ABACE: Asia is poised for explosive business aviation growth
In 1902 John Hay, Secretary of State under President Theodore Roosevelt, said, “Western history began with a Mediterranean era, passed through an Atlantic era and is now moving into a Pacific era.” The world now stands at the leading edge of that era and, like it or not, the future of the U.S. is linked to it.
Looking to that future, 282 forward-thinking business aviation enthusiasts representing more than 20 countries gathered at the Hong Kong Business Aviation Centre (HKBAC) on Chek Lap Kok Airport on July 15 and 16 for a regional forum focused on the value of business aviation and its challenges in the region. It also served to kick off NBAA’s new Asian Business Aviation Conference and Exhibition (ABACE), which will debut next summer, August 9 to 11, at the Shanghai New International Exhibition Center and Hongqiao Airport in Shanghai, China.
This year’s event attracted 13 exhibitors and four static aircraft, (a Gulfstream IV and 200 and a Bombardier Global Express and Learjet 45).
Why Business Aviation?
The Thursday session titled “What Is Business Aviation?” consisted of business aviation professionals discussing the issues, opportunities and challenges facing business aviation in Asia.
Jack Kuss, a former NBAA board member and now retired from running Kodak’s flight department, talked about business aviation standards and business aviation as a tool for economic development. “Business aviation provides economicopportunities,” he said. “NBAA wishes to promote safety, security and efficiency in business aviation. We’re here because the opportunities in Asia are about to explode and we want to help.” Kuss pointed out that historically most major Asian cities developed around waterways, but in modern times cities develop around airports.
Zhang Hongying of Air China Business Jet said there are only 26 business jets in China and most are operated by the government. “Currently aviation in China is limited mainly to ground handling businesses and the operation of airline aircraft,” he said. “But things are changing for the better and in the near future it will be easier to own and operate business aircraft.”
Duane Futch, director of Wal-Mart Aviation, said his company wouldn’t be where it is today, including in Asia, without the use of corporate aircraft. Bill McBride, senior director of flight operations for Home Depot, also discussed how business aviation has been instrumental to the growth and success of his company. Finally, Don Spruston, director general of the International Business Aviation Council (IBAC), talked about IBAC’s International Standard for Business Aircraft Operations (IS-BAO).
On Friday, despite a typhoon, NBAA hosted a roundtable discussion and luncheon with more than 60 industry officials from all over Asia. Immediately after lunch members of the Asian Business Aviation Association (AsBAA) got together for a meeting and proposed a slate of new officers for future election.
John K. H. Li, CEO of the HKBAC, has been treasurer of the organization since the beginning. “I became involved with AsBAA as treasurer because I was a practicing accountant with one of the big firms and retired young and early,” he told AIN. “Just as I retired, this opportunity at HKBAC opened up. I’d been a light airplane pilot for years so the knowledge of accounting and aviation seemed to fit the bill. At about the same time AsBAA was formed, so I became involved with it too.” Li said the organization became dormant after Mark Turner, former president of AsBAA, left the organization.
“Turner was managing director of Metrojets and an ex-Air Force attaché,” Li said. “He had an ability to open doors that was just incredible. It was Mark who got together with NBAA and suggested we should form an Asian Business Aviation Association, and he became its first president.”
Li said the organization began three years ago and quickly faced a lot of difficulties, often the result of cultural differences and political realities. “Imagine the operational life of American and European operators. They’re used to literally seamless flying within the U.S. and even within Europe,” he said. “Here, you cross a line on a map and they think you’re a criminal. Asian countries aren’t like America or Europe. Their borders are quite distinct, the governments, the way people think, the operations are all different. Crossing borders is not an easy thing.”
According to Li, one of the problems that beset AsBAA from the beginning was an overly ambitious agenda. “One of AsBAA’s objectives was to deal with the various difficulties in different countries,” he said. “It was too much. Worse, no one wanted to spend the time necessary to run the organization except Mark, and when he moved away AsBAA was left in limbo.” Though AsBAA has endured, the challenges to the growth of business aviation remain the same: economy, culture and access.
Economic Challengesto Business Aviation in Asia
The economy in the region varies by country but is generally improving. Unfortunately, some countries continue to dramatically lag behind, but bizav-friendly countries turn up in unanticipated places, such as Myanmar.
