The President and business jets

Spare a thought for the new President. His challenges include managing a slowing economy, negotiating tough foreign issues, continuing healthcare reforms and solving deep-problems with the financial system.

I am of course talking about Xi Jinping who next week will be chosen as the next leader of China.
It is very hard to work out what Xi’s exact policies are. He has strong links with the military (which controls all of China’s airspace) and is known to favour state-owned companies. But he also toured the US last year and is seen by some as a moderniser.

Whatever he does will have a huge effect on the business jet and helicopter markets.

Today the Organisation for Economic Co-operation and Development (OECD) said China’s economy will overtake the US by the end of 2016. The OECD says its GDP will be larger than the combined economies of the Eurozone countries by the end of this year. Helicopter companies should also note that China National Offshore Oil Company today announced they had discovered a “big” new gas field in the South China Sea.

Government policies in any country can hurt business aviation – Italy’s traffic has fallen sharply due to a (possibly illegal) tax on business jet flights and the seizures of jets in Brazil have slowed deliveries. But China is different. The entire business aviation market could literally be shut down in hours.

In 2002 following several airline crashes, the CAAC ordered the CEOs of all the airlines to Beijing. The regulator warned them that it would close airlines and stop the importation of new aircraft if there were any more problems. This could happen with business jets and helicopters if there are serious incidents and it is a challenging environment for operators.

Demand could also dry up if the word goes out that ownership of business jets is not encouraged. China’s business aviation market has grown very quickly but it is still young enough to be fragile.
China will become a major business jet and helicopter market. The question is when. Let’s hope it happens under the 10 years of President Xi.