Red tape hinders the growth of corporate aviation in some Asian countries, but change is coming, albeit slowly, with China and Taiwan drafting new rules

Barriers impeding growth of north Asia’s fledgling business aviation market are starting to lift but, for manufacturers and operators, the pace in most countries is painfully slow.

China and Taiwan are leading a movement to rewrite regulations that until now have hampered expansion of corporate aviation throughout the region. But pressure from manufacturers and operators has not yet resulted in any progress in Japan, while expansion in South Korea, which has the region’s most liberal regulations, is mainly blocked by resistance from local corporations to using business aircraft.

Taiwan’s regulations are now the most restrictive because they prohibit private aircraft registration and business aircraft charter operations, but the Civil Aeronautics Administration has drafted a set of rules that would lift these restrictions and allow companies to register aircraft locally and launch business jet charter operations. The new regulations are now being reviewed by Taipei’s legislature and, if approved, will immediately make Taiwan the most business aviation friendly territory in the region.

Sunrise imminent

“It is in the legislative branch for approval. All the amendments have already been drawn up by the CAA. They say the regulations will be in place by the end of 2006. I’m thinking early or mid-2007,” says Sunrise Airlines executive vice-president Wilson Kao.

KBAC CESSNA Charter W446

KBAC will soon offer its Cessna 206 for charter

Sunrise, which now operates four Kawasaki BK117 helicopters on medical evacuation flights, aims to offer business jet charters initially with a Hawker 400XP and later larger aircraft, including a Hawker 800 or Bombardier Learjet 60. Taiwan’s general aviation operators are now limited to aeromedical evacuation, aerial photography and other government missions, but are looking to offer charters under new regulations that are designed to mimic the Part 135 rules at the US Federal Aviation Administration.

Sunrise plans to take delivery of a Hawker 400XP in the second quarter of this year, which it will use for medical evacuation flights until charters are authorised. Start-up My Aviation also wants to establish a VIP charter business in Taiwan and plans to register its first aircraft, a Bombardier Challenger 300 to be delivered in June, in the USA to get
around current restrictions. My Aviation aims to register business jets in Taiwan eventually, but the US registration on the first jet will probably be kept to provide access to the lucrative Taiwan to mainland China market, which must be served with an intermediate stop in Hong Kong, Macau or the South Korean island of Jeju.

US registration is already used throughout the region to get around what are seen as burdensome local restrictions. Most north Asian countries prohibit foreign operators from parking their aircraft for more than a few days, but business jets are typically mobile enough to avoid such restrictions.

Guam-based ACI Pacific, for example, operates business jets throughout Asia, but sees no need to register any of its aircraft locally. ACI now operates a Bombardier Global Express leased by a group of Japanese charter companies led by ITC Aerospace and, at the beginning of April, will add a Challenger 601ER for ITC.

“Its legal base will be Guam, but it will be based at Nagoya,” says ACI chief executive Terry Habeck. “We look at it as a temporary parking situation.”

ITC chief executive Tomoo Nakayama says it hired ACI, which until last year operated its own charter company ShareJet with Japanese partner Sojitz and is now helping ITC sell its charter service, because registering business jets with the Japan Civil Aviation Bureau (JCAB) is cost- prohibitive. “At this moment it’s better to have an N number [US registration],” Nakayama says. “Those doing it with a J number [Japanese registration] charge twice as much as we do.”

Domestic hurdles

There are only a handful of Japanese registered business jets and these aircraft generally stick to the domestic market, which foreign operators have trouble accessing because of a three-day notice requirement. Japanese start-up Global Wings has also applied for a Japanese air operator’s certificate (AOC) and plans to locally register a new Learjet 45XR, which is scheduled for delivery in March and will be based at Osaka Kansai.

Bombardier is now working with JCAB to certificate the 45XR in Japan and expects Global Wings will be able to secure its AOC by the end of March. Global Wings, which launched a charter operation in China early last year using a Learjet 45XR operated by Air China, has been working on its Japanese AOC for over a year and says it plans to launch Japan’s first international business jet charter operation around April.

