Visitors are fascinated by a model of the Boeing 737-700 jet displayed at the Asian Business Aviation Conference and Exhibition in February 2020
Oil prices may or may not have peaked with July’s record cost of crude just below US$150 a barrel, dropping to US$115 in early August and then, who knows? Airlines are still frantically looking for ways to shed costs by cutting weight and in-flight amenities while regaining revenues by increasing fuel surcharges. So does own a business jet make sense?
“With Asia on the cusp of unprecedented growth, the need for business aviation is great. Business leaders, government officials, and consumers can meet those demands more effectively through the use of business aircraft.”
Self-serving or not, it’s still true. It was true last year, too, when the organization’s brochure contained the identical statement. It’s been true for a while and will continue to be so, but though there has been progressing in terms of business aircraft sales in the region, the much-anticipated avalanche of orders has yet to happen.
Growing need Unlike the United States, and to a lesser extent Europe, Asian business people and corporations just don’t seem so air-minded. A large part of this is logical: for many years, most industries in Asia have been located close to – or at least within reasonable reach of – major cities. Scheduled airline services have been more than adequate and cost far less than those of owning and operating even a small business aircraft.
Needs have changed. Developing economies have pushed industries further afield, increasing traveling times and turning what should be quick visits into major expeditions. And the age of mass travel has turned what used to be a relatively luxurious and relaxed outing into an unpleasant and often hectic experience.
So why not switch to using business aircraft? Some Asian businessmen and companies have done just that in recent years, as witness the crowded business aircraft ramp in Hong Kong in February. Where in earlier years, the HKBAC was more than often empty, with only one or two aircraft gracing its modern facilities, this year, there were 22 aircraft present, including three parked in the hangar.
Not all these aircraft are Hong Kong residents.
Some are based in Macau, which is a cheaper base for a private jet, and others were flown to Hong Kong, especially for the show. But the fact that so many were shown at all indicates the level of optimism that pervades the industry. With developments continuing apace in China, Hong Kong and Macau are obvious gateways from which to access places in the Mainland that are not necessarily easy to reach via airlines.
Not cheap At its most basic level, it’s a trade-off of executive time versus expense.
A medium-sized corporate jet made by the United States’ Cessna, Gulfstream and Hawker Beechcraft, Canada’s Bombardier (which also owns Learjet), France’s Dassault or Brazil’s Embraer and seating, say, eight to 12 passengers, will cost anything from US$20 million to US$40 million. Assuming usage of, say, 500 flying hours a year (figure this as perhaps one Hong Kong-Beijing return trip per week with some hours leftover), this will cost anything from US$2 million to US$3 million a year to run (crew, fuel, insurance, navigation and airport charges, maintenance and so on). It’s not cheap.
At the upper level, owners of corporate jets are people or companies so wealthy that running costs are not an issue.
Many of these owners are in the Middle East and run private versions of airliners. These range from the Airbus Corporate Jet, based on the A320 airliner family, and the Boeing Business Jet, derived from the Boeing 737 family, up to special versions of the Boeing 747 and the biggest of them all, the Airbus A380. These cost anything from US$45 million for a Boeing Business Jet to US$320 million for the A380 (one has been ordered for delivery some years hence). The price is largely set by how much luxury the owner wants in the aircraft.
Numbers of orders are usually vague, and the identities of individual owners are often closely guarded. Privacy is one reason: personal security is another. One Airbus Corporate Jet is owned by a Hong Kong individual, and another has ordered a private A350, Airbus’s latest offering that will fly in a few years’ time. For some years, the only Asian private jet whose owner has been widely acknowledged is a Boeing 757 owned by the Sultan of Brunei.
Overlapping with the basic level and intruding into the area adjacent to the upper level is the fleet of jets available for charter. Some are from charter companies in Hong Kong such as Metrojet, with Gulfstreams and a Bombardier Challenger; Swiss Jet Aviation and TAG Aviation, which this year set up a Hong Kong office to manage its own and other owners’ aircraft; and the United States’ TWC Aviation, which is a joint venture with Japanese ground handling company JAS has based two Gulfstream corporate jets in Hong Kong.
Group ownership These and other operators run charters on demand, either with their aircraft or by leasing out aircraft they manage for private owners so that the owners can offset some of their costs via charter income. There are also schemes such as NetJets, via which individuals can pay to join group ownership of an aircraft and become entitled to a certain amount of flying time per year.
There are still obstacles in Asia: obtaining permits for flights can take time, short, direct flights can become longer because of airway constraints, operators must use large airports that charge high fees because there are very few if any private airports with adequate safety cover or runways. But it’s getting better as authorities and users become used to corporate aviation, and the fact that the ABACE continues to grow each year indicates that there’s a real market and it’s developing faster.