The Bush Administration still has import sanctions against Myanmar (formerly Burma), considered by many to be one of the most repressive regimes in the world. General Than Shwe, the 71-year old hard-liner who heads the Tatmadaw, the military government in Yangon (Rangoon), appears proud of his ability to survive in international isolation.
Although the country has not received a single World Bank loan since 1987, it has an international airline with new aircraft and a new, lavish international airport in Mandalay, the country’s second largest city. The Tatmadaw is banking that the precious jewels mined there and the incredible beauty of the country will draw tourists with hard cash. As a result, it is not particularly difficult to enter the country in a business aircraft, if one is so inclined.
On the other end of the financial spectrum is Japan–a wealthy, industrialized country with an economy that’s rebounding from the doldrums. Japanese firms, after years of expansion into other countries only to see the economy go bad, are closing many of their foreign operations and moving them home. The remarkable thing about Japan is that for all its wealth and international business, it has not only failed to embrace the corporate jet, the government is outright opposed to business aviation.
The Market for BizavGrowth in China
Despite such extremes, many see potential benefits far outweighing the problems. Torrington, Conn.-based B/E Aerospace, for example, exhibited at the regional forum. Michelle Stone, director of marketing, said B/E Aerospace, which designs, manufactures, sells and provides global support for commercial and general aviation aircraft cabin interior equipment, elected to exhibit for a variety of reasons.
“First and foremost we see a tremendous growth market in Asia and in China specifically. We also understand that doing business in Asia takes more than just showing up,” she said. “There is an appreciation for suppliers who take the time to cultivate relationships and understand the unique needs of the Asian market. B/E Aerospace wants to be on the ground floor of this opportunity and is prepared to take the time to develop the market. We are planning on participating in the show in Shanghai next year. There is no place to go but up for the Asian market.
Compared with the U.S.’s $10.4 trillion economy, China’s 1.2 trillion yuan seems small, but it is predicted to more than triple in the next 20 years. Doing so will put it approximately where Japan is today. According to the Wall Street Journal, China’s GDP expanded at a faster-than-estimated 9.1 percent rate during 2003, compared with an 8 percent pace in 2002. That was China’s best economic performance since the Asian financial crisis in 1997.
None of this is lost on the Chinese Central Government. Though struggling to resolve capitalism versus communism issues, it is doing so while decisively planning for growth. Construction of 50 new airports in China is slated to begin over the next five years.
China’s Pearl River Delta is one area the country has earmarked for growth. During a pan-Pearl River Delta regional trade symposium that took place in Guangzhou last July, 473 projects, including infrastructure and transportation agreements, were signed. They amounted to 241.2 billion yuan ($29.14 billion U.S.).
“The signing of the pan-Pearl River Delta agreements will accelerate the implementation of the Closer Economic Partnership Arrangement (CEPA) and boost the stabilityand prosperity of Hong Kong and Macau,” Guangdong Governor Huang Huahua told the South China Morning Post. The pan-delta concept aims to develop and make the area more conducive to industry.
The Ministry of Public Security logged more than 129 million cross-border journeys into China during the first half of the year, 85 million of them made by Hong Kong and Macau residents. The figure, which is one-third higher than last year, is due mainly to simplified procedures at checkpoints. To help cope with the increased traffic, one of the new airports has already opened. Guangzhou Baiyun International Airport is expected to become one of China’s three largest gateway airports, Li Kun, vice president of China Southern Airlines, said in a South China Morning Post interview.
The new airport is located north of Guangzhou about 23 kilometers from the old one. It is slated to handle 25 million passengers each year and move more than one million tons of cargo annually through 2010. There is room for future runway and facility additions.
The Central Government’s effort to embrace capitalism has not escaped U.S. OEMs despite continuing challenges. Jerry Mullins, president of Enstrom Helicopter, said, “Asia presents a huge opportunity for the helicopter market. With flight restrictions there being lifted and major city ground traffic always a concern, helicopters are a natural fit for the Asian market. If a manufacturer can provide a safe, quiet, reliable product, then the possibilities there are endless.”
Enstrom now has a permanent presence in China. The company has placed helicopters with the Wuhan Police and Wuhan Helicopter Industry. Wuhan, under an agreement with Enstrom, has appropriated land outside the city to construct a comprehensive helicopter support facility for training, maintenance and manufacturing of Enstrom products. Enstrom expects China and Korea to be significantly large markets in the next decade.
