And Finally

Going private

New Chinese rules could lead to a boom in private jets

Going private

Ready for take-off

There have been better times to choose to fly in on the Gulfstream. That was the lesson learned by the CEOs of the Detroit carmakers late last year, when they opted for an estimated $20,000 round trip bill (versus an $837 fare in first class, claimed ABC News) to travel to Washington for bailout hearings. Congressman Gary Ackerman likened it to “seeing a guy show up at the soup kitchen in high-hat and tuxedo.”

Compared to the bashing of the jet-set lifestyles of America’s humbled business leaders, business aviation in China is still in its infancy.

Flight International magazine estimates that the country had only 900 privately registered aircraft in 2007, and that the general aviation sector (all flights other than military and scheduled commercial ones) was employing just 7,000 people. Compare this to the 231,000 aircraft privately-owned in the US, and an estimated 1.3 million associated jobs, and the disparity is a stark one.

But rising demand for pilots and flying schools is helping general aviation to grow. More airports with specialist facilities will help the sector to develop further – Shanghai’s Hongqiao International Airport will open a business jet port in time for next year’s World Expo.

A friendlier regulatory environment is also in the pipeline, the South China Morning Post reported last week. Flight plans have taken up to six days to receive approval – hardly conducive to the flexibility a private jet is supposed to provide.

But there are now hopes of a lighter touch, including approvals within three hours for locally registered aircraft. Foreign operators will still have to wait for three to six days, and will pay higher processing and parking fees than their Chinese counterparts. Clearly, the policy agenda is tilted somewhat towards homegrown operators.

Until recently, most Chinese had no experience of flying at all, so expectations of private jet travel were more distant still. The growth of the economy is changing that, with the emergence of a wealthy class of businesspeople keen to enjoy the privileges of their newfound status.

Some of this new elite may well want to stay off the authorities’ radar, and so resist the bragging rights that journeys by jet allow. But others argue that hopping onto a Learjet is perfectly suited for the discreet trip, away from public attention. Mike Walsh, an executive at Hong Kong-based charterer Asia Jet, told the SCMP that many clients like the fact that they can move about without being “seen or known”.

But where would the jet-set lifestyle be without at least a little conspicuous consumption? Walsh revealed too that at least 35% of Asia Jet’s business was leisure related, and typically undertaken with wives and girlfriends.

Although presumably not with both at the same time.

© ChinTell Ltd. All rights reserved.

Sponsored by HSBC.

The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.