Last November’s Airshow China in Zhuhai proved both illuminating and encouraging to those who eagerly anticipate the long-awaited emergence of business and general aviation in the People’s Republic. Because, despite all the fuss about China’s potential, the hard data paints the real picture of a sector of aviation that has just barely begun to taxi from the stand.
Business and general aviation contribute woefully little to the Chinese economy. In 2007 general aviation as a whole contributed only 0.001 percent to the country’s GDP and employed just 7,000 people. By contrast, business aviation contributes more than $150 billion to the U.S. economy every year and provides over 1.2 million high-wage, stable jobs. There are still only around 900 privately registered aircraft in this vast country, including 125 helicopters, and around 75 aircraft operators. Compare that with Australia, which has 10 times as many airplanes serving a population one-fiftieth of China’s.
The International General Aviation Forum (IGAF) that took place during the Zhuhai show was exceptionally well attended and involved some heavy hitters. The caliber of people on or around the podium was testimony to just how seriously China is taking business aviation now. Luminaries included the vice chairman of the Guangdong People’s Government, Lin Zuoming; the president of Avic General Aviation aircraft company, Meng Xingkai; the president of the Civil Aviation University of China, Wu Tong Shui; and Dr. Jackson Ho from the Hong Kong Aviation Industry Association.
More Access for GA
IGAF addressed the many obstacles to building business aviation in China with promises that change is afoot. Interestingly, there were signs of a new blossoming aeronautical relationship between China and North America. Zhuhai vice mayor Liu Xiaolong opened proceedings by praising the U.S.
“We should learn from what our colleagues in the U.S. are doing and look at the contribution business aviation is making to the economy there,” he said. Liu urged delegates to promote the sector, pointing out that in developed economies private aviation is a key market driver.
According to Du Qiang, vice director of China’s State Air Traffic Control Commission, business aviation has become one of the government’s main priorities. Du orchestrated the recent big move forward in developing business aviation in the country through the relaxation in lower-altitude airspace restrictions. “This is an important first step in developing general aviation in China,” he asserted.
Evidently, China has recognized an urgent need to open up low-altitude airspace. Some 85 percent of the country’s airspace is under military control, and divided into Class A, B, C and D, all of which are tightly controlled. There is limited access to these areas and a lack of air traffic management services. However, later this year the army will open lower altitudes for GA traffic. This will result in three separate zones: areas remaining under full control, areas under surveillance and areas that can be used freely by operators who file flight plans in advance. For aircraft operators, this is a huge step forward from the current requirement to request permits three days ahead of time.
The most immediate beneficiaries are likely to be the helicopter manufacturers and charter companies. This will please the likes of Xu Jiaqing, deputy general manager of Shanghai Sikorsky Aircraft, who spoke out last year against the “three major bottlenecks for China GA development, two of which are ATC and civil aviation regulations, as well as lack of infrastructure and lack of aviation talent.”
The Lower Altitude Airspace Access pilot program will be launched at the end of the year in Changchun, Guangzhou, Shenyang, Zhuhai and Xinjiang and expand nationwide by 2015, with low-altitude airspace to be opened in the country’s five aviation control areas, including Beijing and Lanzhou.
Manufacturing
Another area that needs attention is China’s light aircraft manufacturing industry, which is at an embryonic stage, with companies struggling to break even. Zhuhai vice mayor Liu addressed this issue, pledging to make Zhuhai an aeronautical center of excellence, with government development money going into the new China Aviation Industry Corporation General Aircraft (Avic) light aircraft factory in the region. “We intend to encourage people to come and build business here and make Zhuhai a real aviation hub,” he said.
Both Avic president Lin Zuomin and Li Jian, the deputy administrator of the Civil Aviation Authority of China, echoed Liu’s statements. A homegrown manufacturing sector would be a boon for China, since imported aircraft still rely heavily on overseas support for major repairs.
There was tacit acknowledgement that there is still a lot of work to do. “The current development level of general aviation is unable to keep pace with China’s social and economic development needs,” said CAAC deputy administrator Li. “GA has tremendous development potential and the outlook is bright. GA can make a significant economic contribution and generate sizeable employment for China.”
Sino-U.S. Cooperation
The CAAC is now actively cooperating with the U.S. to emulate the world’s most user-friendly GA sector. The U.S.-China Aviation Cooperation Program (ACP) recently hired consultants Booz & Company to examine the outlook for China’s GA sector. The resulting report identified several factors constraining its growth, including a restrictive regulatory environment, airspace access and an underdeveloped aviation infrastructure and supply base. Import duties and value added taxes, which are higher for GA aircraft than for commercial aircraft, have also hampered growth.
However, China’s government says it is serious about its business aviation strategy and is to implement a five-year plan (2011-15), covering training, fleet development, airport construction and fuel supply. There are also plans to build more new general aviation airports and airstrips with new standards, plus new training and testing for general aviation pilots and mechanics, and more general aviation flight schools.
The CAAC is also throwing its full weight behind development programs. These include formulating new GA policies and regulations; international exchanges and cooperation, such as with the ACP, and encouraging contributions from industry associations. Crucially, the CAAC has also vowed to simplify the process for establishing a GA operating company, which will benefit both charter companies and flight training schools. It is due to promulgate Part 91 and 135, similar to U.S. operating standards, which will be a shot in the arm for the industry, facilitating flight operations and certification for commercial operators using smaller aircraft.
There are also reviews under way designed to lower operating costs (such as takeoff, landing and handling fees) for GA flights and reduce import duties and value-added taxes on GA aircraft and parts.
Today the shortage of aviation infrastructure is most acute away from the major coastal economic centers, such as Shanghai and Hong Kong. The government is investing more in airports and roads, but it will be years before the effects are thoroughly felt.
David Tang, a London-based aviation attorney with Beijing-based Minsheng Financial Leasing, is confident that China’s growing private sector will chip in, too. “I know of several entrepreneurs in property development who are also interested in building airports where they’re building houses,” he said.
Although the IGAF focused primarily on business aviation, the several flight training schools, aero clubs and light sport aircraft peppering the airshow halls and static park provided another clue that GA is growing. There were many new prototypes of composite light aircraft and gyrocopters on display.
According to Booz, all this means that China’s GA sector could grow at approximately 20 percent annually, generate just over $7 billion worth of annual output, and create 43,000 jobs and a range of indirect benefits. Estimates for projected annual growth of the Chinese GA fleet tend to come in anywhere between 10 and 20 percent, with more than 2,500 aircraft predicted for 2015. A much healthier picture indeed.