Todd Duhnke, Cessna Aircraft’s director of international Citation sales, said the company is heavily represented throughout Asia and the South Pacific. “The Asian Pacific market is important for Cessna,” he said. “Although we do not deliver as many airplanes to this region as we do to the U.S. and Europe, we see a tremendous amount of potential for this market. We have had several recent successes with sales of products in our Citation, Caravan and single-engine piston aircraft product line.”
Some recent sales include two firsts for China–a Citation X delivered to the Civil Aviation Authority of China (CAAC) and a Cessna 206 delivered to Beijing Sport Aviation. The CAAC purchased the Cessna Citation X to supplement its fleet of two Citation Model 650s, which are used primarily as special-mission flight-inspection aircraft. They are used throughout China to calibrate and monitor navigation aids and are also used to supplement other special missions.
The government also ordered two Citation XLS aircraft to be based at Beijing’s Capital City Airport. They will also be used for flight-inspection missions and are scheduled for delivery in the second quarter of next year. The company will deliver two additional 206s this year to be used for training aswell as surveillance for the 2008 Olympics. Four Caravans went to China Northern Airlines, five to Shandong Airlines and the 1,000th 208B Grand Caravan was delivered to a private operator in Thailand.
“Looking ahead, we foresee future growth in the training market,” Duhnke said. “We anticipate that the airlines will need more pilots as the region’s aviation infrastructure develops. Toward that end we are equipping our single-engine training aircraft with the new all-glass integrated Garmin G1000 cockpit. It’s a perfect environment for a pilot who will transition to jet training in the Citation Mustang because the G1000 is used in both the single-engine and Mustang lines.”
David Dixon, Bombardier Aerospace’s regional vice president for the Asia Pacific region in Hong Kong, said it is important to understand two issues of economics in Asia. First, most Asian country’s currencies are tied to the U.S. dollar and second, there was a crucial economic event that occurred in 1997 thatdidn’t have anything to do with Hong Kong being handed back to China.
In 1997 there was a fairly small but growing business aircraft fleet in Asia. “That just literally died overnight on July third that year,” Dixon said, when the value of the Thai Bat collapsed against the U.S. dollar and other Asian currencies followed suit. “The problem was more far-reaching than you would think. It savaged the corporations here for two reasons. First, they saw the currency halve in value and the stock market go down 90 percent. Second, anyone who had borrowed in U.S. dollars against a fixed currency suddenly had a massive write-off and no security. They’d taken out loans against their company’s share value and it was wiped out in 1997 so they had massive debt and no collateral to cover it.”
Dixon said he was buying back Bombardier aircraft and sending them back to the States because the U.S. at that time was in an expansion period. “Nearly every airplane I had on order, Global, Challenger, all of them, ended up going back to the U.S. with a couple of exceptions,” he explained. “So business aviation took a huge hit in mid-1997 and the recovery didn’t begin until about 12 months ago, but it’s still very lean.
The Present Business Aviation Market
“People look at Asia, at how huge it is, and they think there should be a lot of business aircraft. Just look at my territory, it spreads from pole to pole, Beijing to Melbourne and Guam to Rangoon; geographically it’s huge, but in reality it’s a very small market,” Dixon explained. “To put it in perspective, there are more privately owned business jets in the Greater Los Angeles area than the whole of Asia. In many countries you can count the total number of business jets on one hand.”
Even in Hong Kong, arguably the business capital of Asia, there are only two based business jets. Gulfstream leases a G200 to Metrojet and a GIV to Air China; both are used for charter. Bombardier has 69 aircraft in China, but that includesa mix of Learjets, Challengers,Dash 8s, CRJ200s and CRJ800s.
“It’s important to understand that all these aircraft are owned by the government though some are used for charter work,” Dixon said, “But it’s still a very good sign because historically they didn’t use that type of aircraft at all. Relatively, I’ve never been busier but, again, I’m still dealing with an area that covers half the globe.”
In addition to aircraft sales, Bombardier offers Flexjet Asia Pacific in the region. According to Judith Moreton, managing director, “Flexjet Asia Pacific supports our network of Bombardier owners. We’re able to advise new owners with no experience on all facets of corporate aircraft ownership. We’re not a fractional-ownership operation; instead, we support our owners by marketing Bombardier products and looking for business for our individual operators.
“Say a company with offices in Hong Kong, Australia and Singapore needs the use of a bizjet but can’t justify buying its own,” Moreton said. “We’ll try to link it up with charter providers operating Bombardier aircraft in the region. There is also additional value to the service because of tail number variability. Aircraft registered to Taiwan, for instance, aren’t going to be allowed into mainland China, so we can arrange for an aircraft from another country. We have very close relationships with our operators and monitor them constantly. We also offer customers and operators support when operating in difficult regions. In return, we get good quality charter for our customers.”
