Can China overtake India?
“A year ago, the topic was when is China coming back? Now one of the key topics is that India is on the way. This does not just apply to business aviation. India has infrastructure constraints, not dissimilar to China. But it is wanting airplanes now,”says David Dixon, president, Jetcraft Asia.
Dixon was talking after Corporate Jet Investor Asia, which ran last week in Singapore. China is still an important market – with new aircraft deliveries happening – but strong demand from buyers in southeast Asia and Australia have shifted the focus away.
It is easy to forget that mainland China only fully opened its borders to visitors in March this year. For more than two years it was closed, but despite this the country is one of the few markets not to have seen a big post-lockdown demand for business aviation. This is partly because so many aircraft left the country during Covid.
“The aircraft that are still here are flying again, which is positive, but we have not seen the bounce that certainly we would have hoped to see in terms of transactional activity or aircraft coming back into the region just yet,” said Simon Bambridge, commercial director, TAG Aviation. “There is interest but we have not seen transactions come back yet.”
The mainland Chinese fleet has fallen from more than 300 aircraft to about 200 now, according to speakers and attendees. This is now less than the fleet based in Nevada (and a lot less when NBAA BACE is running in Las Vegas).
It had already started falling before Covid partly because some owners were nervous about ownership. Although this has created opportunities for new products like Amber Aviation’s AmberNet fractional lease.
“Business is still good. There’s no doubt about. We are still growing, as are most of our colleagues here. There are aircraft still coming in, but there were a lot also going out in northern Asia in particular,” said Darren Broderick, CEO of ACAM, Asia’s largest operator. “But the market is definitely slowing. The post-Covid rush, of first time buyers is done.”
The falling fleet in China also means that there is a shortage of aircraft to charter.
“There is strong charter demand both from former owners and new billionaires,” said Alex Jiao, chief executive, Hongkong Jet, who also highlighted opportunities in other markets. This includes Singapore, which has attracted a lot of Chinese UHNWIs.
This shortage of aircraft available for charter – which is felt across much of the region – is also encouraging illegal charter. This is something that many of the speakers and attendees touched on. Everyone agreed that regulators need to do more ramp checks but there is no sign of that happening in most countries.
On the whole, the operators attending are optimistic but not getting carried away. They see opportunities to grow, but no one expects a return to the gold rush of the early 2010s when Chinese buyers suddenly demanded aircraft.
All of the operators also have had aircraft grounded waiting for parts. Phil Balmer, director maintenance Asia, TAG Aviation, explained the pain that all operators have suffered. He is also optimistic they are slowly improving but said they are seeing some quality issues with new suppliers coming in.
“China will come back slowly, as a more rational market – and there are deliveries coming in,” says Dixon. “There is strong demand in southeast Asia – including Indonesia. But India is now the rising star.”
Subscribe to our free newsletter
For more opinions from Corporate Jet Investor, subscribe to our One Minute Week newsletter.