Charter providers say demand from Japanese companies, which are traditionally reluctant to use business aircraft, is improving, but Global Wings will have to overcome fierce competition from US-based operators that have a lower cost base. “The volume of business is increasing more than expected,” says Japanese Business Aviation Association (JBAA) vice-chairman and secretary general Masaki Nakatani. “There is a chance Global Wings can make it, but JCAB registration is very expensive.”

Global wings' first Learjet 45XR W445

Global wing's first Learjet 45XR, is operated by Air China and based in Beijing.Its 45XR, to be delivered next month, will operate from a new base in Japan, at Osaka Kansai

JBAA has been working for several years to ease restrictions hampering business aviation growth in Japan and is trying to persuade the JCAB to establish a separate set of regulations for corporate aircraft operations. The JCAB now treats business jets like commercial passenger aircraft and the JBAA fears that, unless this changes, most growth will be handled by foreign operators. For example, Japanese business aircraft operators must meet the same requirements as airlines for securing and renewing airworthiness certificates.

“To maintain airworthiness in Japan is very expensive and difficult for small aircraft operators,” says Nakatani. “This is the main reason why there’s hardly any business jets registered in Japan.”

Habeck points out that for ACI to register a business jet in Japan, the aircraft type must be certificated with JCAB, all the manuals must be converted to Japanese, a maintenance programme must be established and the aircraft must be on the ground for several months before it is cleared to fly. “I’ve been working in Japan for 20 years and haven’t seen any changes,” ACI’s Habeck says.

Glacial change

Last year, the JBAA handed JCAB 37 regulatory items to consider, but Nakatani says only two have been discussed. “It is impossible to handle as a package. I decided to break it up piece by piece,” he says. “It will take many years. It’s a slow process.” JCAB has not yet agreed to any changes on the two items discussed: extended twin-engine operations (ETOPS) and notice periods.

The JBAA is asking JCAB to adopt a set of ETOPS regulations for Japanese business jet charter operators similar to those the US FAA has for Part 135 operators. JCAB’s current ETOPS regulations are the same for airlines and business aircraft operators so the Japan-US market is dominated by US operators, even though they must provide Japanese authorities three days’ notice before entering the country.

JBAA is also asking JCAB to reduce the notice periods required, in particular at Komaki airport near Nagoya. Komaki, which was repositioned as a business aviation hub early last year after most commercial flights in Nagoya shifted to the new Centrair airport, has the only dedicated customs, immigration and quarantine (CIQ) business aviation facility in Japan. But unless JCAB approves JBAA’s request to nominate Komaki as an international airport, the CIQ facility will only be open upon request with three days’ notice. “The advantage of Komaki is they have a so-called FBO [fixed-based operation] facility and have a CIQ in place that can go through the whole process in 20min,” Nakatani says.

The 25 Japanese airports with international designation all force VIPs to go through the same customs line as airline passengers. Manufacturers and operators say this is another major hurdle to business aviation growth in Japan, although other airports, including Osaka Kansai, are considering setting up similar dedicated FBO and CIQ facilities for business jets.

“People are still doing it [chartering in Japan], but resent it because they are travelling all over the world and Japan is probably the most difficult,” Habeck says. “It used to be China, but there have been advances there. In Japan they are still behind.”

An Asia-based sales executive for one business jet manufacturer says: “Japan is a great disappointment in the region. They are so wound up in bureaucracy I’m surprised one can taxi an aircraft, yet alone fly it. One expects it will ease up a bit and become more convenient. As China opens up there will be pressure on Japan to simplify things. It is very sad that it is easier to operate in China today than in Japan. Five years ago China was in the dark ages. It’s not a pioneer, but it’s pioneering change.”

In China, VIP facilities at major airports have been built and notice requirements for international operators have been shortened. China currently allows only airlines to operate domestic charters and four carriers now serve this market with nine business jets. But manufacturers expect even this regulation to loosen within the next few years because the Civil Aviation Administration of China (CAAC) is now working on Part 135-equivalent guidelines that would allow non-airlines to launch charter operations.

