Aviation Giants Target Chinese Growth

Aviation companies have flocked to Shanghai this week for the Asian Business Aviation Conference & Exhibition as they look toward Chinese businesses and wealthy individuals to offset slumping demand for private jets in the west. From The Wall Street Journal: On the surface, sales projections from archrivals Airbus and Boeing delivered at a business aviation show in Shanghai on Monday would seem to suggest that China’s business jet market has yet to really take off. Airbus, the aircraft-making unit of European Aeronautic Defence & Space Co. NV., expects to sell “about five” of its A320-family Airbus Corporate Jets in China this year, David Velupillai, the company’s corporate jet marketing director told the Wall Street Journal. At a press briefing, Boeing Business Jet President Steve Taylor forecast sales this year of three to five of its own 737-based BBJ in China. The numbers may not sound impressive, but given the low-volume/high-margin nature of fully customized private jets, China is “the most active market” for the aircraft, accounting for the greatest global demand, Velupillai said. Airbus has sold 20 ACJ aircraft in China since 2005, primarily to private customers. Boeing has sold a total of 10 BBJ aircraft in China, including three last year, out of 155 sold globally since 1999. The lineup of aviation companies looking to expand into China includes Warren Buffet’s NetJets, which on Monday announced a joint venture with Chinese private equity investors called NetJets China Business Aviation Limited. From Bloomberg: Entering the China market will “widen our business moat” protecting NetJets from smaller rivals, such as Flight Options LLC, Buffett said in his annual letter in February to shareholders of Omaha, Nebraska-based Berkshire. “No other fractional-ownership operator has remotely the size and breadth of the NetJets operation, and none ever will.” The China venture will be based ...
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