Burdensome Fees Stifle Growth
When you consider that Hong Kong is the base of some of the world’s largest multinational corporations it is odd there are so few business aircraft. Li suggested that cultural attitudes are one of the main reasons why more Hong Kong companies don’t have business aircraft. “The big conglomerates are quite conservative companies. Even many of the public companies spend money very conservatively because they are often still run by the original founder. He runs it like it’s still his own business and rich men are rich because they tend to earn more than they spend. It’s not like a company that hires a CEO who gets a huge compensation package and just expects a corporate jet.”
Prior to Chek Lap Kok there was no space for corporate aircraft in Hong Kong. Kai Tak was very small and located in the urban area. Parking a private jet there was simply not possible and the airport had stringent operating hours and noise restrictions. Chek Lap Kok has two runways and no curfew. What it does have, however, is onerous fees.
“If I were going to be critical of Hong Kong with respect to policy that restrains business aircraft, it would be airport charges,” Dixon said. “Just the cost of getting immigration officers to drive across the airport to the FBO is outrageous. Every aircraft pays every time and pays through the nose; it is very shortsighted. The government takes the approach that if you can afford to come in a private jet, we’re going to make you pay for it rather than encouraging business to come to Hong Kong.”
Dixon said if the Legislative Council wants Hong Kong to be the entreport to the Pearl River Delta and reinvent itself to be competitive, it has to bring some value to the table. “Hong Kong should be the business aviation center of the Pearl River Delta, but with the airport’s pricing structure it just makes people angry. We should be rolling out a red carpet not a carpet littered with invoices. Westerners are used to flying in America where you essentially pay one bill–a fuel bill. It contains the taxes and fees to support everything else. Here the bills start rolling in the minute you make the phone call to get your landing permit. The rules have not changed with the implementation of the new airport.”
Li said he understood the frustrations people encounter when it comes to pricing at Chek Lap Kok and explained the situation. “Our business is to manage the terminal building and external ramp,” Li said. “We’re an FBO but we don’t offer charter or maintenance; that’s provided by our tenant Metrojet. We do refueling, servicing, arranging ground transportation, facilitating what our customers need and turning them around as quickly and efficiently as possible. In the process, we make their stay in Hong Kong as nice as possible because we’re the first impression arriving passengers have of Hong Kong. We offer all our customers a VIP lounge with a nice reception area, drinks, snacks and so on.”
Li said HKBAC’s ramp can accommodate anything up to the Airbus Corporate Jetliner and BBJ. “Occasionally something larger will come in, such as a head of state aircraft, and they’ll park elsewhere on the airport. In that case we’ll liaise with the Hong Kong government protocol department and handle the aircraft wherever it’s parked.”
He said in addition to the two locally operated business jets located at his facility there are other corporations in Hong Kong that have aircraft but chose to keep them based elsewhere. “Many of them are kept under ‘N’ registry because there are so many FAA-licensed mechanics throughout the world that it just makes sense to them. These are large, international companies and the aircraft are constantly traveling all over the world anyway.”
Specifically addressing the high cost of keeping an aircraft at HKBAC, Li said, “The facilities are very expensive and they are dedicated entirely to general aviation use. In 1995 the Airport Authority in Hong Kong earmarked this space for business aviation and issued specifications for what it wanted. In reality, the landing fee isn’t so expensive, it’s a few hundred U.S. dollars, but then you have customs/immigration, which charges every time they cross the airport to come here, which adds about another $600 for arrival and departure. Then, to be honest, we charge quite a hefty fee for handling to be able to pay for these facilities.”
Li explained that HKBAC leases the land under the facility and had to pay to build the facility to the airport’s specification. Adding to the expense is that the facility reverts to airport authority ownership at the end of the lease period. The fees are based on the corporation’s need to pay off the facilities before turning them over to the airport authority and make a profit on its investment.
“The original lease was 15 years so we were forced to charge enough to cover the cost of the entire facility in that period,” Li said. “Thatreally didn’t make sense economically so I negotiated with the government for a long time and earlier this year we were able to change it to a 23-year lease, which still isn’t great but it’s better. Then there’s the insurance premium.”
