Pundits long assumed that smaller jets would eventually play a larger role in the next wave of China's business-aviation market. According to noted consultant and market observer Brian Foley, that prediction may be a very long time coming (if at all). Foley contends that China's preference for larger, heavier, longer-range jets will remain in place for the foreseeable future – as has happened in the Middle East.
Mainland China's current business-jet population of 198 aircraft can be broken down into 63% heavy, 25% medium and 12% light aircraft according to aircraft database provider AMSTAT. Having nearly two-thirds of the fleet concentrated in large aircraft seems lopsided compared to the worldwide average of 26% heavy, 34% medium and 40% light.
Foley finds it interesting that China's fleet profile closely mirrors the Middle East's heavy, medium and light fleet mix of 68%, 22% and 9% respectively. "There are important reasons for this – including culture, politics, geography, trade and infrastructure – whose effects will be long-lasting. Like the Middle East, China is faced with long internal distances and a heavy international requirement, both favoring larger and more capable aircraft. Seen in this light, China's medium and light fleet should not be expected to 'catch up' to its larger brethren. More likely, the present mix will remain relatively constant even as the total fleet size increases."
And where is China's fleet growth headed? Mainland China's fleet more than doubled in three years and grew 23% in just the last year alone. But Foley estimates its next market doubling may now take five years. "We're already seeing China's market normalizing to a more sustainable pace. Contrary to industry perception there's a finite pool of capable buyers, whose numbers have been cut as the economy continues to moderate."
Now that it's had a few years to develop, China's business aviation market may not be as enigmatic as once thought, especially considering the historical parallel of the Middle East. Quoting a famous proverb, Foley said, "Study the past if you would define the future." 2500 years later, the immortal wisdom of the great Confucius still holds true.
About Brian Foley Associates (BRiFO)
Since 2006 BRiFO has provided investors and aerospace companies with aviation advisory services including industry analysis, market research, diligence, consultations and other high-level support. www.BRiFO.com
