AIN Blog: Of Dogs and Business Jets

 - April 28, 2015, 11:39 AM

During my extended stay in Asia following this year’s Asian Business Aviation Conference and Exhibition (ABACE) in Shanghai, an interesting item in the international edition of The New York Times caught my eye. “As China’s mastiff mania dims, dogs are discarded,” read the front page headline. The article detailed how Tibetan mastiffs, a breed of dog that looks like a cross between a lion and a grizzly bear (and only slightly smaller) which a few years ago could fetch prices as high as $200,000 among China’s status-conscious elite, are now being abandoned, in some cases sold off for meat and their skins at $5 a head, amid the current political climate. According to the author Andrew Jacobs, the current decline in the dog’s popularity is just one indication of a changing bigger picture: “China’s boom-to-bust luxury landscape is strewn with devalued commodities like black Audis, Omega watches, top-shelf Sorghum liquor and high-rise apartments in third tier cities. Some are the victims of a slowing economy, while others are casualties of an official austerity campaign that has made ostentatious consumption a red flag for anticorruption investigators.”

While Jacobs does not mention private aircraft ownership, arguably, one could add that to the list. Having attended each of the ABACE shows since its relaunch four years ago, I have seen the mood there range from crackling with positive energy in the first years to a seemingly quieter simmer this year.

That observation reflects the findings of industry data provider JetNet, which in its most recent quarterly survey of business aircraft operators saw the levels of confidence among its Asia-Pacific respondents lagging those of the rest of the world. While 60 percent overall and 70 percent in North America believe the industry had passed the low point in the current cycle, only 47 percent in the Asia-Pac region shared that sentiment.

ABACE continues to be well attended, both by exhibitors—with the hangar at the show-host Shanghai Hawker Pacific Business Aviation Center along with a large adjoining pavilion packed with booths—as well as visitors, but in the case of China, that anti-extravagance crackdown remains the 800-pound-gorilla in the room when discussing the current business aviation situation there. Indeed one company confided that it had eschewed most forms of advertising to avoid attracting any unwanted official attention. According to the head of one multi-national’s regional business, the problem stems from the introduction of private aircraft in China. “Fortunately or unfortunately, the start of business aviation here was focused on luxury,” he said. “People who could buy a jet did it because it was a place to put their money and kind of show off their wealth, and that’s been the branding of business aviation in China to start with.” He likened the current attitude toward business aircraft use in the country to what the industry faced in the U.S. at the height of the recent global financial crisis when the heads of the major auto manufacturers were lambasted for their use of private jets to take them to Washington hat-in-hand to plead for government bailout loans. Even today U.S. companies remain wary about announcing their use of private aircraft.

Only of late, he noted, is that luxury-only perception slowly changing in China as companies begin to truly embrace the business use of such aircraft, along with a growing realization that perhaps the largest, most expensive models are not necessarily the best suited for their missions. The evolution of business aviation has played out similarly in other regions.

Clearly the airframers regard China and the greater Asia-Pacific region as a long-term market and have invested much in establishing corporate infrastructure there. The question remains whether the political winds in China will change before private jet usage there goes the way of the Tibetan mastiff.