Li said the airport authority requires HKBAC to carry $500 million liability coverage. “The insurance premium is just astronomical. I tried to work with the insurance brokers, but they won’t even respond,” he said. “Unfortunately, 9/11 changed many things throughout the world. Our insurance premium increased 300 percent after 9/11. I asked, ‘Why us? Hong Kong is a peaceful place with no terrorism’ and they just said that’s how it is. What they’re doing is spreading out the insurance costs of 9/11 to insureds all over the world.”
As an accountant and CEO, Li saw his situation regarding fees as somewhat of a Catch 22. “If I keep our charges low hoping the volume will pick up and we’ll make money in the long run, maybe it won’t and we’ll have a financial crisis. On the other hand, if I keep our charges high enough to recover our costs, maybe no one shows up and we have a financial crisis. I tried to set our fees to where we can at least break even; it was a decision I had to make but I did look at the situation closely.”
Li said just about all of the business jets arriving in Hong Kong are large. “The cost of just flying here is so high to begin with that the roughly $2,000 they spend at the airport is a small part of the cost of the entire journey. We haven’t changed our prices for three years now. We have a price schedule based on aircraft weight. The first year we didn’t break even, but we’ve since moved into the black.”
Li said he regularly talks to the flight crews and heads of flight departments that pass through his doors about how they feel about the fees. He almost always hears, “If that’s the cost of doing business, then that’s the cost of doing business. My concern is that when the chairman arrives in Hong Kong he gets greeted properly, ground transport is ready and waiting, he gets into his hotel without delay and he’s comfortable.”
Bizav Services in Hong Kong
According to Jolie Chung, business development manager for Hong Kong’s Metrojet, the company has two operations: Metrojet and Heliservices. “Heliservices was established in 1978 and Metrojet started in 1995,” she said. “Metrojet leases a Gulfstream 200 from Gulfstream and we’re currently adding a second G200 that we’ll manage for the owner; both are available for charter.”
Chung said Metrojet is Hong Kong’s only licensed aircraft maintenance company dedicated to servicing business jets. As HKBAC’s exclusive maintenance provider, Metrojet, an FAA-certified repair station, provides both line and base maintenance services. Metrojet mechanics are licensed by the Hong Kong Civil Aviation Department, the FAA and other regional civil aviation authorities. The company provides both line and base maintenance services including avionics line maintenance, engine and airframe maintenance, GIV and GV line service facilities and routine inspections.
Heliservices operates five helicopters. The Aerospatiale AS 355N twin-engine Squirrel helicopter provides “flightseeing” tours over Hong Kong, aerial photography, executive transport around the territory and the only on-demand helicopter shuttle between both Hong Kong’s Central District and Kowloon Peninsula and the international airport. Four Aerospatiale AS 315 Lama utility helicopters are the workhorses of the fleet and have been used to erect power lines throughout Hong Kong and its outlying islands and to build hiking paths throughout the mountainous areas of the territory and roads linking the New Territories, Kowloon and the adjoining islands.
Reflecting on his observations of the region, Li said, “What we can do today, flying in and out of China, would have been a virtual impossibility four years ago. Now with Metrojet and other corporate jets that frequently fly into China, the Chinese authorities know them and know they’re not there to create trouble. They understand that the passengers have legitimate reasons to go into China and the application process has gotten much easier. Also, all the flight planners have centers in the major cities in China, so they’re plugged into the system; the officials know them and are used to working with them. In the old days you’d be looking at two-weeks advance notice, but today it’s much quicker. Metrojet can often get clearance within 24 hours.”
Finances aside, one of the more troubling aspects of landing at Chek Lap Kok is noise. “They still have all these silly rules related to noise,” Dixon said. “They can’t look up in a register and see that a Challenger or a Gulfstream or a Learjet complies with the noise rules. You must present the noise certificate information for your particular airplane by tail number with your request for permission. What kind of sense does that make? If you’re coming into Hong Kong it can take two days to get permission. If your paperwork hits on Friday, it could be Monday before you get your clearance. It’s clearly a holdover from when the airport was in the middle of the city. The whole process is not user friendly.”
Flying into and around Asia
Dixon said today most Asian countries are fairly easy to get permission to enter. “Singapore, Malaysia, Indonesia, the Philippines, even Vietnam; they’re all pretty straightforward,” he said. “Then there’s India; talk about a nightmare. Some days you can get instant clearances and other days it’ll take a week. If you can avoid India, do it. Same thing with North Korea. It is so far behind on every front I don’t even consider it in the context of business aviation. Yes, occasionally a business airplane will fly in there, but forget it. Even Mongolia is opening up,” he said. “I’m not suggesting for a minute there are going to be a lot of airplane sales there, but it has opened up access.”
