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Ding Hao!*Operating in China


Oct 15, 2009



 

From the time that European sailing ships first entered its harbors, China has been an enigmatic land of contrasts to the West.

The People's Republic of China (PRC) is hardly that, but it is a country with a thriving free-market - that still prints the portrait of communist government founder Mao Zedong on its money; that is ruled by one of the world's last communist regimes, but which presides over the world's second largest economy, fueled by a mostly entrepreneurial manufacturing sector supplying the West with cheap, high-quality goods produced by a talented workforce drawn from a population of 1.8 billion people; that occupies a land mass comparable in size (3.7 million square miles) to that of the United States, yet relies on a primitive highway system, railroads in its more remote areas still operating coal-fired steam locomotives and spotty airline service to tie together its far-flung people and cities.

But given the remarkable success of Mao successor Deng Xiaoping's 1978 experiment with capitalism, potential for continued growth (in 2008, despite the worst worldwide recession since the 1930s, the PRC's GDP growth rate was estimated at an enviable 9.8 percent), and huge geographical distances, was there ever a place and context more tailor-made than China for business aviation? This has been the assumption held by the international business aviation industry for the last two decades, with the understanding that like the proverbial "Field of Dreams," business aircraft use isn't going to flower in the PRC until infrastructure is developed to support it. That infrastructure - airports, FBOs, hangars, repair stations, weather and catering services, and so forth - combined with practical ATC procedures and an enlightened government attitude toward the kind of freedom and ad hoc operations that define business aviation, is slowly emerging, but still has a long way to go.

When the NBAA staged its first Asian Business Aviation Conference and Exposition (ABACE) at Shanghai in 2005, there were exactly 13 jets actually engaged in business aviation transportation in the country. (Another 29 were being used for government special missions and airline training.) Today, according to Jason Liao, vice chairman of the Asian Business Aviation Association (AsBAA), there are 70-plus twin-engine business jets and turboprops based within the PRC. The largest operator is charter/management company Deer Jet, which has 18 jets on its roster, most of which it owns.

Life Without Part 91

Almost all business aircraft in China, however, are corporate owned but managed by third-party charter companies or affiliated with airlines. "Right now you can't have a private operation in China due to regulatory issues, so you have to have an AOC [air operations certificate] or be allied with an airline or charter provider," explained Pat Dunn, an American who is employed as aviation manager for the Genting Group in Kuala Lumpur, Malaysia. "They are welcoming foreign operations under those conditions."

Rather than government accountability, this may be more a matter of China not yet having a legal codification that defines and regulates noncommercial aviation, and thus the need to ally with commercial operators.

Liao, who is also the country sales director for Bombardier Aerospace, revealed that the Canadian OEM had just delivered a Global 5000 to a Beijing-based company named Reighwood, which is involved in hotels, soft drinks and real estate. Of the business aircraft population, two are Bombardiers, and others include Gulfstreams, Hawkers, Falcons and Citations. Most are based in Beijing.

"Conditions regarding ownership are certainly getting better; however, taxes are still high at 21 percent," Liao said. "Nevertheless, it's getting more popular to own. Some people are looking at fractional ownership, but my opinion is that China isn't ready for it yet - you have to have many more airplanes in the population to make it work to support the supplemental lift requirement."

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