CJI China confidence mini interview: Part I – The Financier
With confidence in China apparently weakening, Corporate Jet Investor has canvassed the views of several key players in the region to gauge the long, and short term prospects.
At the Corporate Jet Investor Hong Kong conference in June we learnt that the high optimism about the prospects for business aviation in China were starting to show signs of weakening.
As a follow up to the above China confidence article, we put the same questions to four of the major players in the country, each representing a different company with different business interests.
By talking to different types of company we’ll eventually build up a picture of current confidence in business aviation in China, and see how people feel about the short and long term future.
Today’s mini interview is with Li Yuan, an expert in the industry who now works for a domestic leasing company:
Corporate Jet Investor: Long-term there is no argument that China will be one of the most important countries for business aviation. But how confident are you in the short term?
Li Yuan: I take a neutral attitude, still have chance, but not like the situation in 2010-2012.
Corporate Jet Investor: In your view, what are the main barriers holding China back from major growth?
Li Yuan: Strict air traffic control and the lack of aviation culture.
Corporate Jet Investor: We recently learnt that a high number of business jet operators in China aren’t making money. Do you think we’ll see consolidation amongst operators?
Li Yuan: I think we will see some consolidation in this year. Some major operators with 20+ jet fleet, such as DeerJet and BAA will continue expanding, some small operators which mainly serve for their parent company, such as Nanshan, Hanergy will keep the size, some smaller operators will be more difficult. Minsheng will grow supported by MSFL, but may not make money in short term.
The operators lost money because of the low utilization, partly from the grey chart flight which has lower rate; partly from the inconvenience of flight application, especially domestic flight, clients can’t save time significantly.
Corporate Jet Investor: If the Chinese market collapses completely tomorrow, are there any other countries in Asia that could see major growth?
Li Yuan: Although speed of China economy is slow down, still the leading one, the potential demand of business jet in other Asian countries may not have a major growth like China.