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A big jet becomes a status symbol in China.

New York (USAsian Network Business & Industry News) Wed, Apr 16, 2014 - In the United States, public reaction to the corporate use of business jets can be scathing when instances of obvious excess become publicized, such as the day in 2008 when the top executives of the Detroit automakers each used a private jet to fly to Washington to argue for $25 billion in taxpayer bailouts. But in China, where sales of business jets are increasing despite a lack of large scale air-system support and a dearth of airports to handle private flights, attitudes about private jets seem to be different. While forecasters had long assumed midsize and smaller jets would prevail as China's business aviation market expanded throughout the country, that has not been the case. Instead, Chinese buyers are enthusiastically opting mostly for so-called heavy metal jets - big, long-range luxury jets that can cost $50 million or more before extras like fancy cabin fixtures. A big jet is considered a big status symbol. In China, "the distribution of cabin size is very different," said Brian Foley, whose company, Brian Foley Associates, provides market analysis on the global aerospace industry. "China leans more toward the heavy, top-end class" in business jet purchases, he said. The main allure is longer range. A top-end Gulfstream G550 - price tag $56 million before cabin fittings - can fly 6,800 nautical miles nonstop, or about 7,800 miles, easily covering the distance between Shanghai and New York. "China is a pretty big land mass, and if you want to go to a business center outside of China, you just need the legs to get there," Mr. Foley said. But cultural differences also favor the market for the big luxury jets, it seems. "In China," Mr. Foley said, "if you're a successful business person, you generally don't mind flaunting that and making your compatriots aware that you're doing well. And one way to do that is to buy the biggest and best business jet, if you have the money to buy it." Global sales of business jets, which plunged during the financial crisis, have been in a slow recovery, and will account for $250 billion in sales from 2013 to 2023, according to Honeywell's business and general aviation division. In its most recent 10-year forecast, Honeywell said that bigger, faster, more expensive long-range jets would account for 70 percent of new expenditures worldwide on business jets. Throughout Asia, Honeywell said, the total number of business jets has grown about 12 percent annually over the last five years, when large-cabin, long-range jets accounted for 77 percent of total sales. Figures from the General Aviation Manufacturers Association show marked global shifts underway in the market for business jets. In 2007, the United States and Canada accounted for 58.3 percent of the 1,136 business jets delivered worldwide. That dropped to 49.7 percent in 2012, then rose slightly, to 52.4 percent, last year - when the industry was still struggling for stability and overall shipments were 678. But there has been significant growth in the Asia-Pacific region, which accounted for 11.9 percent of shipments of business jets in 2013, up from 4.2 percent in 2007. In Latin America, the share grew to 11.1 percent in 2013 from 7.5 percent in 2007. The Middle East and Africa accounted for 9 percent of shipments last year, up from 5.2 percent in 2007. In Europe, the share fell to 16.6 percent in 2013 from 24.9 percent in 2007. In addition to Europe's struggling economy, contributing factors included cultural attitudes that are sometimes negative toward use of private jets and high-speed train service that can substitute for flying on medium-length routes. In the Asia-Pacific region, transport ministers from 21 countries have adopted a plan to ease the way for business aviation, which is often hampered by strict bureaucratic rules and - in many cases - by military control of national airspace. Those issues are to be explored at the Asian Business Aviation Conference and Exhibition, which runs Tuesday through Thursday in Shanghai. The agenda is focused on the growing importance of business aviation for the region. Among the participants will be top Chinese officials, who are expected to address obstacles to that growth in China. "In the U.S., there are about 5,000 airports that can be used by business jets," said Mr. Foley, the aerospace analyst, adding that in China the number stood at around 200 airports. "And complicating that is the fact that there aren't a lot of services for fuel or comfort, or any of the things you expect in a longer-established business aviation market." And he pointed to other obstacles in the region. "In China, trying to get from point A to point B by business jet can be tricky," Mr. Foley said. "In the U.S., you can just file your flight plan and be up and on your merry way within half an hour. Not in China. It used to be days, but it's still hours to get your flight clearance. And it might not be very direct, at your requested altitude or way-points, because the military owns the airspace, and private aviation is low on the totem pole after the military and the airlines." So a well-heeled tycoon might buy a $60 million luxury jet in China but find that using it is more complicated than in many countries. Still, that is where the market preferences lie, and business culture in a rapidly developing economy may explain part of that, Mr. Foley suggested. "Some of these big jets that are bought are pretty much parked out on the ramp most of the time," he said, adding that the owners were often limited to impressing associates and clients on the ground, rather than at 40,000 feet. "We kind of refer to that as ramp jewelry," Mr. Foley said.


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Publication:USAsian Network News & Business & Industry News
Geographic Code:9CHIN
Date:Apr 21, 2014
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