China's jet set grounded by lack of pilots, paperwork

Sun Sep 9, 2012 5:20pm EDT
 
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By Alison Leung

HONG KONG (Reuters) - Bombardier Inc (BBDb.TO: Quote), the world's No. 3 aircraft maker, thinks Chinese executive jet buyers will take delivery of 2,400 new planes in the next 20 years. All China needs now is pilots to fly them, mechanics to fix them, and airports to land them.

With fewer than 200 private jets for a population of 1.3 billion people, China's growth potential is huge. But reams of red tape, snarled-up air space and a shortage of trained pilots suggest it won't live up to the promise any time soon.

The private jet potential has caught the attention of some big-name investors. Warren Buffett's NetJets made the world's largest order of executive jets in June in a deal worth $9.6 billion, months after it announced a China venture with private equity firm Hony Capital.

China is forecast to take delivery of about 100 business jets this year. Before they can fly, buyers need to secure an Air Operator's Certificate from the country's aviation regulator or a management company that has already been granted one. Then the jet owner has to wait for an import license.

"The process you have to go through to get the importation approval has to be signed off by nine departments," said Jeffrey Lowe, general manager of Asian Sky Group, a business aviation consulting firm.

Private jet ownership was illegal in China until 2003, and the aviation regulator has been slow to process paperwork for new operators. About 80 are awaiting certificates, with only up to 20 expected to get one in the next three years, taking the total number of business jet operator certificates in China to 30 by the end of 2015, under the regulator's working plan.

The Civil Aviation Administration of China, or CAAC, has also capped at 12 the number of jets that can be imported annually by each certificate holder. Most of the existing 10-12 holders are new to the industry and lack sufficient skilled staff to take their full quota.

China had just 180 airports as of the end of 2011, and the powerful military controls 70 percent of its air space, leaving limited room to navigate and land planes.   Continued...

 
A visitor walks down the stairs of a Challenger 300 aircraft during the Shanghai International Business Aviation Show at Hongqiao International Airport in Shanghai in this April 13, 2011. REUTERS/Carlos Barria/Files