Non-existent market

The only country in north Asia that already has a Part 135 equivalent is South Korea, but the market for business jet charters there is virtually non-existent. Manufacturers and operators say South Korean corporations have not yet accepted the concept of business aviation and believe it looks bad to charter a jet. “It has more to do with politics of ownership than anything else. It’s considered to be extravagant,” says the Asian-based sales executive.

“My impression is people here don’t understand aviation. They think aviation is only a luxurious good,” says Korea Business Air Services (KBAS) president Sudong Lim. “The registration itself is not a big issue. Cost-wise it’s reasonable and there is no import tax for aircraft.”

KBAS expects to receive a Part 135 certificate from the South Korean ministry of construction and transportation in March, which it will use to offer charters, initially with a Cessna 206 it acquired last year. KBAS has also ordered a twin-engined turboprop for delivery late this year and aims to operate business jets when the local charter market matures.

Korean Air is now the only company offering VIP charters with a locally registered business jet, but its Gulfstream IV is primarily used by the chairman. Global Wings and China’s largest business jet operator, Deer Jet, have also tried unsuccessfully to market charter services in South Korea. Lim says most of the business jet flights in South Korea – KBAS handles 200-300 business aircraft a year at its FBOs at Seoul’s Gimpo and Incheon airports – are US- or European-registered aircraft chartered by international corporations and, in some cases, the overseas offices of South Korean companies, but never their local offices.

“I continuously educate the people here on the value of general aviation,” Lim says. “[Korean companies] don’t know what to do and how to use an aircraft.”

Business aviation awareness is a problem in all Asian countries, but manufacturers and operators are confident it can be overcome through marketing campaigns. Government restrictions cannot be overcome so easily, but are gradually being lifted.

“More and more countries will be more accommodating to business aviation and will become more business aviation friendly,” says Executive Jets Asia (EJA) director Prithpal Singh. “It’s got to come. We’re the pioneers.”

EJA plans to launch a Singapore-based charter service this month, with a wet-leased Learjet 35, and introduce Asia’s first fractional ownership product later this year. Singh says South-East Asian nations such as Indonesia, Malaysia, Singapore and Thailand are “more off the mark” and less restrictive than their counterparts in north-east Asia. EJA plans to hire operators in several Asian countries to get around local restrictions.

“Asia is complicated with every country having its own rules and regulations,” Singh says. “It’s not like the USA where you can get an AOC and have access to a huge market. The approach here is to be nimble and flexible.”

Restrictions throughout the region are being lifted, but the pace is slow. Even with pioneers such as China and Taiwan, the reform process has been plagued by delay. In China, manufacturers still complain about a hefty import tax imposed on business jets, limited airport access and the military’s refusal to open up more airspace to general aviation. “There’s still a lot of ground to cover in China,” says an Asian-based executive of another major manufacturer. “Infrastructure impediments continue to dog the industry in this region big time. It’s very frustrating.”

In Taiwan, new business aviation regulations were initially set to be drafted and implemented in 2004, but they have been delayed several times and have been sitting in the legislature awaiting approval since the middle of last year.

“They are not questioning it. The legislature is not adding or amending it. It’s just a legal process,” Sunrise’s Kao says, adding the approval process could take another year.

“Business aviation is just not a priority for Taiwan. It’s not a first priority for Taiwan’s CAA. We’re pressing the CAA as hard as we can,” he says.

“Just the fact they are working on something is good,” says Habeck. “In Japan there is no change. There’s not a burning desire to bring in corporate aviation.”

There have been some improvements in Japan with new business aviation-friendly airports opening and some noise restrictions easing. In 2004, Japan also reduced the notice requirement for foreign-operated business aircraft landings from 10 to three days. “I think the situation is gradually improving, but not fast,” says Nakatani.


Source: Flight International