Hong Kong’s Asian Business Aviation show sees region’s growth potential realized, yet still stunted

 - March 28, 2011, 5:50 AM

The Asian Business Aviation show formed a key facet of March’s Asian Aerospace show in Hong Kong. It attracted some 5,300 visitors–including some of China’s fast-growing group of billionaires–who had 22 business aircraft to examine.

The event was hosted by the Hong Kong Business Aviation Centre and featured covered exhibits and a two-day conference. It vividly illustrated the fast pace of change in China’s business aviation sector, as AIN’s Liz Moscrop reports.

The Asian Business Aviation show kicked off on March 7 with a highly significant annual general meeting of the Asian Business Aviation Association (AsBAA). After seven years at the top the group’s chairman, Chuck Woods, and vice chairman, Jason Liao, were voted out of office. In their places, AsBAA members elected Airbus sales director Jean Noel Robert as chairman, while Embraer vice president of sales for China Lee Li and Bombardier vice president for Asia David Dixon were chosen as vice chairmen.

AsBAA now has 40 member companies. Robert said that business aircraft manufacturers had come to an agreement to step forward as candidates for the board positions to put their contacts with regulatory bodies to good use. “We can lobby various governing bodies and bring more members together with us,” he told the meeting. “We will also work with the Japanese Business Aviation Association and other regional associations.”

Hong Kong is a key regional business aviation player. Of China’s total of some 116 registered business aircraft, 24 jets are registered in Hong Kong alone, nine of which are operated commercially. This number will grow exponentially over the next couple of years. During the ABA show, Hainan Airlines Group (HNA) subsidiary Hong Kong Airlines signed memorandums of understanding (MoU) for five Gulfstream G450s and G550s, and separately for five Dassault 7Xs, all to be operated by its bizav subsidiary DeerJet. It also committed to buying a pair of VIP-configured Boeing 787s for its Hong Kong Airlines operation. Jet Aviation announced that it has added six new aircraft to its managed fleet in Asia.

Hong Kong charter card provider Asia Jet is set to add 10 jets to its fleet, including a Cessna Citation XLS+ by the end of May and a Bombardier Challenger 300 in July, with a Challenger 605 slated to enter service later this year. It also recently signed a partnership with China Eastern Airlines, which will allow it to base aircraft in mainland China. According to CEO Mike Walsh, the company is about to announce a tie-up with a major American charter provider, which will expand its international offering.

Other Hong Kong business aviation companies are growing too. BAA Asia is set to add another 10 aircraft to its managed fleet of 14 this year, and TAG Aviation Asia will take delivery of its largest jet in Hong Kong, its first Airbus A319 Corporate Jetliner, by April. TAG recently signed an MoU with China’s Shenyang-based First Mandarin Group, which will allow it to operate aircraft in mainland China.                 

In China, Hao Hai General Aviation will buy 11 Cessna Grand Caravan single-engine turboprops, along with three Citation Encore+ jets. Bombardier also delivered its first Challenger 300 to Shenzhen charter operator Donghai Jet. And the Canadian airframer is set to open a regional support office and parts depot in Hong Kong.

Meanwhile Metrojet announced expansion plans in a Mumbai-based joint venture with India’s Taj Air, part of Tata Group. The company will also develop a maintenance facility in Manila at Clark Airport, slated to open early next year. Fellow MRO player Jet Aviation said that it would open an FBO in mainland China within 12 months.

Airbus announced at the show that it had appointed Xiamen-based Taeco its first approved cabin outfitter in the Asia-Pacific region. Taeco is a subsidiary of Hong Kong Aircraft Engineering Company (Haeco) and has already built an ACJ cabin mock-up to showcase its capability in the field. Airbus also showcased a new cabin concept called Phoenix, featuring a color scheme and layout designed to appeal to Asian tastes.

The European OEM was not the only foreign completions center at the show. Canada’s Flying Colours had a huge stand showcasing its regionally based Bombardier Challenger 850s. In more manufacturing news, Crane Aerospace and Electronics will provide the landing gear and hydraulic control units to Embraer for its Legacy 450 and 500 jets.

China is no slouch when it comes to catching up with the West in terms of building business aircraft, and looks as though it will do so largely by acquisition. State-owned manufacturer Caiga is to buy the SJ30 jet program from Dubai’s cash-strapped Emivest Aerospace.

Caiga also recently signed an agreement to buy Cirrus Aircraft from its Bahraini owners and will likely develop the SF-50 Vision personal jet, due to enter service in 2013. (However, an American group is organizing a counter-offer. See article on page XX.) Sources close to the deal say the company has already sold at least 10 Cirrus SR22 piston singles into China this year. Caiga also bought Epic Air, which has been developing the Epic jet and a single-engine 12-seat turboprop, the Dynasty. The company is also buying Continental, the piston-engine manufacturing arm of Teledyne, for $186 million.

Opening Up China

The ABA conference raised some interesting points about what needs to happen to open up China to the market. In his capacity of president of sales for Asia with maintenance provider JSSI, Woods moderated some lively discussions about the topic. Chris Buccholz, president of Universal Weather & Aviation’s Asia-Pacific division, pointed to China’s heavy bias toward the airlines. “In China there are user fees and access to airspace is difficult,” he explained. “Approximately 70 percent of airspace is controlled by the military and some ramps are available only to military aircraft and airlines. It is difficult for business aviation operators to fly as directly as they would like between certain cities. There are often ATC delays and it is not uncommon to see 50 to 60 percent of flights delayed by anything up to two hours.”

Another big issue is the lack of access for business jet operators to the Taiwan Straits route. “This is hampering development in China and Taiwan,” said Asia Jet’s Mike Walsh. “The $4,400 [U.S. dollar] across-border tax into China is also a problem.” 

Currently, business jets cannot use the airline airways to fly the route directly, but have to stop off in Hong Kong or Macau. “You must fly the exact route to China for which you were cleared, otherwise you can be turned back,” explained Universal’s Buccholz.

ASA Group managing director Joe Wilson pointed out that security could be compromised in China. He said that sometimes up to four officials board an aircraft on the ramp, and he urged operators to restrict access to their aircraft to those directly related to the operation. In ASA’s experience, clearing customs and immigration for a private aircraft in China can still take up to one hour and it urges operators to factor that time into their trip planning.

Another key problem for business aircraft manufacturers and operators in China and the rest of Asia is pilot training. According to Daniel Yuen, FlightSafety International’s managing director for Asia and the Pacific Rim, the language barrier is still a big obstacle. But so too is the task of getting Asian pilots into the U.S. for flight training, and he said that the attitude of the U.S. Transportation Security Administration and immigration officials is a big problem in this respect.

Financing is different in China, too. According to Johnny Lau, managing director with the aviation division of major Chinese bank ICBC, his company “wants to do more with Bombardier on financing bizjets,” but he also referenced Hawker Beechcraft and Gulfstream as prospective partners. ICBC prefers to lend in China’s artificially weak renminbi currency rather than U.S. dollars and thinks the renminbi will become more popular for imports into China.

ICBC is also willing to fund FBO and MRO developments in China. For example, the state-backed bank financed the new executive passenger terminal in Hainan.

The ABA show was largely successful as a specialist section within the wider Asian Aerospace event. Organizer Reed Exhibitions has announced plans to run the event separately next year, staging it in Macao from May 24 to 25. This will put it in direct competition with next year’s relaunched Abace show organized by NBAA in Shanghai (February 28 to March 1) and continues the proliferation of Asian business aviation events. o