““It’s a massive, unbelievable competitive advantage. Having access to a private jet is the single most important asset to any national political campaign.” Source: WALL STREET JOURNAL ”
Business Aviation in China
AS SHANGHAI PREPARES TO HOST THE ASIAN BUSINESS AVIATION CONFERENCE & EXHIBITION, the business aviation industry appears to be at a pivotal point in China. The private aviation age has dawned here, but it remains a somewhat foggy dawn with reduced visibility for anyone wanting to operate business aircraft in the country. The outlook is barely any clearer for manufacturers and service providers seeking to capitalize on rising demand.
The first generation of Chinese business jet owners still face significant administrative hurdles to importing their aircraft. At the same time, limited airport infrastructure and restrictions on access to airways continue to dilute some of the flexibility that business aviation is supposed to deliver–and especially for foreigners.
For the time being, the government continues to take a conservative approach to controlling the influx of aircraft. It’s a stance that some Western experts say is merited, given that the country’s existing infrastructure probably couldn’t cope with the deluge of jets that a completely unconstrained free market would produce.
By the end of 2011, little more than 150 business jets were registered in China, but manufacturers expect this number to grow exponentially over the next two decades and beyond. For the time being, though, the process of importing aircraft into the country remains cumbersome and there are tales of business jets sitting on tarmac at ports of entry waiting for release to their owners. In some cases, buyers opt to have their aircraft delivered outside China and registered there, but this means they are much more restricted in how they can operate within the country–having to endure some of the restrictions that apply to foreigners. For Chinese-registered aircraft, the situation is relatively straightforward in that any aircraft with fewer than 29 passenger seats is considered as being for private domestic use and so is relatively free to make trips within the country.
ONE OF THE MAIN STICKING POINTS FOR CHINA’S WOULD-BE JET SET is the requirement to be able to prove that you have found an acceptable company to operate the aircraft. The authorities require that the jet be flown under a management contract and, despite the best efforts of global service providers to get established in China, there are still relatively few management companies with the necessary Chinese air operators’ certificate. In some respects, it’s a classic Catch-22 situation: because there are not enough approved operators in China, it’s hard to bring aircraft into the country, and yet because there are still relatively few aircraft, it’s hard for the management companies to build their businesses–especially given the restrictions placed on international joint ventures.
Most of the operating companies are offshoots of largely state-owned Chinese airlines, which find it easiest to get the necessary approvals, and also operators based in the quasi-offshore enclaves of Hong Kong and Macau. Increasingly, faster growing aircraft management companies are joint ventures between Chinese airlines and private companies, including Western-based groups that have more experience in business aviation. Among the main and emerging players are Metrojet, Deerjet, Asia Jet, Air China’s Beijing Airlines, Hongkong Jet and Hainan Airlines subsidiary Beijing Capital Airlines.
Another constraint on the expansion of China’s business aviation market is a shortage of pilots. For operational flexibility, flight crew generally need to be Chinese and the obvious place to recruit them would be from the country’s fast-growing airlines, where opportunities to earn overtime pay make the switch to business aviation a hard sell and a cost inflator. In theory, Western pilots who could master the Chinese language and pass local exams could fit the bill, but this is a tall order. In many cases, foreign operators also have to hire a local, Chinese-speaking navigator at a cost of up to $1,500 per day. The advantage of doing this is that it could open up access to airways and airports that otherwise are off-limits for foreigners.
Non-Chinese operators remain restricted in terms of the numbers of mainland airports they can use. For the most part, they are confined to the major airports, obviating a key advantage of business aviation, namely the ability to fly closer to the passengers’ final destination by using smaller airports. With airline traffic burgeoning in China, access to the country’s major airports depends on getting landing slots and these are routinely granted to scheduled operators ahead of business aircraft.
There are still fewer than 200 civil airports in China and many of them are not available to private aircraft. By comparison, a large-cabin business jet in the U.S. can access more than 5,000 airports. However, according to flight-planning specialists, Chinese officials are starting to grant permission to fly into airports that have previously been blocked for foreign operators.
“Operating into China is much easier now than it was even two to three years ago, but it is still strict compared with some countries,” said Universal Weather & Aviation’s Larry Williams, who helps business aircraft operators fly into and within the country.
“Now when we put in requests, the turnaround time is much faster,” added his colleague Justin Murray. “Before, we needed several weeks [to get flight permits] but now we are getting them within a week and it is also a bit simpler in terms of what they are looking for in terms of paperwork. Overall, the process is becoming more predictable.”
Flight-permit and air-traffic-control navigation fees are far higher than they would be for equivalent flights in North America or Europe–amounting to several thousand dollars per trip. On top of this, you should budget for some $3,000 in “government compensation fees” at every place you land, plus a $1,200 airport fee.
