for prestige. A big aircraft is more prestigious than a small one. A secondhand aircraft simply will not do. And an owner will not want to be seen flying around in the same jet after six or seven years.
So far, the strong preference for size and newness is confirmed in the belatedly blossoming Chinese business aircraft market. The habit of frequently updating aircraft is only expected by some, and suspected by others. The market took off only five years ago, so it is too soon to gauge the average frequency of updates.
Of mainland China's 193 business aircraft, 61% are large, super-large or ultra-long-range jets, or corporate adaptations of airliners, according to a survey conducted by Hong Kong business aviation consultancy Asian Sky Group. This preference was expected when the Chinese market first began to move. About two years ago, manufacturers began reporting rising interest in smaller aircraft, and they did so again at the Asian Business Aviation Conference and Exhibition held here April 16-18.
But Asian Sky Group's figures show little trend movement in favor of the smaller aircraft. Although there are more of them in mainland China now than a few years ago, from late-2011 to late-2012 the most prominent rises in mainland Chinese business aircraft fleets were still among the big ones, notably the larger Gulfstreams, Dassaults and adapted Airbuses and Boeings.
“In the past three or four months I have had several customers who have wanted an aircraft and said 'I just want the biggest one,'” says Ronan Li, head of the private leasing operation of ICBC Financial Leasing.