Anti-graft drive clips wings of private jets

One third of Chinese businessmen are expected to have withdrawn their private jet orders this year, reported Chongqing Youth Daily on Thursday quoting industry insider, as the nation steps up its anti-corruption drive.

Only 29 percent of Chinese wealthiest say they have procurement plan this year, compared to 42 percent in 2013, a recent survey by US aircraft service provider Honeywell shows.

"Sales of business aircrafts and yachts will decline this year, in part due to the anti-corruption probe and the slowing down of the economy," said an industry sales representative to chinadaily.com.cn, adding that the major demands are driven by institutional buyers.

"Billionaires whose companies are preparing a listing or have accounting problems are withholding their purchase plan."

The controversial public figure Zhao Benshan has something to do with the cool-down, according to the Daily, as he once asked how to return the 17-seat aircraft he ordered at 200 million yuan.

An industry insider told the Daily that about one third of the 88 business jet and helicopter orders made at an aviation exhibition in Shanghai are expected to have been cancelled. Sichuan BRC Group resold its $55 million corporate aircraft by slashing $7 million, while a Guangxi firm resold its $30 million plane by cutting down $10 million.

"To withdraw a business aircraft order, buyers need to pay a maximum fine of 15 percent of the contract price, as the cost for producing a customized plane is high," said Liao Xuefeng, CEO of China Business Aviation Group to the Daily.

He added that the growth of corporate aircraft sales in China has been slowing down, but the market is still with great potential, given the small market base, wealth companies have accumulated and the demand.