If you’re an aviation professional or enthusiast you can’t help to be excited about China’s direction in aviation and all the opportunities that come with it. If you’ve been following China’s aviation industry you’ve heard about the massive investments in aviation infrastructure, reform and opening up of airspace and routes, and the very strong growth forecasts for selling planes and all other aviation-connected products and services. After all, China has already climbed to becoming the world’s second most lucrative market for aircraft sales. Why wouldn’t you be excited!?
Well, herein enters that “P” word. That’s right. Politics. Business aviation in China is facing some significant resistance due to the current international and Chinese domestic political context despite all the warranted hype surrounding aviation growth opportunities in China.
Some good insight comes from Aviation Week’s Check 6 Podcast interview of Kevin Michaels from ICF International back in May. Kevin provided a very frank and honest assessment of where things seem to be at in the Chinese business aviation sector. Here is a summary of the problems he highlighted:
- Infrastructure: Although a lot of airports are being built, many of those new airports are being constructed away from main business/economic/population centers.
- Airspace liberalization: The only major reform and opening of airspace for general aviation use has been at 1,000 meters and below. That doesn’t help business jets which need to cruise at much higher altitudes.
- Politics: The ongoing anti-corruption campaign has had a negative effect on business aviation since officials and business elites (business aviation customers) are the aim of the crackdown. In other words, nobody wants to become a target by looking like they’re basking in lavishness.
Because of all this Kevin forecasted that China won’t overtake the U.S. as the number one market for business aviation for several decades. On a separate note as recently reported by Wall Street Journal, global political dynamics such as sanctions on Russia, economic problems in Brazil, the Ebola outbreak in Africa and the rise of ISIS in the Middle-East combined with China’s anti-corruption crusades seem to be combining to act as a drag on the global business aviation industry. For a market that was finally starting to rebound from the global recession, these new challenges threaten to delay the rebound even longer.
That all said, Kevin himself admits that there still exists a “reasonably healthy stream of deliveries” to China and suggests that while the issues of today are going to delay China’s momentum in the industry for the short-term, the long-term outlook still looks lucrative. Steve Taylor of Boeing Business Jets admitted there are challenges but pointed out that there are challenges everywhere and noted they received 10 orders this year globally compared to four last year.
Its a positive sign that aircraft sales in China still look “reasonably healthy” even in the midst of anti-corruption campaigning. It could mean there is a degree of pragmatism in the minds and attitudes of Chinese government officials and business elites when they think about business jet purchasing and usage. Or it could be a sign that business aviation customers in China have reason to believe that the anti-corruption campaign issues and complications are temporary and there will be a more normal atmosphere eventually.
Regardless of how correct one prediction or explanation might be over another, the one issue that truly matters in this discussion is how well the business aviation community is able to communicate the value, efficiency, productivity and other utilities that business aircraft ownership brings to a company, government agency, or other organization. Too often business jets are seen as luxuries instead of tools of trade; not just in China, but everywhere. However China is unique since there is very little domestic experience with using business jets as they were intended to be used. Much of the market has revolved around purchases by high-wealth individuals and other customers making statements of status, but as the market in China matures that will transition more and more to purchases made for the purpose of furthering productivity and business. There is still very little history and experience domestically in China with using business jet aircraft in the way they were intended to be used for furthering business and increasing competitiveness. Additionally the aviation infrastructure and airspace is in China makes it difficult to use business jets the way they were intended to be used.
Government officials and other influential persons in China need to see the positives in business aircraft usage that result in higher productivity, increased Chinese competitiveness, and increased GDP growth. Unfortunately a connection seems to be made in China (and everywhere else for that matter) that a business jet equals lavishness. So the real problem is not necessarily that there is an anti-corruption campaign going on in China. The problem is that the purchase or usage of a business aircraft is easily construed as corrupt. Of course this is not a situation unique only to China, but the anti-corruption campaign exacerbates the misconceptions. The industry would always do well to make a focused effort in educating officials and other leaders in China about how business aviation advances the Chinese agenda, but in times like this it seems all the more important.
