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May 10, 2013

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China's private jet market ready to take off

ONCE upon a time, traveling by private jet in China was the privilege of only a select few. It's still in the luxury realm for the wealthy, but as their ranks swell, so too does the private jet market.

Nancy Luo, who works in the finance sector in Shanghai, has just returned with her son from an elite university tour in the United States. The eight-day trip in March, which included a private jet from Washington to Boston, cost Luo about 180,000 yuan (US$29,031).

"The private jet part was the biggest attraction for me," said Luo, who took the tour to give her high school-age son a peek at the overseas studies she wants him to pursue. "It was really a high-end experience, with super service, comfort and convenience. It was just like what I have seen on TV."

Luo was so enthralled that she plans to suggest that her company use charter jet trips to impress potential clients. She said she is also considering using them when friends want to celebrate special occasions.

It's all a bit of a new concept in China but one that excites the industry.

That was the buzz at the Asian Business Aviation Conference and Exhibition, China's premier private jet show, held in mid-April at the Shanghai Hawker Pacific Business Aviation Center.

Low-altitude airspace

The number of privately owned jets registered in China has increased from 28 in 2007 to 166 at the end of last year. The pace of growth is expected to explode when regulators relax restrictions on the use of low-altitude airspace across the country.

China's "super-rich," those worth 100 million yuan or more, are now estimated to number 63,500, according to the Hurun Wealth report. Many of the wealthy are only too happy to splash out cash on very expensive toys. China is expected to surpass the US and become the world's largest market for private aircraft in the next decade.

The domestic market now is dominated by big foreign brands, such as Cessna, Bombardier, Hawker Beechcraft, Gulfstream, Dassault Falcon and Embraer, but Chinese aviation companies are eager to enter. The Aviation Industry Corp of China bought out US private jet manufacturer Cirrus in 2011.

Those who work in the charter side of the market also see great potential in organizing private jet tours.

"The private jet market in the US is very different from China's," said Karen Lo, marketing director of Private Jet Journeys, which designs luxury travel and private jet services for Asia's most discerning travelers.

Many Chinese people who buy or charter private jets are just trying to show off, she said. "They seldom ask about the age of the jet or its record," she explained. "They just look for the biggest, the newest and the best."

By contrast, Americans or Europeans who use private jets are more motivated by travel convenience, she said.

Growth at present is constrained by government regulations.

"Limited flight schedules due to air traffic control and the lack of infrastructure are the main problems," said Shi Boli, the head of the transport department at the China Civil Aviation Administration.

Prices for chartering jets vary.

A private jet can usually accommodate five to 18 people, with restaurant, bar and conference facilities available. For private jets at the highest tier, the cost can be up to 180,000 yuan per hour.

A private jet tour scheduled in July to explore America's cowboy culture will cost each participant US$25,000. Lo said six people have signed up so far.

Last year a tour that involved getting to play some golf with world No. 1 Tiger Woods in Kuala Lumpur cost each participant about US$40,000. A 12-day private jet trip to Europe starts at 500,000 yuan, with the promise that participants will be rubbing shoulders with nobility and celebrities in London and Paris.

Walking the red carpet

There are also tours that give participants the privilege of walking the red carpet in Hollywood, with photographers in tow to simulate a star-studded night on the town.

About 100 individuals on the Chinese mainland, mainly business owners, have private jets, while 3,000 others, usually corporate executives, often travel by chartered planes, officials said on the sidelines of the recent three-day exhibition in Shanghai.

The industry, both sales and charters, draws its clients mainly from high-end clubs, large corporations, financial institutions, investment companies and educational institutes, Lo said.

Lo's company is not alone in trying to tap the potential of upper echelon air travel. There are now at least 20 players, big and small, offering private jet services. Most of them have entered the market over the last two years.

"It is a huge market, and all of us are waiting for an early relaxation of air traffic control restrictions on private jets," she said.

However, people should be careful while choosing private jet operators, said Irishman Mark Byrne, CEO of Highlife Asia, an event management and concierge services company.

"Some local operators don't offer full customer service and aircraft choice," said Byrne, who still reels at the thought of a private jet trip he once took with an unqualified Chinese operator.

He said some mainland operators may take up to a week to get back to you with a quote and full flight information, compared with 24 to 40 hours for Western companies.

Still, he added, the convenience of a private jet is hard to beat.

"You can fly on your own time, do things at your own pace and not be chained to someone else's schedule," he said. "Facilities on board are also better than commercial aircraft."

The Shanghai Tourism Bureau said it doesn't monitor the private jet market because it's so small and high-end.

"The market has a bright future and good development potential, but that will require time," said He Yiwei, deputy general manager of Shanghai Datong Travel Agency Co. "The rich may not have the time and capability to plan tailor-made tours, but travel agencies haven't quite reached that level where they can step in to serve them."

Liu Xin, deputy general manager of the Shanghai China CYTS Outbound Travel Service Co, said her agency has started exploring the idea of offering customer-tailored tours, themed around golf, concerts or health-related concepts. But so far, she said, no one has asked about private jet charters.

"It will take a long time for Chinese people to embrace new concepts of travel, but it may be a future trend," she added.

For now, it's just a dream beyond the reach of most.

"It is way too expensive - several times a whole year's savings for me - and common people can't afford it," said Shanghai resident Xia Qing, an advertising company employee.


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