Sky's the limit for booming general aviation sector

Local companies are lining up to take advantage of what is expected to be huge growth across China's general aviation market.

The sector covers all flying except for commercial flights, and includes such activities as private flights, air ambulance services, police aviation and air charter services.

However experts, who gathered recently for the ninth China International Aviation and Aerospace Exhibition in Zhuhai, Guangdong province, agreed that various urgent issues need to be urgently addressed before the industry can reach its full potential.

One of the sector's best-known companies in China is Yunnan Jingcheng Group, a privately owned enterprise based in Ruili, Yunnan province.

Zhao Wei, assistant president of Jingcheng Group, said that it is establishing two subsidiaries to expand separately into helicopter and business jet services, and is planning to invest 2 billion yuan ($321.2 million).

"The general aviation industry will be a platform for our group to expand, outside the province and even internationally," Zhao said.

The two new operators could also work in the tourism in Yunnan, a mountainous area where air travel is the most convenient form of transport, he added.

Zhao said its expansion could take two years to complete, and it has already ordered two helicopters and two business jets which are due to be delivered in the next year.

But it's not just this type of operational service that is attracting huge attention from companies in China and overseas.

Plenty of companies are also eyeing the other related services surrounding the sector, including manufacturing, maintenance and training.

Zhuhai Hanxing General Aviation Co Ltd, for instance, a privately owned company based in Zhuhai, is China's first fixed base operator for private aircraft. Its business covers general aircraft sales, maintenance and pilot training.

Earlier this month it became the first private Chinese company to buy a US aircraft builder, after completing the 100 percent takeover of Washington-based Glasair Aviation LLC.

Hanxing plans to introduce some of Glasair's technology to its aircraft manufacturing operations in China.

Its new US subsidiary produces five types of aircraft and is expected to launch another one soon, which will be powered with ordinary gasoline rather than jet fuel, which it claims will be more efficient and cheaper to run than competitor aircraft.

Fang Tieji, president of the group, said Hanxing is now planning to build 40 fixed base operations around China in the next five to 10 years.

Gao Yuanyang, director of the General Aviation Industry Research Center of Beihang University, said that privately owned companies such as Hanxing, and private capital, will be vital for China to develop its general aviation sector.

Meanwhile, some local governments are also starting to gear up in anticipation of a booming aviation market.

Eight cities, including Chongqing, Xi'an in Shaanxi province and Zhuhai in Guangdong province, have already established State or provincial industrial parks, specially designed to attract interest from the general aviation industry.

However, for the industry to genuinely flourish and reach its full potential, it still has to clear various regulatory hurdles in China.

The most crucial, say industry experts, is reform starting in 2013, to open up the country's low-altitude airspace.

Talking recently during the Zhuhai exhibition, Ma Xin, deputy secretary of the National Air Management Traffic Committee, said: "Traffic guidance and air surveillance facilities will be promoted nationally from next year."

Some 502,700 hours of flight were recorded in China's general aviation in 2011. That number is expected to rise to 2 million hours by 2020, with the help of the new low-altitude regulations, and other opening-up reforms.

The Civil Aviation Administration of China is also reported to be working on various subsidies for the general industry, including grants for airport building and pilot training.

According to a recent CAAC report, there were 70 airports and 216 landing points for general aviation at the end of 2011.

"China should have at least 3,000 airports for general aviation," said Jin Qiansheng, director of Xi'an Yanliang National Aviation Hi-tech Industry Base.

The lack of pilots is another key issue that needs to be addressed.

China's general aviation fleet increased to 1,154 aircraft in 2011, from 1,010 in 2010, but Chen Guangcheng, deputy director of the CAAC general aviation division's flight standards department, said earlier this year that only about 6,000 pilots are working in the industry, and more than half of them are studying or teaching in schools.

Industry experts said the general industry needs more than 10,000 pilots, and the demand will continue growing as the industry develops.

Gao Yuanyang said the new draft regulation from the CAAC is already complete and is expected to be released by the end of this year.

"The general aviation industry has great potential as it is the only industry which was not opened up after China embarked on reforms and opening-up in 1978," he added.

Wu Tongshui, president of Civil Aviation University of China, said: "The current policy barriers and bottlenecks need to be overcome.

"If they are, the general aviation industry will experience high-speed growth in the next 10 years and it may become a key economic growth engine."

Another key issue is the tax being charged on general aviation operators.

"The tax rate on small and mid-sized helicopters, for instance, is too high," said Rong Weiguo, deputy general manager of the Zhuhai Helicopter Branch of China Southern Airlines Company Ltd.