Michael Kwon, executive director of the Aviation Management Group in Seoul, South Korea, said the total number of business jets owned by corporations, including Samsung, Korean Air and various government agencies, is less than 20. “Korea has a very small number of business aircraft and there are no charter services,” he said. “But we do welcome business aircraft.”
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“There are only five FBOs in all of Korea and no business aviation dedicated airports like in the U.S.,” he said. “Most foreign business aircraft operators want to land at Seoul Gimpo International Airport, which is located in west Seoul. It does have a small ramp for business aircraft, but it is only for the use of aircraft operating domestically. The government requires all private aircraft arrivinginternationally to land at Seoul Incheon International Airport located 38.8 nm west of the city on Youngjong-Do.
Except for Japan, just about everywhere else in Asia is business aviation friendly. Of course, there are issues, but overall the various governments try to accommodate business aircraft because they understand that the people who fly in them are high-net worth individuals usually going to the country because they have investments already there or have an eye toward investing much-needed capital.
Chung said Asian countries are recognizing the importance of business aviation. “Some countries, such as Malaysia and the Philippines, are on the lower end of the handling and landing fee schedule at about $1,500 (U.S),” she said. “Singapore, South Korea and Indonesia are more common in the $3,000 range, but China and Japan are off the charts, in the vicinity of $8,000.” She said there’s also considerable variability in the application waiting time, with Taiwan and the Philippines regularly coming back with a clearance in about 24 hours. Most countries, she said, require three to four days, but China and Japan can take anywhere from seven to 14 days for foreign aircraft to get a landing permit.
Dixon explained there is currently a cabotage fee of $5,000 (U.S) for foreign aircraft to land. The airlines demand it to offset what they perceive to be a loss of revenue. There is also a 17 percent value added tax and a 4 percent import tax on anything brought into the country. In contrast, China has a five-year plan (2004 to 2009) to improve conditions for business aviation.
On July 1 China copied and implemented FAR Part 91. It is now legal, for the first time, to fly VFR in China up to 18,000 feet. The five-year plan calls for the issuance of VFR charts for all of China; charts are already being processed for Northern China. Charter operations, still run by the airlines under Part 121 specifications, will soon have FAR 135 regulations instead.
Howie Fuller, senior auditor for Wyvern Consulting, underscored that China is opening up to the idea of business aviation. “Chinese operators are very proud to operate Western aircraft after so many years using Russian aircraft. They’re following our MEL system and they’re incorporating our FARs into their system.”
Fuller said he compared what he saw this year to his last trip two years ago. “My observation of China this year was that the economic and aviation progress is phenomenal. If you’re ignoring China in your economic planning you’re making a major mistake,” he said. “China is on course to economically eclipse the U.S. as the world’s economic super power, assuming nothing dramatic occurs to prevent it from happening. You go to major cities in China, such as Beijing or Shanghai, and you’d swear the national bird of China was the construction crane.”
Culture and Infrastructure Impede Growth
While the economy and fees have had a chilling effect a far more common reason for the slow growth of business aviation in Asia is the culture. The Chinese have never had general aviation and as a result they don’t see aviation the same way Westerners do. “It’s a tough sell in much of Asia,” a British expatriot told AIN. “Take right here in Hong Kong as an example. Chek Lap Kok is by any measure a world class airport. It is connected to both Hong Kong and Kowloon by an immaculate, convenient and safe high-speed railway. The airport itself is clean, highly efficient and relatively hassle free. It’s everything U.S. and European airports aren’t.” He also stressed that most Asian airlines offer superior service compared to U.S. counterparts that want to sell you a terrible box lunch.
More important, unlike the U.S., Asia doesn’t use the hub-and-spoke concept of travel. “You can walk into the terminal and in fairly short order board a flight to any major city in Asia without having to change aircraft. Most countries have a limited number of airports with immigration, so all aircraft, commercial and private, must stop in those cities. So you say to a business, ‘Have you ever thought of owning a corporate jet?’ and they ask ‘Why?’ It’s hard to justify on the surface.”
