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Jun
2015

Luxury yachts & Private jets May 2013

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Jet Market overview

By the end of 2012, 1,340 aircraft were registered on the Mainland, belonging to non-aviation related companies or individuals. Only 187 private jets were registered to Chinese HNWIs. But according to the proposed development goals from the “Chinese Civil Aviation 12th Five Year Plan”, by the end of 2015, aircraft owned and registered by non-aviation companies in mainland China will reach 2,000, and then the market size will reach 150 Billion RMB.

According to the Academy of Social Sciences, the business jet market is estimated to grow at an average rate of more than 20% between 2010 and 2020. Insiders also estimate that China’s business jet market is worth about US$ 2.5 Billion currently, and will increase to US$ 11 Billion in 2019. There is no doubt that China will be one of the fastest growing business jet markets and it is estimated that 16% of Chinese rich have an interest in buying a jet.

Consumer attitude

Different from western countries, many Chinese consumers purchasing jets in order to build a company image showing their strength and expect to gain a great reputation among their clients or the public. Also jet purchasing is a great advertisement, “you can spend 100 or 200 million RMB to place an advertisement on TV, but I placed it in the sky.” according to a potential jet buyer. Mahjong table, karaoke and other entertainment and leisure facilities are necessity on a jet, for a Chinese HNWI will invite several friends to join them and to play all the way to the destination.

A survey carried out by Hurun magazine, across 1,219 Chinese HNWIs who have assets of over 6 million RMB the following are the rankings of the influencing factors related to private jet purchase.

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As with boats, or in fact any other product or service in China, brand awareness and reputation has a significant influence on purchase decisions, particularly in immature sectors like this one.

Policy

During two sessions of the party congress this year, Xu Heyi, the representative of National People’s Congress, and chairman of Beijing Automotive Group, claimed that China is expected to officially enact a new policy to fully liberalise and open up the low-altitude airspace around May, but this has not been confirmed via any other sources. If this is true, it will greatly facilitate the development of general aviation aircraft and private aircraft market in China.

Open-air opportunities

Opening low-altitude airspace could possibly ease traffic congestion, especially in the cases of urgency, using a plane would help cope with the countries traffic issues. Chinese consumers have only ever seen air taxi’s in films before, but soon this could become a flourishing industry across the country. In early 2013, both Chongqing and Jiangmen governments put forward plans to develop the air taxi industry.

Opening low-altitude areas will also promote the development of several industries such as tourism and the provision of air tours across scenic but inaccessible areas of the country. We would expect this activity to be extremely popular with Chinese consumers. The policy is likely to promote air sports, such as paragliding, paramotoring, hot air ballooning, and airship’s. Industry professionals predict that as the low-altitude airspace gradually open’s up, about 10,000 light aircraft will be needed in the next 10 years, which will ignite a 1.5 Trillion RMB market.

Overall, private aircraft are now attainable by the Chinese. The country now has about 63,000 Billionaires, so even if only 5% of them purchase a private jet, the market will be worth Hundreds of Billions of RMB. In addition there are more than one million Millionaires and 120 million affluent in China, a small number of this the population will produce an enormous aircraft related market. The market still needs time, and industry experts estimate that 2011-2015 is the preparation period; 2016 – 2020 will be the period of initial growth and from2021 to 2030 the market will begin to explode.

Store opening

In Mar 30th 2013, Beijing’s first aircraft supermarket opened, containing multiple aircraft of different sizes in addition to helicopters. A 17 million RMB helicopter sold just several hours after the store opened; the buyer is a Shandong private owner.

A Shanxi’s coal mine owner who came to Beijing for a meeting came to inquire about the price.

After a briefing by the salesman, the coal mine owner nodded “Only about 17 million RMB! I could buy one and use it when I’m here for meeting in the future.”

Wuhan’s first aircraft supermarket also opened in Mar 30th, and 3 aircraft sold on the same day.

The 2013 Asian Business Aviation Conference & Exhibition snapshot

  • Over 3,800 business jets visited Shanghai airports in 2012, an increase of 12% compared to 2011, accounting for 1/3 of those across the nation
  • The Deer Jet Company now offers a “Time Share” service which is similar to the “Shared Ownership” model in the Shanghai yacht industry. But as a company specialising in business jet charter, Deer Jet has the advantage that it can provide its own jet when two owners want to take a business trip at same time
  • Dassault Falcon which has a 60% share of the European business jet market says that its sales in China represent 80% of the entire Asian market in 2012
  • Pudong Airport, currently operates three runways and will build another two, and is planning to build a business jet base and a dedicated business jet terminal. It will build a number of dedicated business jet stands as well, which means Shanghai will become the only city with two jets terminals in China

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