ABACE Convention News

China Slow To Embrace Light And Used Jets

 - April 15, 2013, 9:00 PM

For all the excitement that business aviation is stirring up among Chinese high-net-worth individuals, there are two groups of products that they do not seem ready to embrace: light jets and pre-owned aircraft. For now, the market remains resolutely focused on larger, long-range jets and brand-new models ordered straight from the factory.

The reasons for this appear not to be entirely rational in that Chinese jet buyers are not making choices based on the sort of pragmatic considerations about cabin size and range that generally guide Western customers. “Sometimes we might recommend a model worth $10 million, but the client might want one worth $50 million instead just because his friend bought one at that price level,” said an executive with Chinese aircraft management company Deer Jet.

The Beijing-based operator, which is part of the HNA group, now operates more than 50 jets, most of which are large. “We plan to gradually write off the older mid- and small-sized business jets,” said the company executive, acknowledging that it can’t reverse what appears to be embedded consumer preferences.

Anecdotal evidence makes it clear that for most of China’s early adopters of business aviation, the desire for efficient transportation is only part of the appeal, and not necessarily the most important part. High-net-worth individuals clearly view private aircraft as full-blown status symbols that can reflect the success and strength of their business and be valuable assets for hosting valued clients.

However, makers of smaller aircraft have not given up on the China market. Both Beechcraft and Cessna, for example, maintain that the greater versatility of these models will mean that they will come into their own in the country through a variety of applications, including training.

“Many big bosses’ first aircraft are luxurious large or mid-sized business jets,” said Beechcraft marketing director Jing Wang. “Their second one, perhaps chosen for specific business needs, might well be a light jet, which is more cost efficient and convenient.”

Another factor relates to the scarcity of professional pilots in China. This leaves business aircraft operators often having to recruit from the ranks of the airlines and the end result is that it can cost as much to hire a light-jet captain as one qualified to fly larger aircraft. Furthermore, the cost of having aircraft managed in China is such that it is relatively more expensive to have a smaller aircraft operated this way.

Similarly, the reasons why Chinese buyers have so far shown little inclination to invest in used aircraft may be related to the prestige reasons described above. “We are very optimistic about the future market for used business jets. However, currently we have no plan to import any used aircraft,” commented Deer Jet marketing director Yan Li, expressing a sentiment heard by many other industry insiders.

“The cost of used jets is much lower than that of the new ones, but the assessment of their quality and value takes professional teams. This is the biggest problem we are faced with right now,” said Bo Zhang, vice president of Minsheng Financial Leasing. “Currently, we substantially rely on the assessment of some international institutions. However, some customers still do not quite trust them [pre-owned aircraft].”

This article originally appeared in World Flight magazine published by World Flight Ltd.