TAG Aviation Asia and China First Mandarin Group (CFMG) signed a preliminary joint-venture agreement to serve the business aviation market in Asia with aircraft charter, management and maintenance services. The agreement will be finalized when Chinese government approval is received, which is anticipated to occur in early 2011, according to Robert Wells, CEO of TAG Aviation Holding CEO.
The joint-venture company will be named TAG Aviation China and will be held 51 percent by CFMG and 49 percent by TAG Aviation. The deal has the potential to establish a significant new force in China's business aviation sector, which has been slow to develop due regulatory restrictions and bureaucracy.
"Business aviation in China is in its infancy," Wells said. "For TAG Aviation it allows us the opportunity to join up with a qualified partner who is already operational in mainland China." TAG Aviation Asia, headquartered in Hong Kong, manages and operates 15 business aircraft and last year received an air operators certificate (AOC) from the Hong Kong Civil Aviation Authority. That fleet doubled in size during the past 12 months and will likely double again in the next year, according Keith Morgan, TAG Aviation Asia chief executive officer.
CFMG's Shenyang-based First Mandarin Business Aviation (FMBA) unit holds a Chinese AOC and also a Civil Aviation Administration of China CCAT 145 repair station certificate. The company operates Bombardier Challenger 604s and 850s. "TAG Aviation's reputation with business aviation clients worldwide combined with its well-recognized global brand make an ideal match for us," said Zhu Lili, chairwoman of FMBA, "and it is the perfect time for our two companies to join forces to serve mainland China clients. We entered the exciting business aviation sector in our country convinced of its enormous growth potential, and forming a partnership with TAG creates a key combination in terms of both our expertise and worldwide capabilities."
Li Dong Qi, CEO of CFMG and husband of Zhu Lili, is a former Chinese air force pilot who flew MiG fighters. Li attributes his interest in business aviation to "a deep passion for this business," he said. "This agreement is built on friendship with [TAG Aviation founders] the Ojjeh brothers, both Mansour and Aziz, and brings a fresh breeze of advancement to business aviation in China and Asia.”
TAG Aviation Asia was the second fixed-wing business aviation company to receive a Hong Kong AOC. The joint-venture with CFMG, Wells said, “is the first time, as far as we know, where a company that holds an AOC in China is not part of one of the scheduled airlines. So we felt this is a particularly unique opportunity to join forces.”
TAG Aviation began working on the joint-venture with CFMG 18 months ago. The timing for the alliance with CFMG, Wells said, “was the right combination in terms of capitalizing on the rapid growth of aircraft operations in China and the need for business aviation that did not exist perhaps 10 years ago. We believe that we have an opportunity to provide both the service and the operational expertise in partnership with a well-qualified company that’s already in existence.”
While the details of how the aircraft will be operated remain to be worked out, Wells said that the two companies’ capabilities and skills would complement each other. “We believe that the combination of TAG Aviation’s world-wide presence along with the knowledge of how to do things in China that First Mandarin Business Aviation has is going to certainly bring [the joint venture] more visibility.”
Listen to Wells’ conversation with AIN at MEBA.