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Private aircraft sales take off

By Li Xiang (China Daily)
Updated: 2009-07-13 08:09

Twenty years ago, the only way Chen Yilong could fly an airplane was if he joined the military and became a pilot.

Today, the 50-year-old real estate executive from Shaanxi province is among a growing number of wealthy Chinese people purchasing private planes.

Chen recently purchased a Cirrus SR22-GTS nicknamed the "BMW in the Sky." It cost him about $735,000.

Chen said he had to follow tedious procedures to receive permission from the government and the military for his airplane, but that it was worth it when his shiny red plane arrived at Beijing's Badaling Airport.

"Owning an airplane and flying it myself are something I've wanted to do for years," Chen said. "So I decided to buy one for fun."

China's low-altitude airspace is tightly controlled by the Chinese Air Force and the Civil Aviation Administration of China (CAAC). But that does not prevent people like Chen from shopping for luxury planes.

Chen made his first fortune in 2002 from his first commercial real estate project in Weinan, Shaanxi province. The property now is worth more than $7.35 million, and Chen's company has total assets of $14.7 million.

Flying and owning an airplane is definitely not a cheap hobby.

Li Linhai (left), a Shanghai-based entrepreneur, gives his helicopter a routine maintenance check, with the help of an assistant. Private airplane sales are increasing in China as wealthy Chinese buyers take up an expensive hobby. [Asianewsphoto]

Flying lessons and a private license can cost about $20,600.

An airplane like Chen's Cirrus SR22-GTS is usually priced at about $600,000.

Maintenance and repair services and gas will add another $45,000 to $73,500 in expenses each year.

Still, increasing demand from wealthy would-be flyers is driving up demand in the private airplane market, and also growing business at private flying clubs.

"Most of our members are middle-aged and elderly successful businessmen who have both the money and the time," said Li Chen, president of Jinggong General Aviation Co Ltd, who operates a private flying club in Beijing.

Li said a $45,000 fee is required to become a member of his club. The cost of flight training is about $730 per flight hour.

"We don't want to train professional pilots. We are looking for people who see flying as a personal hobby and are passionate about it," Li said.

Although private flying clubs only began appearing in China in the past five years, owning private jets is no longer something new among rich Chinese entrepreneurs.

Zhang Yue, president of Broad Air-Conditioning Co, was reportedly the first mainland Chinese businessman to own a private business jet.

In 1996, he bought a Cessna jet and a helicopter for $10.3 million.

Later, Qiu Dedao, an entrepreneur in Hangzhou, Zhejiang province, purchased a plane called "No 1 Premier" from US-based Raytheon for $8 million.

While some insiders believe China can become a huge market for private airplanes, others said the country's aviation sector lags those of the United States and other countries.

General aviation refers to all flights other than military and scheduled airline flights, both private and commercial.

The United States is home to about 220,000 general aviation airplanes, accounting for two- thirds of the world's total.

By comparison, China has about 800 general aviation airplanes, according to statistics from the CAAC.

But insiders expect China's numbers to take off with the new interest in flying as a hobby.

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"A decade ago China only had about 40 private pilot licenses. Now the number has reached about 1,000." said Li, whose company recently sold four Cirrus airplanes.

"It's a very promising industry," he said. "Today's America is tomorrow's China."

But the strict control of low-altitude airspace remains a challenge in the development of private planes and general aviation in China.

Before flying a private aircraft, the pilot has to apply for a flight route and permission from the CAAC and the Air Force at least three days in advance. But the process often takes much longer.

"It is not that there are not enough people who can afford an airplane. Rich people worry that they might just bring home a toy that they'll never get the chance to fly," Li said.

China and the United States are now cooperating closely in the general aviation sector with the creation of the US-China Aviation Cooperation Program.

Through this program, the US government and American industry partners share their expertise with Chinese aviation experts to develop China's general aviation sector.

"China's sky is a valuable resource that remains largely undeveloped, and many foreign airplane manufacturers and aviation companies are now eyeing it," Li said.

China in recent years has loosened control of low-altitude airspace use for private airplanes.

China this year made Guangdong province and the country's northeastern region two experimental sites for opening the use of airspace below 1,000 m.

If successful, it will lead to the gradual opening of low-level airspace to private aircraft throughout the country.

Li said his next step is to expand his Beijing-based business to Zhejiang province, where rich entrepreneurs are concentrated, and to Shaanxi province, where there is a mature aviation manufacturing industry.

"My ultimate goal is to establish China's first mature private airplane enterprise to provide services that include training, sales, registry, maintenance and repairs," Li said.