Want China Times, Staff Reporter 2015-01-26
China's anti-corruption campaign has hurt the previously booming market for private jets, but the temporary setback may also lead to the more measured development of the sector, China Entrepreneur magazine reports.
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| A private jet in Zhuhai, Guangdong province, July 5, 2014. (File photo/CNS) |
China's anti-corruption campaign has hurt the previously booming market for private jets, but the temporary setback may also lead to the more measured development of the sector, China Entrepreneur magazine reports.
China's
private jet market has seen rapid growth since the 2008 Olympics in Beijing,
and the Greater China region posted an annualized growth rate of 34% at the end
of 2013 compared with the global rate of 5%, the magazine noted.
This rapid
growth attracted different players to the business, including airline
companies, leasing companies and other private enterprises. However, the
government's crackdown on corruption has hit the private jet business, and it
has become a game of endurance for companies that invested in the sector in terms
of surviving in a race that initially offered profits similar to a gold rush,
the report said.
"We
all believe the market will rebound in the future but at the moment we need to
wrap up to stay warm through the cold winter," said Jin Yao, president of
Dream Jets, a company established in 2012 to operate chartered private jet
services.
Xu Shaoyi,
a venture capital fund investor who invested in Dream Jets, said the company
had decided to focus on chartered services and consultation services for the
purchase of private jets because of the heavy costs involved in buying and
operating the aircraft independently. "The sector may be flourishing but
it has not yet yielded returns. It is most important to avoid investing too
much but rather to maintain a presence and accumulate experience," Xu
said.
The
government's introduction of stricter rules to curb the lavish spending of
officials has led to the cancellation of existing orders of private jets by
both state-owned and private companies. State-owned companies cancelled their
orders in adherence to the government's rules, while private companies made the
same decision since the private jets were meant to carry company executives and
government officials, the magazine said.
Since the
manifest of all private jet passengers must be submitted to the aviation
authorities, no government official dares to take flights offered by private
companies for fear of falling foul of the anti-graft drive, the magazine added.
However,
Jin remains positive about the sector's future, saying that the current
downturn may help eliminate the business' image of being a luxury service.
"In the past, everyone bought irrationally. Many people only chose to buy
the most expensive premium models," Jin said, noting that American companies
generally start by buying secondhand planes rather than new.
While the
government is also attempting to resolve the issues restricting the development
of the business, which include a lagging infrastructure and the applications
required before each flight, Dream Jets is exploring other opportunities.
"We
want to become the Uber of private jets," Jin said, noting that a seat on
a chartered private jet can be cheaper than a first-class ticket on
international long-haul flight on some routes.
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