THE STARTING POINT FOR ANY TRIP BY A FOREIGN AIRCRAFT OPERATOR IS TO HAVE A SPONSOR–someone who is officially inviting you to come to China. Previously, if you wanted to make a trip that involved visits to multiple cities, you had to provide information about your sponsor for each destination, including full address details, but now a single sponsor for the entire trip will suffice. The authorities will check each aspect of the trip with sponsors to ensure that they genuinely issued the invitation, rather than it being a bogus arrangement to get around the rules. “The authorities have cracked down on ‘for-hire’ sponsors and this is not something that companies should be arranging for you; the sponsor needs to personally accept responsibility for having invited you,” explained Williams.
Flexibility is a big reason for flying privately, but don’t count on being able to fully benefit from this advantage in China. The Universal experts warned that aviation authorities are not at all keen on last-minute changes to flight plans, such as if passengers arrive late for departure or change their mind about when and where they want to fly. According to Williams, Chinese officials are getting somewhat more accommodating in these situations and he has been able to secure new permits at short notice in some circumstances. But generally, the Universal team manages client expectations around the need to plan trips as thoroughly as possible and not count on being able to make changes.
It is possible to change flight plans once in China. But this can take two or three business days, which may well be impractical if you’re planning to spend only a day in each city, according to Rockwell Collins Ascend Flight Information Solutions. You can generally change a departure or arrival time by an hour or so without a new permit, but to change them by three or more hours, you’ll need approval that could take another day to arrange.
Universal’s experience suggests that the requirement to hire a Chinese navigator no longer always applies. “It tends to be when you are flying to more remote areas, rather than to places like Shanghai and Beijing,” explained Murray. “Some airways aren’t listed on charts and are known only to Chinese pilots.”
Immigration is another high-priority item for the Chinese trip-planning checklist. You should apply for your business or tourist visa in good time and if you can’t be without your passport while it’s being processed by your nearest Chinese embassy, you should be sure to get a second passport to use for trips in the interim. Your pilots will need crew visas and if one of them gets sick or can’t make the trip, you’ll need to be sure that replacement crew also hold a current visa. What’s more, if you’re going to change out your air crew for flights within China or your return trip (as might well be necessary for a prolonged itinerary), then any pilots or flight attendants heading home early by commercial airline will need to leave the country on a separate business or tourist visa.
“I see the restrictions in China lessening as they see the opportunity [presented by business aviation],” concluded Williams. “I wouldn’t wing it in China–you need a support company and a good ground handler wherever you are going.” Universal has offices in Beijing and Shanghai and can send its Chinese staff to back up clients anywhere in the country.
Other factors to consider are that if you are traveling to northern China in the winter there is little hangar space to protect your aircraft from the elements. It can take some time to get an aircraft de-iced–indeed ground support services generally are pretty rudimentary.
Also be alert to the local holiday schedule–especially around the Chinese New Year. During this time the process for securing flight permits may be prolonged.
DESPITE THE MANY OPERATIONAL HURDLES, PRIVATE AVIATION STILL BEATS AIRLINE SERVICE in China, according to Matt Pahl, flight operations manager with Rockwell Collins Ascend Flight Information Solutions. But in his view, the practical challenges of operating into China haven’t significantly improved yet in many respects and without the support of established trip planners it would be prohibitively difficult for foreigners.
Administratively, though, the situation is more straightforward, if only in that all flight requests can now be channeled through the General Administration of Civil Aviation of China (CAAC). A decade or more ago, all requests had to start with the aircraft owner’s national embassy in Beijing, which would be required to submit a formal diplomatic note to the Chinese Ministry of Foreign Affairs and another to CAAC.
Rockwell Collins handles client requests through its five-strong Beijing office. While the official notice period for permits is still advertised as being 10 working days, Pahl said that his staff have a good record of getting them in as little as 24 to 48 hours.
From his perspective, one of the greatest challenges in China is that most business aviation traffic is still going through the main airports in Beijing and Shanghai and these are overly congested with airline traffic. At Beijing, for instance, between 8 a.m. and 10 p.m. foreign-registered aircraft are limited to just 15 movements per day and business jets are often effectively blocked on these grounds.
South of Beijing, Tianjin is available as an alternative airport but this is a 90- to 120-minute drive from downtown. There are few alternatives to the main airports around the country and CAAC still excludes general aviation traffic from many airports altogether.
That said, some progress has been made in terms of dedicated infrastructure. The 2008 Olympic Games spurred Chinese officials to create an enclave for business aviation at Beijing Capital Airport. In Shanghai, Hongqiao Airport is a more convenient downtown option to the far more remote Pudong International Airport. Hongqiao is also home to one of the country’s few purpose-built FBOs and this is run by Australia-based group Hawker Pacific.
Hong Kong-based Evo Jet Services flagged the importance for foreign operators to avoid inadvertently falling foul of their own countries’ legislation when having agents make trip arrangements for them. U.S. and UK companies, in particular, are subject to strict regulations that could misinterpret a facilitation.
Evo Jet founder Chris Cartwright also cautioned against planning flights to China over restricted airspace such as that of North Korea or Myanmar. Another consideration is that a flight involving passengers being collected along the way for flights within or out of China can be considered as cabotage operations and this can trigger additional paperwork and fees of up to $30,000.
Viewing this report requires Adobe Reader be installed on your device. If it's not currently installed, click here to download.