Poor market sentiments in China amidst uncertain economic prospects have dampened the growth for the business aviation fleet in the Asia-Pacific region. According to the Asian Sky Group 2018 Fleet Report, the total Asia-Pacific fleet grew by 17 aircraft, or 1.4 percent year-over-year (YOY) to 1,201 jets. However, the biggest driver for the region’s growth, Mainland China, experienced a decline, with a reduction of six aircraft in 2018, or -2 percent YOY, reversing the more robust 10 percent growth in 2017. Including, Taiwan, Hong Kong, and Macau, the Greater China region shrunk by 0.2 percent.
The region saw 33 new deliveries along with 13 preowned additions and 47 deductions, with long-range jets from Bombardier and Gulfstream continuing to see the biggest movements.
“The slump at the moment is due to poor domestic growth and poor business confidence," said ASG managing director Jeffrey Lowe, "and the U.S.-China trade conflict is not a direct cause.” He added that a weakened Chinese Yuan or high oil prices will not have any effect on China’s business aviation growth, while those factors have slashed profits in the Chinese commercial carriers by more than 50 percent.
“It is just one of a number of issues that are currently affecting business confidence in China and therefore purchase intentions," he added. "The economy in China is not performing as well these days and this has caused some marginal owners in China to dispose of their aircraft."
“The 'slump' will be short. 2019 will see more new aircraft deliveries into China such as the Global 7500, Gulfstream G500 and G600, and Falcon8X, and I expect sentiment to improve too as the year progresses. The trade dispute will get resolved and I expect the central government to introduce some stimuli into the domestic market to get growth going again,” Lowe said.
For the Asia-Pacific region, the fleet grew by 109 or 1.4 percent YOY. This consisted of 54 new deliveries, 55 second-hand additions, and 92 deductions. Gulfstreams remained leaders of new deliveries accounting for 44 percent or 10 G650s, seven G650ERs, five G550s, and two G280s, worth around $1.38 billion. The biggest movement for preowned jets comes from Bombardier, seeing 22 aircraft entering the fleet, consisting of mainly the Challenger family (seven aircraft) and the Learjet family (nine), worth around $222 million.
The strongest driver for 2018 was Southeast Asia, with 6 percent YOY growth, adding 13 aircraft to the pool. The market rebounded with a number of new entrants bringing in both new and used aircraft, which offset some of the losses. Four new aircraft were delivered, a HondaJet, Bombardier Challenger 350 and Global 5000, and a Dassault Falcon 8X, and there were 13 preowned jets added. Lowe said economically the region has been doing well and that in turn has spurred the growth of business jets.
ASG forecast the market for the next twelve months to rebound to 2 percent, growing the total fleet from 1,201 to 1,225 jets by the end of 2019.