AIN Blog: Will the Year of the Dragon Spell Happy Times for Business Aviation in China?

 - December 19, 2011, 10:04 AM

This year we could finally find out whether China will fully realize its potential as the world’s most dynamic new market for business aviation. For all the high-octane speculation about growth in China, 2011 closed with fewer than 200 business aircraft registered in the country and continuing difficulties in getting them imported and flying for the new jet-set in the People’s Republic.

At the same time, it is increasingly clear that some Western bizav operators and service providers are finding it harder than anticipated to advance their plans for joint ventures in China. This, in and of itself, is slowing the rate at which aircraft can be delivered to the country and operated there in any sort of a flexible way, because there are still insufficient numbers of air operators certificate holders to provide the legally required management for new aircraft owners.

Meanwhile, the long anticipated new airport infrastructure, including FBOs, is still not getting provided quickly enough. And the problems in advancing the key international alliances needed to kick start sustained business aviation growth in China can loosely be characterized by the Chinese saying, “Same bed, different dreams,” meaning that while partners may think they are working to a common set of goals, they may in fact be inadvertently deluding themselves and each other that this is truly the case.

So why might 2012 be a breakthrough year? Or what further obstacles might stand in the way of fulfillment for the Chinese bizav community?

Even when the West’s main economies in North America and Europe were gripped by financial crisis in 2008 and 2009, it had been assumed that China’s epic growth in gross domestic product of more than 10 percent annually could continue, spurring breathtaking advances in personal and corporate wealth that would drive demand for business jets ever upwards. But with the crisis worsening, at least in Europe, and with lingering fears of further bank failures and credit squeeze, it now appears even the Chinese economy might be pegged back by its exposure to the failings of the West.

As of press time, economists were predicting that 2011 GDP growth in China would dip to 9.5 percent and that it could fall further, to 8.6 percent in 2012. Where will this end? What changes might be induced in China’s monetary policy and how could this spur or undermine demand for business aviation? The industry must be agonizing privately over these questions, even as it maintains an optimistic face publicly.

But fear not, for change is coming on the political front–or is it? The development of aviation has been specifically highlighted as a national priority in China’s latest five-year plan. What’s more, general aviation (including business aviation) has been specifically earmarked for positive reinforcement and this has already resulted in planned initiatives to free up access to airspace for private aircraft operators. The question is how quickly and to what extent will Chinese officials follow through on these commitments.

This year will see a wholesale change in the political leadership of China, with a new government due to be appointed. Close observers have suggested that this could result in a more consultative approach to regulation, but also yet more bureaucracy. A change of leadership in Hong Kong could also have ramifications for the regulatory environment in which business aviation is being nurtured.

So, as is often the case, there are as many questions as answers when it comes to China. Luckily for the industry, some light will likely be shed on these questions at the Asian Business Aviation Convention & Exhibition (ABACE), to be held in Shanghai from March 27 to 29.

There’s one thing you can be sure of and that is the commitment of AIN Publications to bring you the most authoritative information on China’s emerging business aviation scene. AIN will publish daily ABACE editions in Shanghai and will also bring you unrivalled online coverage of this key show. Another new feature for 2012 will be the first-ever Chinese-language edition of the Business Jet Traveler Buyers’ Guide, which is produced annually by the sister publication of Aviation International News.

The Chinese New Year begins on January 23. It will be the Year of the Dragon and this could prove auspicious. According to Chinese tradition, Dragon years are characterized by excitement, unpredictability, exhilaration and intensity. People born in Dragon years are supposed to be predisposed to an entrepreneurial, wealth-creating spirit. This ought to bode well for business aviation, but the flipside of the Dragon character can be reckless risk-taking, so maybe we should be preparing for a bumpy ride.

But, as they say in Beijing, Gong Xi Fa Cai: “Happy New Year “to all our readers.