China loves pre-loved jets
One of the signs of a mature business jet market is its acceptance of pre-owned aircraft.
Normally the first business aircraft imported into a country are brand-new.
This is usually driven by wealth. Ultra High Net Worth Individuals (UHNWI), often newly rich, value their time, and want the best that money can buy. They do not buy second hand cars and feel the same about aircraft.
It has happened in many countries around the world, including China.
But China did not come from the same mould as other countries. The first business jets in China were mid-size jets operating charter flights. The first privately owned business jet was a Cessna Citation Excel.
These aircraft, new when they entered the country, came into a China that was unrecognisable by today’s standards.
Having moved from a socialist centrally planned economy into a market-driven economy, China’s growth began, and with it came a generation of newly wealthy individuals.
Brand-new, large-cabin, long-range jets began to enter the country in numbers. Often UHNWIs would choose an aircraft one up from their friends. So, for example, if they saw that a friend had bought a G450, they would buy a G550. If they saw somebody had bought a G550, they would buy a G650. Pretty much all of the aircraft coming in were new.
Although pre-owned aircraft have begun to be accepted in China, these were normally purchased by charter companies, rather than individuals or companies.
In 2017, the ratio between new and pre-owned aircraft coming into China shifted towards pre-owned for the first time.
According to Asian Sky Group’s figures, of the 68 business jets that were added to the Chinese fleet in 2017, 39, some 57%, were pre-owned. In 2016, only 36% were previously owned.
The shift has taken place for a few reasons. One aircraft manager at ABACE this week said that one of these is that buyers are looking for value, adding that six months ago there were a lot of good deals in the market, but these were quickly taken.
All the best from Shanghai.
NOTE: The below originally appeared as the editorial in our One Minute Week newsletter. To find out more, and sign up for free, please click here.
Subscribe to our free newsletter
For more opinions from Corporate Jet Investor, subscribe to our One Minute Week newsletter.