He said business aviation is less accepted in Japan than China which is odd because China still has airspace restrictions rooted in the Cold War and tensions across the straits. Yet, according to Dixon, China has moved 10 years ahead of Japan in the past five years. He said private ownership of business aircraft in China is still queestionable based on property rights issues common in a Communist society, but he sees things getting better.
“At the moment, only those people who hold licenses to operate can own aircraft in China. Currently that means the airlines, with the exception of Broad Air Conditioning which owns a Beechjet 400,” he said. “Otherwise, any aircraft operated as a business jet is actually being operated by an airline for the company.”
With respect to airports in China, all but a few military airports are open to business aircraft that have been approved to operate within the country. Foreign registered aircraft must land at a port of entry such as Beijing then take a Chinese charter flight or airline within the country. While China doesn’t have private aircraft in the classic sense, it also doesn’t have any of the constraints the Japanese government puts on business aircraft.
In Japan, most major airports have no landing slots for business aircraft. There are very few airports one can fly into and customs, immigration and quarantine has very little flexibility when it comes to business aircraft. “It’s a nightmare to get in and out of Japan despite the fact they’ve got the airports to support it,” Dixon said.
He said further, “They keep saying there’s no space, there’s no this, there’s no that but it’s purely bureaucratic constraints. There’s plenty of infrastructure to support business aviation and it’s not corporations that are against the idea, it’s the government for inexplicable reasons. There are quite a few Japanese businesses that operate aircraft but they keep them outside Japan. Some are based in Guam, some even as far away as the West Coast of the U.S.” Regardless of the opportunities available, the single most significant piece of the puzzle is culture.
Forging Long-term Relationships in Asia
Throughout Asia, a very important component of business is who you know. It is far more important than what you have to offer in terms of opportunity. It isn’t that people don’t want to make a profit and enter into good business arrangements; it’s that they see more to life than those things.
To be successful in Asia requires an upfront, long-term investment to develop relationships based on common interests and mutual understanding. One gentleman from China told AIN during the regional forum luncheon, “Everyone wants to be your friend when there’s a profit to be made, but the man who wants to be your friend when there’s no profit is the real friend.”
Yeet Jones, director of marketing for China for Guam-based ShareJet, explained how the charter operation understands the importance of culture. “We have ShareJet offices throughout Asia,” she said. “We have strategically positioned them to eliminate time differences and language barriers. More important, we have local representatives who live there, speak the language and know the customs. Having a local presence is very important. The company, a joint venture between Nissho Iwai corporation and ACI Pacific LLC, operates BBJ, GIV-SP, Falcon 50 and Falcon 900B aircraft and has offices in Bangkok, Beijing, Hong Kong, Jakarta, Kuala Lumpur, Macau, Newport Beach, New York, Seoul, Sydney, Taipei and Tokyo.
Terry Habeck, ShareJet’s president and CEO, said, “We recognize there are a multitude of independent countries with different languages, cultures and business concepts and believe that to be successful in Asia you need to have representation in each country that is knowledgeable of the local nuances and can serve as a conduit to the local clients.”
Li expanded on the importance of culture and finding common bonds among disparate cultures. “A few months ago I e-mailed my observations to various individuals involved in AsBAA, knowing certain issues would be discussed at ABACE,” he said. “I told them, looking back on the beginning of AsBAA, I think we stepped off with the wrong foot because we didn’t have critical mass yet. How can AsBAA be a voice when we’re not even properly organized? If you go to China and say you want this or that changed, they’re just going to ignore you. They’re not going to care about a little group with no political clout. As a result, none of the Chinese operators joined AsBAA.
“I suggested AsBAA should become more of a social gathering,” he went on. “The membership fees go toward organizing get-togethers at the Singapore airshow, ABACE, NBAA and similar functions. That way we form a core group of people from all over Asia who get together on a social level and talk about aviation. The idea is to find our common interests.
Once you have enough interest you can formalize what the organization does and have a one- or two-hour session at these conferences. As more people get involved there could be sessions where representatives from different countries give a briefing on the situation in their country. Things will continue to formalize over time and committees will form. Historically, countries have made issues of what’s different about them; this would be about finding out what we have in common and building on it from there.”
i said he strongly believes AsBAA can be a forum where information can be shared about the benefits of business aviation and the methods of entry into various countries but cautions not to expect too much, too soon. “It’s very important to remember that NBAA is fifty years old; it’s a mature organization. AsBAA is just starting out. You can’t expect it to be the Asian equivalent of NBAA; it takes years for that to develop.”