Bombardier’s China optimism grows

In the past two years, Canadian aircraft manufacturer Bombardier has tripled its 10-year forecast for business jet demand in China, and the company’s regional sales chief David Dixon believes those figures are understated. Andrzej Jeziorski reports. As a transportation group, Canada’s Bombardier has had a presence in China for half a century. The company has been involved in numerous rail projects, as well as supplying commercial and business aircraft to customers across Greater China. The company has established a number of manufacturing partnerships in the region. On the aerospace side, major components of the Q400 regional turboprop are being manufactured in Shenyang, while China’s aerospace industry is also a risk-sharing partner in Bombardier’s 100- to 149-seat CSeries single-aisle jetliner, which is expected to have its maiden flight in 2013. With an office in Beijing and a strong customer-s

9th May 2011



Bombardier’s China optimism grows

In the past two years, Canadian aircraft manufacturer Bombardier has tripled its 10-year forecast for business jet demand in China, and the company’s regional sales chief David Dixon believes those figures are understated. Andrzej Jeziorski reports.
 

As a transportation group, Canada’s Bombardier has had a presence in China for half a century. The company has been involved in numerous rail projects, as well as supplying commercial and business aircraft to customers across Greater China.
The company has established a number of manufacturing partnerships in the region. On the aerospace side, major components of the Q400 regional turboprop are being manufactured in Shenyang, while China’s aerospace industry is also a risk-sharing partner in Bombardier’s 100- to 149-seat CSeries single-aisle jetliner, which is expected to have its maiden flight in 2013.
With an office in Beijing and a strong customer-support presence in the country, the company is well-established in the market that manufacturers predict will drive Asian demand for new aircraft over the next 20 years.
“China’s performance during the last recession was exceptional. In 2009, despite major economic difficulties faced by its key trade partners, China succeeded in maintaining a real GDP growth of 8.7 percent,” Bombardier says in its current market forecast for business aircraft. “China should continue to lead world growth in 2010 with a real GDP growth in excess of 10 percent. A February 2010 survey by The Economist Intelligence Unit estimated that China is poised to become the world’s largest economy by 2023.”


 Rosy view


David Dixon, Bombardier’s vice-president of sales for the Asia-Pacific region, stresses that Bombardier’s view of China as a market for its aircraft is growing ever rosier. The company now predicts demand for 600 new business jets in the country between 2010 and 2019.
“Two years ago, we said it was 200 aeroplanes,” Dixon says. “Within two years, we’ve tripled the number of aeroplanes projected in this market. My own personal view is that those numbers are understated.”
Dixon highlights the numerous hurdles business aviation has faced in the market. Restrictive airspace access, high aircraft import taxes, a shortage of small airports and high operating costs are among the factors that explain why China only hosts an installed base of some 100 business jets for a population of 1.3 billion people.
The Bombardier executive is convinced that these hurdles will be overcome – and when they are, pent-up demand for aircraft will surge.
“All of these [restrictions] will diminish when the government realises the benefit – and it does, increasingly – that the sort of people who fly in our aeroplanes [can generate]” Dixon says. Business aviation users “employ hundreds of thousands of people, they invest millions of dollars in production facilities in China. But we are also seeing Chinese companies move outbound into being overseas investors. So you’re seeing a change in the dynamic, where China was an inward-investment market, now she’s moving outbound.”
As this outbound investment accelerates, Chinese businessmen will increasingly need fast, efficient access to resources and manufacturing facilities around the world, stimulating demand for business aircraft even further. In the meantime, the country’s government has already demonstrated the will to improve the existing aviation infrastructure.
“The strong commitment made by the Chinese government to build new infrastructure and recent improvements to flight-planning regulation bring hope that private aviation could blossom in China over the next 10 years,” Bombardier says in its forecast. “The Chinese business jet fleet is expected to grow at a [compound annual growth rate] of 20 percent over the next 10 years, and to account for 700 aircraft in 2019”
For the moment, Dixon says the manufacturer has “40-plus” aircraft in mainland China. That figure would increase if one added aircraft based in the market that are registered elsewhere, however.
Elsewhere in the Asia-Pacific region, the company has 35 aircraft in South-East Asia and about 47 in Australia.
 

 Significant change


“The more traditional markets will grow more traditionally – like Australia and South-East Asia, which have been user-friendly and are very familiar with business aviation. But China is the one that’s changing significantly,” Dixon says.
At the beginning of March, Bombardier announced the largest business aircraft sale in its history, with a firm order for 50 Global series business jets, with options for 70 more, from operator NetJets. The deal was valued at US$2.8 billion based on list prices – growing to US$6.7 billion if all the options are converted into firm orders.
The firm orders cover 30 Global 5000 Vision and Global Express XRS models, for delivery starting in 2012, with 20 of the manufacturer’s proposed Global 7000 and Global 8000 jets, deliveries of which will begin in 2017.
“NetJets are moving out of the domestic domain of North America into the international field,” Dixon says. “So I’m pretty sure we’ll see a large number of these aircraft in airports in Asia – in China specifically.”

 

 

Asian Aviation at a glance