Paul Lewis/SINGAPORE
The concept of business aviation in Asia has been for many years a bit of a misnomer. A combination of infrastructural shortcomings, official hostility and user ignorance conspired to constrain severely the development of the executive aircraft market. Despite recent economic difficulties, there are encouraging indications that this moribund state of affairs is slowly changing.
Asia has a massive gap to close on that of North America or Europe in terms of aircraft ownership. The region accounts for only around 3% of the nearly 9,000 business aircraft operated in the world today. The combined number of Bombardier Canadair aircraft and Learjets, Dassault Falcon Jets and Gulfstreams of all types from Australia to Japan totals only about 200.
Moreover, a good proportion of these sales has been to government agencies for mundane tasks such as flight calibration and target towing. For years, privately owned aircraft were afforded an almost pariah-like status by many Asian regulatory authorities. Business aircraft were either banned outright, or severely curtailed by restrictions on runway slots, apron parking and flightplan approvals.
AIRPORT ADVANCES
The construction and opening of new Asian airports is arguably the biggest single factor now bringing about changes in local aviation thinking. In recent months, Hong Kong's Chek Lap Kok and Kuala Lumpur's Sepang airports have both come on line and will be followed by a new Seoul gateway at Inchon in 2001. With a corresponding drop-off in airline traffic, airport authorities no longer view business jets as runway cholesterol, but rather as a welcome new revenue stream.
This volte face is perhaps best symbolised by the appointment of former Hong Kong Civil Aviation Department (CAD) director Peter Lok as the new chief executive of the Business Aviation Centre at Chek Lap Kok. He recalls: "Priority always had to be given to airlines in terms of air traffic control and parking slots and, knowing how short these were at Kai Tak, business aviation always got squeezed out."
As a result of long-standing complaints about Kai Tak and moves elsewhere in Asia to open up airport access, the CAD proposed to the new Hong Kong Airport Authority (HKAA) in 1995 that provision be made at Chek Lap Kok for a separate business aviation centre and ramp. "There is no reason why we should lose out to, say, Singapore, when we think we're in a more favourable geographic position," contends Lok.
Some HK$70 million ($9 million) has been invested in the Business Aviation Centre by a consortium comprising AMR, China Southern Airlines, the Kadoorie Group, Sun Hung Kai, and various individual backers. Its facilities, due for completion by December, include a two-floor executive terminal building and a hangar large enough to accommodate two Gulfstream GVs and two smaller jets, or six mid-sized aircraft. A second hangar is planned.
Aside from parking and hangar space, other available services include line maintenance, contracted out to either Hong Kong Aircraft Engineering or Pan Asia Aviation Services, and full immigration and customs clearance. "We're a little different from fixed-base operators [FBOs] in the USA, because every flight is an international flight, even after the 1997 handover to China," explains Lok.
Airport user charges, although lower than for commercial passenger aircraft, remain a bone of contention with the HKAA, which has set a flat landing rate of HK$2,600 up to a maximum take-off weight of 20t and HK$74/t thereafter. For a Gulfstream IV, this translates into a levy of HK$3,562, plus HK$350 per 6h parking slot. This clearly puts at a disadvantage lighter types such as the 11t-class Hawker 700 operated by incumbent charter operator Metrojet, which has been "screaming blue murder."
The HKAA argues that its pricing puts Chek Lap Kok in "about the middle of more than 20 major airports with business aviation facilities". By comparison, Singapore's Changi International Airport charges a landing fee of S$202 ($120) for a Canadair Challenger 601-sized jet, plus S$49 for a 24h parking slot, exclusive of handling. Costs at the nearby smaller Seletar Airfield, home to FBO and maintenance company Jet Aviation and charter operator Global Aviation, are about half as cheap again.
Hong Kong, however, represents a bargain when compared to business aviation charges in north-east Asia. Use of facilities in Japan can cost as much as $5,000, while Chinese airports can be a "law unto themselves," observes one disgruntled operator. He gives as a recent example a series of unexplained and seemingly arbitrary charges that accounted for some 70% of the $15,000 price of a recent Learjet medical evacuation flight to Beijing via Guangzhou.
