Ownership trends in the Asia market

There has been much talk about the changing face of the first-time business aviation users, post-Covid-19, with clear evidence of mounting demand for private aircraft at all levels, whether via charter, card membership, fractional or outright aircraft ownership.

This had led to significant industry growth in the USA and Australia, where, due to the vast landscape, a four- or five-hour flight remains within the same domestic borders. The experience in Asia Pacific (APAC), and its key commercial locations of Hong Kong and Singapore, is different. Take off from Hong Kong and in five minutes you cross into China and Taiwan. Depart Singapore and 60 seconds later you can be in Malaysia or Indonesia. However, with many Covid-19 lockdown and quarantine requirements still in place throughout the region, such cross-border travel is difficult.

These ‘new’ constraints for business aviation sit on top of the region’s long-term infrastructure issues but despite this, my long-term view is that APAC remains on course to overtake Europe as the second biggest market after the US within the next five years.

Economic influences

The core economic indicators in APAC remain solid. Knight Frank’s ‘The Wealth Report 2021’ forecasts that the region will see the fastest growth in Ultra High Net Worth Individuals (UHNWIs) over the next five years, rising 39%. By 2025, close to a quarter (24%) of all UHNWIs worldwide will reside here.  These economic influences are important because this population is traditionally a key driver in business aviation activity, and large, long-range jets, in particular, look set to benefit. Jetcraft transaction data shows that UHNWIs represent a higher share of buyers as aircraft size and very crucially range increases.

It is significant that all the major manufacturers are investing in their ultra-long-range programs, and we’re seeing heightened interest in Bombardier’s Global 7500, Gulfstream’s new G700, and Dassault’s Falcon 10X model set to make its debut in 2025. These aircraft are primed to be popular in Asia because it is a long way from almost anywhere.

Southeast Asia & Australia

These are traditional markets in APAC for aircraft ownership and at Jetcraft we’re seeing steady sales momentum across Australia, Indonesia, Singapore and Malaysia. Domestic travel needs within Australia, Indonesia and the Philippines have also expanded, in part fuelled by geography and the remoteness of some communities. While attempts to open up the region’s airways through Air Travel Bubbles (ATBs) have stalled, hope remains for the safe opening of borders within the region, providing Covid-19 case numbers remain under control.

China

Currently China has the largest business jet fleet in APAC and together new and pre-owned aircraft account for 11% of all General Aviation aircraft in the country. China was first to experience the impact of Covid-19 and now is the first major economy in recovery from the pandemic; the World Bank is forecasting 8.5% economic growth in 2021. This in turn is reflected by the positive outlook for business aviation traffic – the latest WingX data shows that business jet flights out of China are up 12% on June 2019 levels. However, it must be noted that flight hours are still down 30%, reflecting the current curbs on international travel.

China today is a worldwide, outward investor, and when travel restrictions ease, we believe business aviation will further prove its value to Chinese companies looking to travel to their investments in the Middle East, Africa or South America. Private jets are the natural solution to accessing remote locations, offering shorter, direct journeys to rural airports.

The case for business aviation in China is also nurtured by a growing acceptance of pre-owned private jets. Buyers traditionally inclined to purchase new aircraft are beginning to favour pre-owned, and first-time buyers are realising that they can buy a larger, longer-range aircraft for the same price as a smaller, new delivery jet.

Investing in infrastructure

In the early 1980s, business aviation was all but non-existent in China, Hong Kong and Japan. Today, that picture has changed significantly but infrastructure remains the key barrier to business aviation growth in APAC. Airports, parking and air traffic constraints all collide to limit expansion, with business aviation friendly airports few and far between. There are still more private jets in the state of California than in the whole of Asia. There are also around 250 civil airports in China, compared to some 5,550 in the US.

Singapore’s Seletar Airport is one of the region’s main business aviation focal points, closely followed by Kuala Lumpur’s Subang Airport, with its on-site maintenance capabilities set to steadily grow. With the correct infrastructure, supported by greater authority and government understanding of the economic role of business aviation, I believe in Asia’s bizav market potential.

Long-term potential

Covid-19 has changed the short-term travel landscape and airlines won’t miraculously re-emerge to full-strength. Sadly, some may never return, and it will take time for the survivors to rebuild and recover. We’re confident new business aviation users will take away the positive experiences of travel over the past year and stay within our industry, as they seek to protect the health of themselves, their family and colleagues. It’s exciting to share the value of aircraft ownership with a fresh audience and be at the forefront of how this will change the skies across Asia-Pacific.