Rule changes in China could create GA opportunities
Dec. 31, 2013, Beijing, China - Ferraris and Rolls-Royces have become common sights in China's cities as a new class of super-rich indulge a growing appetite for luxury, but tight regulation has meant the private jet, the ultimate status symbol of the global elite, remains rare.
December 31, 2013 By Fang Yan and Matthew Miller Reuters
Recent rules changes, however, indicate that China is preparing to open its skies to private aircraft, in a move that may herald the greatest expansion of business and private aviation in the last 30 years.
Last month, China's aviation regulator simplified flight approval procedures for private aircraft and lowered the threshold for obtaining a private pilot license.
More importantly, the implementation of little-noticed guidelines issued by China's State Council and the Central Military Commission in 2010 will gradually lift the ceiling for low-flying aircraft by 2020.
For companies such as Cessna, Gulfstream, Dassault Aviation SA and Bombardier Inc, which have spent a decade trying to build their China business, it may present the needed opportunity to expand in the world's fastest-growing aviation market.
“This tells everyone publicly that China now endorses the use of business aircraft and general aviation just like any other countries worldwide,” Roger Sperry, Gulfstream's senior vice president of international sales, told Reuters in an interview. “I'm nothing but optimistic.”
General aviation, which refers to all flights that are not operated by airlines, charter firms or the military, is already a $150 billion business in the United States.
In contrast, there are only 1,610 registered general aviation aircraft in China, the latest figures from the China General Aviation Association show.
That compares with about 228,000 in the United States, according to Craig Spence, secretary general of the International Council of Aircraft Owner and Pilot Associations.
Still, in a country where the military controls 80 percent of airspace, there have been obstacles to expanding private air travel. Approval for a three-hour trip on a private plane can still take weeks in some cases.
A lack of facilities where small planes can take off, land or refuel means hopping on a private plane to visit the other side of the country for the weekend remains a dream for even the most well-heeled.
But the environment for general aviation began to change in 2010, and sales have begun to grow.
For example, guidance issued by regulators in 2010 aims to open up airspace below 1,000 meters (3,280 feet) by 2015 and expand to airspace below 3,000 meters by 2020. And rules about pilots filing flight plans have been relaxed in many areas of the nation.
Business jet sales in China for Canada's Bombardier have topped 100, while Textron Inc.’s Cessna has sold more than 70 planes.
All are gearing up for growth.
Cessna has already started delivery of its Grand Caravan EX made at its China venture with state-owned Aviation Industry Corporation of China (AVIC). Delivery of its Citation XLS+ jets built by a separate venture with AVIC is scheduled to begin in the fourth quarter of 2014, according to William Schultz, senior vice president of Business Development at Cessna Aircraft's China operations.
Bombardier forecasts overall business jet deliveries in Greater China at 2,420 from 2013 to 2032.
The growth, industry insiders say, would be fueled in part by demand for smaller jets in a country where large-cabin models, such as Dassault's Falcon 7x or Gulfstream's G550 and G650, are among the best sellers.
“There is a beautiful potential in this market,” said Beijing-based Jean Michel Jacob, senior vice president of international sales with Dassault Falcon.