In late March, Threshold Aviation Group hosted the first U.S. China General Aviation Business Conference. The first day’s meetings were held at a hotel in Brea and on the second day everyone attended an aviation expo held in the Threshold hangar at Chino Airport, followed by a dinner at the Planes of Fame Air Museum.

Before the two-day conference, the Chinese visitors were invited to take a tour of California's aviation highlights, such as local airports, the Rosamond Sky Park live-in airport community near Mojave and the Los Angeles County Airshow at William J. Fox Airfield in Lancaster. The genesis of the conference is Threshold Aviation’s work to help Chinese companies build general aviation (GA) businesses in China. While airspace restrictions and lack of GA infrastructure are holding back development, there are also tremendous opportunities for GA in China. 

“This is a first opportunity for U.S.-based companies to meet the people in China who are responsible to a great extent [for fostering] the aviation business in China,” said Dr. Yuanyang Gao, director of the General Aviation Industry Research Center at Beijing University of Aeronautics and Astronautics and also deputy secretary general of AOPA China. “And it represents an opportunity for U.S. companies to share their expertise in an area that is new to China—general aviation.” 

“There is huge pent-up demand for GA in China,” said Bradley Harker, commercial officer for the Foreign Commercial Service Section at the U.S. Embassy in China, “but the question is how quickly. When China decides to put its mind to something, it can absolutely grow.”

Harker noted that in terms of land mass, China is about the same size as the continental U.S. In GA terms, the U.S. far outstrips China, with 200,000 aircraft, 20,000 airports and 600 Part 141 flight schools. In China there are 2,500 GA aircraft, 300 GA airports and 20 flight schools, according to Harker. 

GA is limited in China because the government is focused on specific tasks and not leisure activities, he explained. “But the regulations are changing.” Currently about 70 percent of the country’s airspace is controlled by the military and inaccessible by GA. In some pilot cities, GA operators are allowed to fly below 3,000 feet, and the goal is to expand that to 9,000 feet in 2020. “This is the key,” he said. “If I fly GA in China, I need to fly higher than 3,000 feet.

“GA is currently being mentioned much more frequently by the government,” he added. The country’s 13th five-year plan anticipates GA functions such as emergency services, business aviation and GA clusters where businesses can focus on GA activities. “The state council has said that GA is vital to China economic development and that it will be the engine of growth in China,” he said.

Harker encourages companies interested in developing GA in China to work with his office. The slow pace of change, the lack of airports, staff shortages and high business costs in China actually bode well for GA in the U.S., Harker said, because Chinese GA enthusiasts will come to the U.S. to buy GA products and learn to fly.

Impressive Progress

International business attorney John Tulac believes that China has made “impressive progress. The potential for airports to unite a large country like China is virtually unlimited.” But there remain barriers, and China needs to address three key obstacles ifa GA industry is to grow and thrive.

The first is energy. “Airplanes don’t fly without fuel,” he said. The country needs to boost refining capability or import more fuel, yet, he added, “distribution of jet fuel is strictly controlled. Building a reliable framework for distributing fuel is an absolute necessity. This is an opportunity for companies with expertise in supply chain management.”

Education is critical. “No country or any sector develops without a well trained workforce,” Tulac said. China needs not only pilots but air traffic controllers, mechanics, administrators, insurance experts and more. “This is an opportunity for companies to be of assistance,” he said. “They may outsource this to training centers in the U.S., but that’s expensive in the long term.”

Finally, he said, “GA will not grow and thrive in China unless it’s supported by the rule of law accompanied by transparency. How airspace is handled between the civil and military must be described by rule of law. Also, infrastructure must be well defined by rule of law. The regulatory framework to provide details of how rule of law is carved out is critical.

“If we have these three [energy, education and rule of law], we will see the GA industry in China develop and thrive in the coming years,” he concluded.

Frustrating Setbacks

“China is rich with opportunity and exiting new talent,” said Doug Carr, NBAA vice president of regulatory and international affairs. “But there is a fundamental challenge between thriving GA in China and where we are today.” 

One example of this are the restrictions on business aviation at China’s commercial airports, but more recently, authorities at Shanghai’s Hongqiao International Airport decided to limit business aviation movements to short times, from 6 to 7 a.m. and 10 p.m. to midnight, and place limits on how long they can park. This was a result of a separation incident between two airliners in January, but business aviation was the sector punished as a result, with movements slowing from an average of 25 per day to just a handful. 

“Hongqiao is designed to serve business aviation,” Carr said, “but customers are struggling to get in there. Airports are scarce and valuable resources. The investments China is making are exciting, but we need runways to support business aviation. Our ability to integrate with airliners should not be a discriminator.”

Carr is encouraged by the 13th five-year plan’s focus on GA and plans to build several hundred new airports, but this won’t help if there isn’t more cooperation between the military and civil authorities on airspace and GA activity. There are also regulatory impediments, he said. “Stable regulations and a supportive foundation create an opportunity to work together.” 

During the conference, Rick Cunliffe, founder and former CEO of Discovery Aviation, announced that the company is for sale. The manufacturer of the Discovery XL-2 training airplane, headquartered in Melbourne, Fla., should be an attractive opportunity for a Chinese company, according to Cunliffe, as it carries a far lower cost of entry for a Chinese buyer compared to trying to mount a new aircraft manufacturing effort. “This is a quick and much more rewarding way to do it,” he said. The XL-2 comes with a revenue base, global certifications and is a proven product, he added. And trainers are desperately needed in China. “I like training airplanes. They’re not sexy and not fast, but they make money.”

Although the organizers didn’t specifically mention Discovery Aviation, after the forum they reported that “two NDA/MOUs were signed for the sale of an aircraft manufacturing company” as a result of the event. The forum also spawned offers for a U.S. company to send teams to perform at Chinese airshows this summer; a possible deal for a U.S. company to manufacture “aircraft-related items for sale in China”; and the opportunity for a U.S. aviation memorabilia company—presumably warbird nose art specialist Victory Girl, which was one of the forum exhibitors—to supply a Chinese firm that will sell its products in China.

“Threshold Aviation Group was pleased to host this important event,” said Threshold founder and CEO Mark DiLullo, “and the fact that so many deals are in the works from the introductions to the Chinese people in aviation makes this event a success in my book. We are looking forward to building on the success of this event again next year.”