The New Age of Chinese General Aviation Is Coming

helioslab — Thu, 01 Mar 2012 02:54:22 GMT

The general aviation market is watching closely on the policies and regulations on general aviation from CAAC, the key regulator. After the issuance of the Opinion on Intensifying Reform of the Administration of Low-Altitude Airspace in China, how is the CAAC implementing these policies? What measures are being developed to further stimulate local enthusiasm for the industry and the participation of various players?

The Chinese general aviaiton industry started as early as 1950’s. By the end of 2010, China had 111 enterprises, 1,010 aircrafts, including 206 helicopters, 781 fixed-wing planes, hot balloons and airships, and nearly 400 airports and temporary taking-off and landing spots. The CAAC has approved 30 activities divided into 4 categories, such as emergency rescue, general services and infrastructure development.

Although China had nearly 60 years history in general aviation, it is still fall far short of the needs of the economy. China has no specialist base operations and services stations as the norm in mature markets.

The CAAC is dedicated to improving the situation. Li Jiaxiang, director general proposes the strategic positioning of a strong aviation state and makes it clear that general aviation is the foundation for civil aviation and a key component of air transportation. General Aviation makes it to the 12th five-year plan for the very first time. The CAAC has a special planning session on general aviation, which is now blessed with very favorable policy environment.

In recent years, under the guidance of the National Space Management Commission, the CAAC is actively working with relevant authorities to push for reform in low-altitude space administration and has achieved initial results. Last year, as the Opinion on Intensifying Reform of the Administration of Low-Altitude Airspace in China was issued, general aviation is expected to enter into a new era.

CAAC focuses on two areas, improving general environment and building services capability. This means developing policies and regulations, as well as improving infrastructure, building up supporting facilities etc. The most watched-over initiative is the reform and opening up of low-altitude airspace.

In the Opinion on Intensifying Reform of the Administration of Low-Altitude Airspace in China, it has been specified for the first time the overall objective, initiatives of various phases and key tasks with regard to low-altitude airspace reform and opening up. Currently, the CAAC is working on the detailed classification of low-altitude airspace and the way to building up supporting facilities. This is a very systematic project and will happen over a long time.

However, the development of general aviation is not up to the CAAC alone. It involves fiscal and tax policies and needs coordination and support from the aviation industry and the military. General aviation spans aircraft manufacturing, flying operations, airport management, airspace usage, finance, insurance and third-party services. The CAAC is only responsible for part of it. Currently, the CAAC is experimenting with pilot programs in various provinces and cities, in an effort to foster a market place driven by demand and the industry, and supported by relevant central government and local authorities. This is for the healthy, virtuous development of the industry.

It is widely believed that the development of general aviation is seen as a major breakthrough to transform economic growth model, adjust industry mix and drive domestic consumption.

Since last year, the research office and the general office of the State Council and the NDRC have engaged in several studies into the general aviation industry and are deeply impressed with its role in emergency rescue, economic development and driving consumption. General aviation is now seen as a pillar industry. In the 2010 Decision by the State Council on Accelerating the Development of Strategic New Industries, general aviation is listed as one of the 7 new strategic sectors, along with advanced equipment manufacturing. The CAAC is actively supporting the NDRC to make national policy concrete.

Local governments are also very enthusiastic about general aviation. The four direct municipalities all have strategic plans for this sector. People in the industry all feel that the new era of general aviation has eventualy come after dozens of years.

More investments are joining in. Overseas enterprises are introducing their products to China. The CAAC is encouraging foreign enterprises to set up maintenance and repair bases in China. Private capital is also welcome in financing, insurance and leasing. Fleets are being formed. The key issue today is to control costs and expand financing sources. The primary and secondary markets all call for the guidance of the CAAC and relevant authorities.

Still China has very poor general aviation infrastructure and airports are not enough. Of China’s 200-plus airports, most are for network airlines; some are dual military-***-civil airports, impossible to allow taking-off and landing of general aviation. How can planes fly up and further? There cannot be general aviation without a network of fuel supply, maintenance and repair, meteorological services and other ground services.

The government and the CAAC realize it. Genhe of Inner Mongolia is one of the three pilot airports experimenting with three key issues: first, business model, second, standards for airport, operations, insurance and regulations, thirdly, administration. Genhe will be a show case and model for short-haul general aviation. The CAAC is fully behind the experiment.

Apart from Inner Mongolia, Xinjiang will also include general aviation services and commuting airports in its planning. General aviation is part of Tibet’s 12th five-year plan. The general aviation will grow very fast with local support. It takes 5 million to build a small launching pad for a small helicopter. So the total investment for 2,800 county-level administrative areas won’t exceed 15 billion. This is not much but will greatly promote local economy and enhance social services. The local governments are all very keen.

Therefore, general aviation drives airport economy. Local governments can do a lot and will also be the biggest beneficiaries. In Beijing, Huairou and Yinqing are proposing to build airports and FBO. When you have an airport, a unique trade zone will gradually come into being nearby, driving the development of real estate, hotels, clubs and other non-aviation businesses. Taxes will stay local and consumption will come. You can see it this way, general aviation is a market. The government creates a good market place where enterprises operate. Governments, authorizes, insurance companies, specialist agencies and consumers will all participate.

How to develop airport economy? This needs further evaluation and empirical studies. Should the government do it, or should it be left to business supported by government? Local governments can support general aviation projects with favorable tax policies, and guide them with general aviation guideline funds. Of course, local governments can come up with greater policies, such as promising to buy certain hours from operators annually. Governments can make use of those jets for traveling as well as emergency rescue. It is important to foster an excellent policy environment for general aviation.