China: The battleground for luxury private jets
At a time of global economic uncertainty and European financial gloom, the Chinese luxury market has not only withstood the pressure of a slow-recovering economy, but is seeing increasing demands and astonishing buying power for luxury goods. Reports speculate that China will lead the global luxury consumer market by 2015.
China’s rapid economy development in recent years has seen the Chinese property market soared and the nation’s resource industry has also expanded significantly – the effect of wealth accumulation is pronounced and has greatly stimulated the consumption of luxury goods. Luxury goods are no longer just Made in China, it is also now Made for China.
In the luxury goods arena, private aviation is a hot topic and the new symbol of wealth. In Bombardier’s annual report, the renowned private jet manufacturer revealed that the Chinese market was very active in private jet acquisition in 2012.
For a culture that delights in extravagances and gaining ‘face’ (a Chinese concept; Chinese are very concern about losing face as it means losing the respect of others), Fiona Zhi, Chapman Freeborn’s charter specialist based in China, shares that indeed the Chinese look at private jets as more than a transport machine:
“Private jets have become a status symbol – at present, the Chinese’s top favourites are heavy jets such as Global 6000, Falcon 7X, Gulfstream 550 and Gulfstream 650. The Gulfstream 650 may be highly-priced, but already there are Chinese consumers placing orders for the luxurious jet.”
Fiona further commented on Gulfstream’s position in the Chinese market:
“In comparison with other private jet manufacturers, Gulfstream is well positioned in the Chinese market – its scarcity marketing strategy has successfully increased the interest for Gulfstream aircraft. As a result, most aircraft management companies’ fleets are dominated by Gulfstream jets; hence Gulfstream private jet users are able to benefit from optimum management expertise and support.”
Fiona shares that similar to chartering an aircraft, buying private jets calls the need for professional air charter brokers like Chapman Freeborn to provide neutral and objective advice to aid clients in making the best decision.
“Unlike European business jet consumers, the Chinese counterparts tend to show preference for packaged solution and one-stop-service. We (charter brokers) play a critical role in sourcing the most suitable aircraft model, aircraft management company, and even selecting the best financial solutions for the client – all in all, we play a pivotal role in client’s decision making process,” says Fiona.
On a different note, the used jet market is increasingly popular and cannot be overlooked – the price of used Airbus 318, Boeing BBJ and bigger business jets with flight records within the range of 100 to 200 hours is comparable to the price of the new Gulfstream G650.
As of April this year, official statistics has shown that China had 15 business aviation enterprises and a total of 166 registered private jets; the number of jets take-offs and landing have reached 11,810. In contrast with the European countries, the management fees for private jet movements are higher – as such, the natural operation cost advantage of small private jet cannot be reflected. Thus, Fiona is confident that China’s private jet market in the next few years will show a continued preference for larger cabin and longer range luxury jets.
Image: The Bombardier Global 6000 (formerly marketed as the Global XRS) is a popular private jet type in China. The aircraft has superb short-field capabilities, but is also designed for 12-hour-plus intercontinental flights.