Over the next decade, China is expected to give the general aviation market a boost, although short term, there are many market limitations to overcome, said aviation analyst Brian Foley.
In the next 10 years, China will buy as many as 900 airplanes, or about 9 percent of future orders worldwide, said Foley, with Brian Foley Associates.
Foley’s remarks about China’s market come as the Asian Business Aviation Conference and Exhibition prepares to open next week. ABACE runs Tuesday through Thursday at the Shanghai Hongqiao International Airport in Shanghai, China.
China has been viewed as the next great market for private general aviation aircraft. During the recession, China bought expensive, high-end business jets at an unprecedented rate.
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“Some interpreted this as the beginning of a sales explosion,” Foley said in a statement.
That didn’t last.
A more sustainable market should come behind it, but that will take time and patience, he said.
An initial sales boom in China was an anomaly, the product of sudden, new-found wealth in that region, Foley said.
Then as China’s economic growth slowed, the local stock market declined, and early private aircraft buying enthusiasm began to wane, Foley said.
Still, most planemakers and analysts see a lot of potential in China and other parts of Asia.
Beechcraft, Cessna Aircraft and Bombardier are among the companies exhibiting at ABACE.
But Foley noted that government restrictions and inflexibility constrain China’s potential.
Foley cited numbers from AMSTAT, a company that conducts aviation market research, that showed that mainland China is home to 176 business jets, while 118 are based in Hong Kong. That’s 294 in all, or 1.5 percent of 19,373 business jets in operation worldwide.
“Imagine if there was a 22 percent tariff on imported cars (and) drivers had to ask permission two days in advance and could only drive to specified cities via a sub-optimal route with few services,” Foley said. “Driving to a city not on the approved list would require a ‘navigator’ to ride along. It’s safe to say you wouldn’t sell many cars, but that’s exactly how the aircraft operational environment is in China today, which isn’t great for selling planes, either.”
China has made the development of general aviation a national objective, however.
Both the government and private companies have made a number of aerospace acquisitions and entered joint ventures in the last couple of years. But a clear, unified approach toward developing the country’s aviation sector hasn’t emerged so far.
“As familiarity with the segment increases, one would expect to see more systematic, logical, pragmatic and deliberate actions commensurate with building an aviation industry,” Foley said.
The market is expected to expand once impediments slowly get addressed over the next decade, he said.
“This could set up the following decade to be truly extraordinary,” Foley said.