Minsheng signs deal with Cessna, will place 13 more business jet orders and plans to build Chinese executive airports

[nonmember]Minsheng Financial Leasing has signed a co-operation agreement with Cessna and plans to order 13 new business jets from several manufacturers in the next bank. The bank is also looking at building specialist executive airports and FBOs.::join::[/nonmember][ismember]

Minsheng Financial Leasing has signed a co-operation agreement with Cessna and plans to order 13 new business jets from several manufacturers in the next bank. The bank is also looking at building specialist executive airports.

The subsidiary of China’s largest non-state owned bank ordered 17 aircraft in 2009 and 2010 – making it one of the biggest buyers of new jets – and has taken delivery of five aircraft in 2010.

Its 2009 and 2010 orders were placed with Bombardier, Dassault, Gulfstream and Hawker Beechcraft. Zhou Wei, the chairman of Minsheng Financial Leasing, announced last week that it would now work with Cessna and offer its products to the bank’s customers. Minsheng expecist is customers, whom typically order larger aircraft, to be most interested in Citation Sovereigns, Citation Xs and Cessna’s new Citation Ten.

Minsheng Leasing has a specialist team that advise customers, orders and registers aircraft. As the leasing company is based in the special tax area of Tianjin – which is treated like an off-shore territory – it can amortise import tax over the course of a 10 year finance lease and pass on this benefit to customers.

Minsheng Financial Leasing was one of the first leasing companies to be approved by China’s bank regulator and the first to specialise solely in business jets.

Building airports

But despite being the biggest buyer of new business jet aircraft in 2009 Minsheng is realistic about how quickly the market can grow.

“We could easily order more aircraft and place them with customers,” says David Tang, aviation adviser and chief legal counsel, at Minsheng Leasing, who is based in London. “We could launch a national advertising campaign and find buyers. However, we need to be careful. There are still significant limits to how aircraft can be flown and delays. There is no point bringing in more aircraft if the infrastructure is not ready.”

He estimates there are 160 airports where business jets can land in the whole of China; compared to over 19,800 airports in the US.  

Minsheng’s plan is to change China’s infrastructure. “We want to encourage investors to build executive airports. Starting with Beijing, Shanghai and Gungzhou,” he says. The bank will create syndicates of Chinese investors – mainly existing bank clients – who will invest in Greenfield projects outside major cities.

Tang is keen to play down the size of the airports they are looking to build. The key benefit for aircraft owners will be that flights will not be delayed by commercial airlines not the facilities. “There is a misconception that FBOs need big land, long runways, impressive buildings and big money,” says Tang. “The ideal model is more like US FBOs and general aviation airports and these could be built quickly.”

Minsheng hopes to encourage flight clubs and training schools alongside its new airports to help grow the number of Chinese private pilots. Tang, a keen pilot in his spare time, says there are less than 200 private pilot license holders in China. He says they are confident that manufacturers will support aircraft with maintenance, repair and overhaul centres.

Tang says finding suitable land for executive airports will be relatively easy but the biggest challenge will be working with the Chinese military, the People’s Liberation Army, which runs the country’s air traffic control. Although China’s State Council and the Central Military Commission have announced that they will open up part of the country’s low-altitude airspace. This is great news for helicopters but business jets will still be restricted when they fly above 4000 metres.  

Under the Low Altitude Airspace Relaxation policy – which will happen if trials around the cities of Changchun, Guangzhou and Shenyang in 2011 are successful – pilots will not need to file a plan for flights at altitudes lower than 1,000 metres.  Aircraft flying below 4000 metres, but above 1000 metres will need to file a plane but will not need approval to fly.

Tang is, however, optimistic. “We are confident we can manage the relationship with the government and the military,” he says. “And in China when things happen; they happen quickly.”

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