Utility trumps luxury as China private jet buyers fly economy
By Fang Yan and Siva Govindasamy
SHANGHAI/SINGAPORE (Reuters) - Makers of private jets for China's elite are shifting their focus from luxury to convenience, as a cooling economy and long-running crackdown on corruption prompt customers to demand smaller planes and even consider second-hand deals.
Utility is the watchword, say industry insiders, as buyers who once enlisted feng shui masters to help them design cabin interiors that might feature mahjong tables or karoake areas now look for functional desks to work at and rest areas to sleep.
China's richest businessmen remain Asia's top owners of luxury aircraft: the greater China region had 466 private jets in 2015, according to consultancy Asia Sky Group, compared with 65 in 2007. Mainland China accounted for 300 of those. But for manufacturers such as Bombardier (BBDb.TO: Quote), Dassault (AVMD.PA: Quote), Embraer (EMBR3.SA: Quote) and General Dynamics' GD.N subsidiary Gulfstream the market is cooling, especially for new aircraft, forcing them to prioritise efficiency, keeping production costs low and speeding up aircraft delivery times.
"The economy is weak and there are different political forces, as you know," said Bill Schultz, senior vice president of business development in China at Textron (TXT.N: Quote), which manufactures Cessna and Beechcraft-branded aircraft. "It's impacted jet sales, there is no question about that."
Against that backdrop the mood was subdued as plane makers, charter firms and buyers gathered this week for one of the industry's biggest annual air shows in Shanghai. Interest in specialized firms who manage, charter or refurbish planes was high.
KEEPING UNDER THE RADAR
President Xi Jinping's three-year-old campaign against official corruption has discouraged conspicuous consumption in China, hitting discretionary spending on everything from fine wine and jewelry to luxury cars, yachts and casino trips. Continued...