On April 24, 2010 afternoon, a white
painted jet landed at the Putuoshan Airport, in Zhoushan county, Zhejiang
province, China. Zhao Benshan and little Shenyang, two of China’s most popular comedians, descended from the plane – the 200 million
RMB“Benshan” jet was purchased by Zhao Benshan from Bombardier. The two
comedians toured the Putuoshan mountain first and then flew to 2000 mile away
Chongqing to have a fire pot dinner with their friends. .
At that time Zhong Ling has just resigned
from a company and the impression of private jets on her remained as
transportation tools of the riches for parties with their friends.
However, less than two years later, Zhong
has become a CEO of a private aircraft leasing company with less than 10 people.
Her company is helping Asian millionaires acquire their own jets.
The company, named Asia Business Aviation
Co., buys small aircrafts from foreign websites, and resell them to domestic or
Hongkong businessmen. Each transaction will bring about a revenue of about US$
200000 to 300000. “Sometimes more,
sometimes less, however, China has a huge demand on private aircrafts”, said Zhong.
Opportunities Brought about by “Concerns about Troubles”
More and more Chinese wealthy people want
to own their own aircrafts. CAAC (Civil Aviation Administration of China) says
from 2008 to 2010, China’s business jets
have increased from 32 to 56, and between November 2009 to February 2011,
another 28 jets were registered in China with a purchase value of over US$ 1.1
Zhong, who is sensitive to data, has
smelled the business opportunities. She started to visit the larger foreign
aviation companies. “At that time I
know nothing about the aviation industry, therefore I screened out the
companies presented on specialist magazines and sent out my visit requests”, said she. However, this seemingly “foul” way of marketing has
brought about abundant results and she began to know the way private aircraft
sale and leasing are done.
Because of its high price, normally private
jet purchase or leasing is financed via foreign bank or domestic bank. In order
to ensure that all transactions and procedures are carried out in compliance
with relevant regulations, foreign bank normally requires that the clients meet
with certain conditions, for example, the jet shall be registered in a country
with fairly good regulations, or in a country where the bank is operating.
Therefore this imposes problems on foreign jet owners.
For example, if the buyer is the
registrant, but not a US citizen, foreign financier may likely require that the
client complete the transaction in the trust way, in this case, he or she has
to choose a US citizen to act as a trustee and to become the actual owner of
the jet. Due to a series of complicated procedure, under such a trust
structure, foreigner cannot own aircrafts registered in the US, and therefore
has to hand over the possession right to the trustee. At the same time, the
purchaser – the foreign buyer – has to guarantee to pay the credit – in order
to own the aircraft.
In China, it’s not an easy job to have the bank finance a US$50 million jet.
Zhong knew. Here came her chance. She began
to investigate who likes what types of aircrafts, and in which way these people
wanted to buy their aircrafts. Data showed, almost all aircraft orders came
from those who have never bought an aircraft. They knew little about private
jet. They tended to buy long distance, wide bodied business jets. Different
from western countries, Chinese clients always stick to the high end jets –
such as Gulfstream, Express of Bombardier, Falcon, Airbus A318 – all over US$
Another peculiarity compared with US clients,
while private orders in foreign countries come from existing clients who have
some kind of aviation knowledge and know what types of aircrafts they want to
buy – incl. the shape, size, number of seats, range, fuel efficiency, avionics
etc, however, Chinese buyers simply ignore all these. They tend to have others
to cope with all these complexities.
That means also, the potential Chinese
clients in most cases will expect that “aircrafts will come up when and where they are needed”.
In fact, faced with complicated flight
permission procedures, private aircraft owners are faced with much more
troubles after the purchase. For example, prior to the flight he has to submit
his flight schedule to the air control authorities ahead of time, the socalled “one flight, one submission” regulation takes long time to complete. In addition, because the
low sky is not yet opened, private aircrafts are only allowed to fly on some
very limited civil air routes. If one wants to fly from Beijing to Shanghai,
for example, he has to apply for permission to the two air authorities in
Shanghai and Beijing simultaneously, and ahead of time as well.
Zhong hopes to solve these problems for
domestic aircraft buyers and earns her commission wherefrom, just like those
who earn their commission by selling houses of other landlords. For this
purpose she has paid high salary and hired specialist employees from foreign
“I can determine the
flight range, seats, standby crew and repair base and make ready those
aircrafts appropriate for the flight, according to the information provided by
the clients about the destinations, passenger number, flight frequency and
parking places of the aircrafts”, Zhong said.
The recent transaction was that a coal mine
boss wanted aircraft leasing company to lease aircrafts to provide
transportation for his foreign clients, for a period of one year. Zhong has for
this project contacted foreign pilots and provided the necessary training.
According to Zhong, foreign pilots are more favored by Chinese aircraft owners,
and their salaries are between 12000 to 17000 RMB per month. Apart from paying
the lucrative salary and providing relevant training, VISA and family
relocation are also provided.
Some have calculated the flight cost for
private jets. To obtain a flight license, one has to pay RMB 160 000 Yuan; to
join a flight club costs RMB 300 000 Yuan for a 100 hour flight; exclusive fuel
consumption expenses, annual maintenance costs about 5% of the aircraft price;
each 200 hours of flight needs an overhaul at a cost of RMB 1 million.
Nevertheless, the largest costs are caused by the “small money” – therefore it
is the key to reduce operational costs.
The expertise of Zhong and her team has
caught the attention of more and more large domestic companies, and they are
inviting her as their private aircraft advisor. But her chance is not limited
Forecasts from major aircraft manufacturers
show that they are viewing China as a place with huge potential. Dassault plans
to increase its China market portion from 10% to 30% within 5 years. Aviation
industry experts are predicting the Chinese business aviation in different
ways. Some predict that by 2020 China will have 500 private aircrafts while
others say this figure will amount to 10000. “I think it may be 2000, and this is already fairly big”, Zhong said.
Sat, Apr 7 2012 9:12 AM
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