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Economy

Business jet sector hit by headwinds(2)

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2015-05-04 09:38China Daily Editor: Si Huan

There are currently 155 Gulfstream aircraft in China, Burns said, with a further 23 being purchased by Chinese customers in 2014. Business insiders, including aircraft manufacturers, operators and distributors, said that the market decline was due to the central government's ongoing anti-corruption campaign and China's slowing pace of GDP growth.

"It is without doubt that the market is slowing down," said Fernando Grau, director of marketing and product strategy of Embraer China's executive jets department, the manufacturer of the Legacy 600/650 and the Lineage 1000.

Policy and economic growth changes in China have not just led to a market decline, but have also affected clients' choices of business jets.

Chinese clients previously had a preference for long-range corporate jets with large cabins, but they are now turning to small and medium-sized jets.

A businessman surnamed Zhou from Shandong province visited the ABECE on April 14. He said he plans to purchase a small corporate jet for business purposes.

Zhou, who is in the real estate industry, said airline flights do not suit his busy work schedule and business jet may provide the solution for him.

"I need an affordable jet to meet my basic requirements," he said.

Small-sized business jets accounted for 30 percent of the planes on display at this year's ABECE, up from just 15 percent in the previous two years.

As the market and clients become increasingly sophisticated, they will choose small and medium-sized airplanes, which are more functional for them, said Guan Dongyuan, senior vice-president of Embraer SA.

Most business jet owners in China do not understand the airplane or business aviation industry, Guan said, and they are unclear about what type of plane would be the most appropriate for them.

In the next one or two years, people will correct their misunderstanding about business jets, seeing them more as a convenient transportation tool for businesspeople rather than luxury item, he said.

Scott Neal, senior vice-president of sales and marketing of Gulfstream, said that this was the trend in China, as four of its medium-sized G280s were delivered to the nation in 2014.

International airplane manufacturers remain cautiously optimistic about the Chinese market, as the nation's 7 percent annual GDP growth remains very robust by global standards.

"The main driver of the aviation market, both in terms of commercial and business aviation, is economic growth," said David Velupillai, marketing director of Airbus Corporate Jets.

Policy changes may affect the market in the short term, but the long-term prospects remain rosy, he said.

About 20 Airbus Corporate jets are flying in China at present, and all of which were delivered after 2007.

Government, individuals and corporations equally share the ACJ fleet in China, he said.

"We expect to be more successful in the market in the next 15 years," said Velupillai.

Mark Burns from Gulfstream also said the market decline also happened in the US after 2008 and it is a cyclical occurance.

"It will take time for people to understand how important business jets are," said Burns, "and we are going to see growth in China with business jets."

However, compared with manufacturers which do business all over the world, business jet operators focusing on China's market suffered more in recent years.

"Last year was flat," said Zhang Peng, president of Deer Jet Co Ltd, the largest business jet operator in China in term of fleet.

Deer Jet's fleet reached 70 in 2014 from 67 in 2013, while 10 jets were added into its fleet from 2012 to 2013.

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