Mon, Dec 01, 2014 - Page 15 News List

China touts private jets as business tools

‘GOOD OUTLOOK’:Despite private jets costing, on average, between US$50 million and US$62 million, a Bombardier official said they should not be seen as a luxury item

AFP, SHANGHAI

Makers of private jets are looking to promote their aircraft as business tools in China rather than luxury toys for the super-rich, as a corruption crackdown slows sales in the nation.

Chinese President Xi Jinping (習近平) launched a drive against graft after he came to power in late 2012, accompanied by policies to enforce austerity among officials — hitting sectors ranging from high-end liquor to luxury watches.

The market for private jets is a small, albeit fast-growing aviation segment in China, but the corruption campaign has taken some heat out of the market, according to industry officials.

“We’re in this anti-extravagant thing so numbers are down a little bit,” said Briand Greer, president of Honeywell Aerospace for Asia-Pacific, which supplies the aviation industry. “To me it’s like the river has slowed a little bit. Growth will be there, but it’s a different period right now.”

The first US Gulfstream jets only arrived in China in 2003, widely seen as the dawn of the new market. By last year, there were an estimated 248 business jets in China — a 28 percent jump from 2012, according to consultancy Asian Sky Group.

At China’s premier airshow in Zhuhai early last month, major players including Gulfstream, Canada’s Bombardier and Brazilian firm Embraer put their products on display. Even the Commercial Aircraft Corp of China (COMAC, 中國商用飛機), the nation’s major civil aircraft maker, showed a plastic model of a new business version of its ARJ21 regional jet, as it seeks to steal market share away from foreign firms.

“Business jets should not be treated as a luxury product because it’s considered a business tool to improve efficiency,” Bombardier China marketing manager for business aircraft and aerospace Christine Yan said.

“As long as this benefit can be recognized ... in the long run it’s still a very good outlook,” she said on the sidelines of the airshow.

Manufacturers remain positive about the longer-term outlook for the China market, citing steady economic growth and Chinese companies heading abroad to do business.

“For a long time, it’s been wealthy individuals buying a jet because they needed somewhere to put their money. It was cool to have a business jet,” Greer said.

“There’s starting to be a recognition that this is a tool that you can utilize to be more efficient,” he added.

Chinese customers for private jets are undoubtedly concentrated among the nation’s wealthy, with the aircraft sometimes costing tens of millions of US dollars — Airbus gave a list price of US$80 million when it unveiled a budget version of its ACJ319 corporate jet earlier this year.

Bombardier’s popular Global 5000, which seats up to 12 people, lists for just over US$50 million while the longer-range Global 6000 is US$62 million, according to the company.

In a survey this year, independent wealth publisher the Hurun Report estimated 40 percent of China’s “super-rich” — defined as those with fortunes of at least US$16 million — plan to use private jets in future.

The Hurun Report’s founder, Rupert Hoogewerf, said Chinese buyers typically pay US$20 million to US$80 million for a private jet, but some individuals are now renting for a one-off trip or time-sharing with others.

“It’s the evolution of the market,” he said.

On top of the corruption crackdown, there are also other bottlenecks on the market.

Comments will be moderated. Keep comments relevant to the article. Remarks containing abusive and obscene language, personal attacks of any kind or promotion will be removed and the user banned. Final decision will be at the discretion of the Taipei Times.

TOP top