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Air charter companies await takeoff in China
International air charter companies say China’s limited general aviation infrastructure and lack of cultural awareness of charter constrain near-term internal growth. So for now these providers are concentrating on bringing international charter passengers to China’s doorstep and establishing local contacts and partnerships.
“Our emphasis is on arriving in Hong Kong or Shanghai [with charter passengers], then flying them back to the point of departure,” said Neil Harvey of UK-based charter broker Hunt & Palmer, which established a Hong Kong office five years ago. “We have some clients in Hong Kong, some in Singapore, but outside of that, not that many clients are locals.”
For missions to and from China, Hunt & Palmer typically brokers Hong Kong-based, Chinese-registered aircraft, including a Falcon 2000 and 2000LX; a Challenger 300, 605 and 850; and a pair of Gulfstream GIVs. The Chinese registration allows Hunt & Palmer to expedite flight-permit procedures, as well as provide “some trips around China,” Harvey said, citing flights to Beijing as an example.
While business jet ownership is expanding in China, the idea of allowing one’s aircraft to be chartered out for use by strangers remains unfamiliar, which is limiting the growth of China’s charter fleet. Meanwhile, many potential customers with the means to charter have yet to develop a taste for it.
“What we haven’t seen [in China] is the mass use for personal or leisure travel, as in the U.S. or Europe,” said David MacDonald, a sales director at international charter broker Air Partner. “In the Far East, it’s much more a corporate thing, or the ultra-high-net-worth thing to do,” MacDonald said. But one hopeful trend that Air Partner has seen is that “a lot more Asian companies are coming into Europe and wanting to charter aircraft. That’s when Far Easterners started becoming clients,” MacDonald said.
Indeed, most Chinese customers use charter for trips outside of China, and catering to these travelers is one route to building long-term relationships that could blossom along with an internal charter market. In March 2012, U.S. charter management company TWC Aviation established an alliance with Sino Jet Management Ltd. to operate charters using Sino Jet’s fleet of Hong Kong-based, U.S.-registered business jets, which include a Bombardier Global Express and a Gulfstream G200. The U.S. registration eases movement into, out of, and within that country, a benefit for U.S.-bound charter customers. In announcing the alliance, TWC’s CEO, Andrew Richmond, spoke of “the need for a strategic partner experienced with local customs, cultures, languages and regulations” to succeed in China.
While all charter companies acknowledge the need for a strong local partner, reforming regulations will be key to growing China’s charter market, they say. Getting permits for a flight within China can take five days, hamstringing the quick response and flexibility that are hallmarks of air charter elsewhere. Administration time also checks charter’s ability to expand. Harvey noted that 53 applications are pending approval from companies that want to establish charter services within China, but only 12 operator certificates are issued annually.
Such companies do point to hopeful signs. “We’re now seeing a more stable period of growth, a new aviation culture in China,” said MacDonald. But Harvey expects it will be “another five years easily before there’s a strong charter market” inside the country.