ASG-ASIA-PACIFIC-Business-Jet-Fleet-Report-YE2014-EN

GREATER CHINA
GREATER CHINA – MARKET TRENDS
In the context of the Asia Pacific region, not too surprisingly due to the dominance of the China market, the
Greater China business jet fleet at the end of 2014 represents the lion’s share of the installed fleet in the Asia-
Pacific region with 59% of the aircraft (439 in total). Individually, China represents 40% of the Asia Pacific fleet,
followed by Hong Kong with 15%, Taiwan 2% and Macau 1%.
Compared to year-end 2013 however, the Greater China fleet grew only 15.5% in 2014 pulled down by lower
fleet growth in China specifically and consequently, the Greater China fleet portion of the total Asia Pacific fleet
remained unchanged 2013 to 2014.
From an OEM’s perspective and whether their fortunes will rise or fall in the Asia Pacific region in the near
future, different manufacturers have very different dependencies on the Greater China market. Keeping in mind
that the Greater China market is very much a large cabin / long range market, it is not too surprising that Hawker
and Cessna have just over a third (32% and 37%) of their Asia Pacific fleet based in Greater China versus 83%,
72%, 72% and 64% for Airbus, Dassault, Gulfstream and Bombardier respectively. Of note are Embraer and
Boeing (57% and 39%), with Embraer having a large fleet in Indonesia to counter balance Greater China, and
Boeing doing very well at placing aircraft throughout the Asia Pacific region.
Year-End 2014 Review
In ASG’s 2013 year-end business jet fleet report, it was expected that the Greater China market would grow at
20% and reach 445 aircraft by the end of 2014. ASG also highlighted a number of market drivers that could
end up influencing these numbers.
These market drivers were:
● Austerity measures put in place by the Central Government in Beijing
● The introduction of a more clearly defined tax structure for business jets registered in China
● Operational and infrastructure issues like parking constraints in Hong Kong
To these we can also now add:
● Spending fears linked to the on-going corruption crackdown by the Central Government
● The slowing pace of GDP growth in China
In line with ASG’s predictions, market drivers did exactly as expected and 2014 saw growth in the Greater
China market of only 15.5% - a drop of 5% from the growth rate achieved from 2012 to 2013. The net number
of aircraft (new deliveries plus pre-owned additions minus deletions from the market) added to Greater China
in 2014 was 59 in total versus 64 in 2013 and over 100 in 2012. The Greater China market is very much in
decline.
When breaking the 2013 net numbers down even further versus 2014, new aircraft deliveries held up through
2014 (+21%) and even deletions decreased (-17%). The big change was therefore in the pre-owned deliveries.
In 2013, pre-owned aircraft represented almost half the additions to the Greater China fleet. In 2014 this
number was just 28%. In 2013 there was almost an insatiable, immediate demand for aircraft in Greater China.
The only way to meet this requirement was through more pre-owned aircraft sales, with a vast majority of these
sales being relatively new, i.e. recently delivered & low time pre-owned aircraft. With the austerity measures
and corruption crackdown gaining steam through the course of 2014 however, buyer demand and sentiment
declined, directly impacting pre-owned aircraft sales.
54 ASIA PACIFIC BUSINESS JET FLEET REPORT YEAR END 2014