Unreasonable as this may appear, what is arguably more significant is that China is finally opening its door to business aviation - albeit at a price. Officially, it can take up to 15 working days to process a flightplan application, but in reality, this has been cut to two to three days - or even a few hours - depending on the financial and political clout of the individual wanting to go.
"It depends on the visitor and the purpose of the trip," explains Mylene Scholnick, managing director of Kadoorie-owned Metrojet, which has been operating ad hoc charter and medical evacuation flights into China since 1995. "A flightplan to Beijing is easy-you can get a permit in a day, but if you're Mr Nobody and want to go to a remote part of China, you won't get very far," she adds.
CHARTER START-UPS
In neighbouring Macau, gambling magnate Stanley Ho has founded Jet Asia to operate charter flights into China, using a Challenger 601-3R, which will soon be joined by a new Raytheon Hawker 800XP. A second Ho-owned helicopter firm, East Asia Airlines, has also announced plans to link with Heli Hong Kong to operate charter flights around southern China's economic powerhouse, the Pearl River Delta.
The concept of business flying has also begun to take hold in mainland China itself, with Hainan Airlines launching the country's first charter service in late 1995. Based at Beijing Capital International Airport, DeerJet has a single Learjet 60 and a 55 available for hire at an hourly rate of ´29,000 ($3,600) and ´22,000, respectively. It has been operating internationally since January and recently added a Raytheon Beechjet 400 to its fleet.
In late 1997, Broad Air Conditioning became the first private Chinese company to operate its own aircraft when it took delivery of a Cessna CitationJet. The aircraft is operated domestically in conjunction with state-run China General Aviation, which supplies crews and technical support.
It has not been entirely smooth sailing for everyone in China, however. Dassault and China Xinhua Airlines' planned FBO joint venture, Oriental Falcon Jet Services, has for now fallen prey to politics. "Our long-term strategy of market penetration in China has not been abandoned, neither has a vehicle to action it been abandoned," insists Jeff Habib, Falcon Jet North Asian sales director.
One noticeable area where Asia has lagged behind the rest of the world is the concept of either shared or fractional ownership. While in recent years Indonesia, Malaysia and the Philippines have displayed a growing potential as business aviation markets, private aircraft sales to date have generally been to high net-worth individuals who have neither the inclination nor the need to want to share.
"Co-ownership won't work here. Asians don't think that way," contends Fred Baudzus, chief executive of Singapore-based Global Aviation. "In the USA, where it is used as a business tool, it works. Here you have Tan Sris, who won't want to share with Datos. They instead wake up and say they want an aircraft and want it now."
HEALTHY BAROMETER
Others take the opposite view, pointing to the growing number of Asian-based charter operators and FBOs as a healthy barometer of rising interest in business aviation. They contend the next logical transition for the region would be towards a shared ownership scheme and, eventually, fractional ownership. While both Bombardier and Dassault report interest in the concept, it is clear that the critical mass required to make it viable is not yet there.
"You need such a large core fleet to make a fractional ownership scheme work properly and to give reasonable guarantees of how quickly the aircraft is going to be available. You can't start with one or two aircraft. There is certainly the interest in starting one, but whether it will be achieved in the near future or not I don't know," says George Laforme, Bombardier regional vice-president.
The answer clearly hinges on the timing and speed of an eventual economic turnaround in Asia. The financial crash has hit the business aviation market over the past 12 months, particularly in South-East Asia, Hong Kong and South Korea, where the downturn has been the most acute. From Malaysia, there has been an outflow of Challengers, Falcon Jets and Gulfstreams, while charter operators such as Global and Metrojet have seen their flying hours considerably reduced.
Asian owners have been quick to try and take advantage of a robust US secondhand market to dispose of aircraft, although new sales remain largely unaffected, claim some manufacturers. Typically, operators have no sooner sold existing aircraft to meet immediate cash needs than they are placing new orders for replacement jets, hedging on an economic recovery in time for deliveries in one to two years.
"There has been a net contraction in the number of operators, particularly in the large jet segment," concedes Laforme. He adds, however: "We're still selling substantial numbers of jets in Asia, as we speak. This year I would have been happy with anything, but if it ends as it has started, it would be a very good year."
Source: Flight International
