Mike Stones

Time for the billion-dollar question in China

“With money, you can buy a clock but not time,” according to a Chinese proverb. If that’s true, Fabergé clock sales in the world’s most populous country look set to rocket. The latest Forbes Billionaires list, published this week, includes a record 2,755-dollar billionaires, with China supplying 205 new entrants to this most exclusive of rich lists.

But how likely are the newly ultra-wealthy in China to find themselves buying or flying in private jets? There seem to be mixed signs from this most complicated of countries. David Dixon, president, Jetcraft Asia told Corporate Jet Investor he did not expect to find an extra 205 prospective clients outside his office door on Monday morning waiting to buy an aeroplane.

While he detects an increase in new clients in Asia, in China significant constraints continue to curb the growth of private jet aviation. “Factors limiting the growth include local perceptions [about private jet aviation], politics and the difficulty in showing wealth when people are under a certain amount of pressure,” said Dixon.

Other constraints in China include the lack of infrastructure, airports and parking. And there is no sign of that changing – at least in the short term. “There is an increase in activity in China but no great upsurge,” said Dixon.

‘The crucial thing is new entrants’

Overall, he was heartened by the prospects for the industry worldwide. “It has been encouraging the way business aviation has shown signs of recovery. It’s not back to where it was yet. But the crucial thing is new entrants to the business.”

Dixon also detected a changing dynamic, as more high-net worth individuals (HNWIs) chose to avoid major airport terminals. Increasing numbers of principals are becoming interested in private aviation as a way of protecting not just themselves but their family and their close associates. “These principals want to go from A to B, not via C, which is the airlines way of doing it.” That means they are choosing to travel from one smaller airport to another smaller airport.

It remained unclear how growing tensions with Western countries, including economic sanctions, would impact private jet sales and use in China.

A more optimistic assessment of the prospects for business aviation growth in China comes from Paul Jebely, managing partner, Pillsbury, Winthrop Shaw Pittman, who like Dixon is based in Hong Kong. “When I saw the Forbes article yesterday [April 8th] a giant smile came to my face,” Jebely told Corporate Jet Investor. He believes we are living through one of the greatest wealth creation events of our lifetime – a rising tide will also lift the growth of private aviation in China.

Greatest wealth creation events of our lifetime

Interest in private jets acquisition and use is not confined solely to new aircraft sales. “The latest increase isn’t just going to be new equipment, whereas the last time it was exclusively new aircraft.” New clients in China are also increasingly willing to consider the shared use of aircraft. “10 years ago, during the first boom in China, the idea of a shared aircraft or fractional was considered disgusting,” said Jebely. “Fast forward to today, a few owners are more inclined to look at the secondary market. That includes shared use, which was absolutely unheard of 10 years ago.”

Convenience rather than Covid-19 precaution is currently the main motivator for interest in private aviation in China, he added. “You have to remember that a lot of the corporate jet use in China remains in China. Their internal travel is the equivalent of our international European travel.”

Hong Kong-based jet charter broker L’VOYAGE’s new CEO and shareholder Jolie Howard is also optimistic about the prospects for growth. Commenting on her appointment last month, Howard said: “Compared with some of the foreign or overseas players that have come and gone over the last two decades, we [founder Diana Chou and Howard] have had the privilege to stay and nurture the industry and encourage local market development all this time. In this new, post-covid market that the industry is now entering, we are well-positioned to serve the influx of new buyers and customers.”

Will China see a return to the demand we saw in 2012? Only time will tell.

L’VOYAGE’s Jolie Howard looked forward to private jet aviation’s “influx of new buyers and customers”.

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