Valley Aviation Firms Fly to China

Chinese businessmen are beginning to discover the benefits of private jet travel for business purposes, and that’s translating tino opportunity for Valley area aviation companies. China represents the fastest-growing market in general aviation, and therefore, it has become a magnet for U.S. and other foreign aviation businesses ranging from aircraft manufacturers and charter companies to fixed-based operators that sell fuel and handle ground services. Van Nuys-based TWC Aviation recently partnered with Sino Jet, a Hong Kong-based firm that will manage its fleet of VIP charter jets. Anjet, a Westlake Village charter firm, opened an office in Hong Kong earlier this year. And Castle & Cooke Aviation Services, a fixed-base operator in Van Nuys, last month attended the Asian Business Aviation Conference and Exhibition (ABACE) in Shanghai to promote its business to the Chinese business aviation audience. Compared to the mature markets of the U.S. and Europe, the Chinese business aviation market is in its infancy. Its growth is being fueled by a powerful economy, a rising number of wealthy businesspeople and the loosening of airspace restrictions to allow business jets to fly around the country. “I foresee the Hong Kong office overtaking our domestic business and becoming our main year-over-year revenue generator,” said Anthony Newcombe, president and founder of Anjet. “We’re already on an upward trajectory of the scope that will very soon make the Hong Kong office our global flagship office.” Deliveries of business jets dropped in the U.S. and Europe between 2007 and 2011, as the Asia Pacific region experienced an increase during the same period, according to data from the General Aviation Manufacturers Association. In 2007, Asia Pacific deliveries accounted for 4.2 percent of all worldwide shipments. By 2011, that number leaped to 13.5 percent of deliveries to the Asia Pacific region. But while U.S. companies such as TWC Aviation and Anjet have the advantage of being early entrants into China’s growing aviation industry, they also face a host of challenges and setbacks. Among those are cultural and language differences and an infrastructure that’s inadequate to support the burgeoning industry, observers say. TWC – Sino Jet partnership Sino Jet approached TWC about six months ago, seeking a U.S. partner. TWC offers aircraft management, private jet sales and acquisitions and private charter jets worldwide. While the company has managed aircraft in Asia in the past, its alliance with Sino Jet represents its formal entry into the Chinese market. The relationship will have the Valley firm increasing its charter fleet to 66 aircraft from 60 aircraft by the end of the year. TWC starts with a Global Express, an intercontinental business jet, based in Hong Kong. Subsequent aircraft managed by TWC will be based in Hong Kong or mainland China, said Scott Cutshall, director of sales and management services for TWC Aviation. “We do not know the local culture and language, and by partnering with a local firm, that is the best way to be part of the market in its growth stage,” Cutshall said, noting Sino Jet will be marketing its charter and aircraft management services in China Cutshall couldn’t put a dollar figure on how much new business will come TWC’s way from the alliance. “From a branding perspective, it further demonstrates our ability to operate in foreign countries and areas not common to the normal business traveler,” he said. Anjet eyes future Anjet, an on-demand private jet charter company, opened its office in Hong Kong in January, and is developing a group of concierges fluent in English, Cantonese and Mandarin to provide personalized service to clients. Newcombe said the company has plans to expand into Shanghai and other Asian locations, such as Singapore. Shanghai is attractive for its international business scene. With DreamWorks Animation SKG Inc. opening a studio there, Anjet can capture entertainment industry clients, Newcombe said. Singapore, meanwhile, is a hub for flying to Indonesia and outlying islands. “We’d be opening offices and hiring concierges that arrange aircraft, ground transportation, accommodations and special security,” Newcombe said. China’s demographics are the key draw for companies like Anjet. With a population that is six times that of the U.S. or Europe, most new millionaires are coming from the country. Newcombe would not disclose specific dollar amounts he expects to come from the Asian business, but said that market will surpass fourfold the business Anjet does in the U.S. and European markets. “We expect to do that in three to five years,” Newcombe said. The recent ABACE event in Shanghai proved valuable for both Newcombe and Tony Marlow, general manager with Castle & Cooke. Newcombe came away with business leads and is now preparing new travel packages for clients he met there. With facilities in Van Nuys and Honolulu, Castle & Cooke promoted itself at ABACE as being a gateway for jets traveling to and from China and the rest of Asia. Marlow has had one new customer for the Hawaii location come from the show. China’s infrastructure problem But while Chinese businesspeople may have the capital to purchase a Gulfstream or Embraer or Bombardier jet, industry insiders concede there’s a lack of infrastructure to service and maintain these aircraft. Jeff Kohlman, an aviation consultant in Colorado, makes a comparison to owning a fancy Lamborghini sports car and living in Wyoming where knowledgeable mechanics are nonexistent. “It’s the same thing,” said Kohlman, a principal with the Aviation Management Consulting Group. “What good is the plane if there is no one to maintain it?” To fill in that gap, aircraft manufacturers Gulfstream and Dassault Falcon each announced plans to open service centers in China this year to maintain their growing fleets of aircraft. The Chinese government has put a priority on building infrastructure, which includes the country’s first general aviation airport, scheduled for completion by 2015. Providing for private aircraft even has been incorporated into the nation’s current Five-Year-Plan, said Roger White, a special counsel on Asia to the National Business Aviation Association. “If history is anything to go by, (then) what is in the Five-Year-Plan gets done,” White said. For U.S. companies to succeed in the Chinese market will take perseverance and patience due to restrictions and cultural barriers. Relationship building is important to the Chinese, and this is often done at the lunch and dinner table, not in meetings and offices, said White of the NBAA. “Once the Chinese trust you they are good people to do business with,” he said.