CJI Asia 2021 Conference Report
High hopes for growth in private jet aviation and concerns about Covid-19 focused attention at Corporate Jet Investor’s Asia 2021 virtual conference.
Shanghai is home to 26.32m people, including Mandarin-speaking staff from the Bermuda Aircraft Registry’s new office in the megacity.
CJI Asia 2021 Conference Report
High hopes for growth in private jet aviation and concerns about Covid-19 focused attention at Corporate Jet Investor’s Asia 2021 virtual conference.
Shanghai is home to 26.32m people, including Mandarin-speaking staff from the Bermuda Aircraft Registry’s new office in the megacity.
OPTIMISM ABOUT THE prospects for private jet aviation in 2022 and beyond, tempered by frustrations caused by Covid-19 travel restrictions and dwindling inventory plus snakes on planes all featured in Corporate Jet Investor’s Asia 2021 virtual conference staged in November.
Demand for private jet ownership, charter and fractional schemes will rise as regional wealth grows and High-Net Worth Individuals (HNWI) seek the sanctuary, comfort and convenience of private jet travel, speakers agreed. Prospects were particularly encouraging over the next two to five years, according to Alexander Tang, Global Jet Capital, sales director – South-east Asia, Australia and New Zealand. “We are seeing a lot of wealth shifting into this region; mainly because factories are coming to South-east Asia creating new wealth and opportunities,” he told delegates before the emergence of the Omicron variant.
Newly wealthy fintech entrepreneurs will also help to grow the market, predicted Michel Buffat, Credit Suisse, head of Aviation & Yacht Finance. “We see younger clients in the fintech business who have created a lot of wealth in recent years. Sooner or later, they will have to have an aircraft because of the obvious advantages with Covid still around,” he said. But growth will be gradual.
New entrants to the industry also underpinned the optimism of Stuart Miller, Clyde & Co, partner. “I don’t think we are going to lose too many of them [new entrants] when the commercial airlines rejuvenate,” he said. “Corporates are going to fly more and it’s likely the level of personnel who use jets will push down [the company structure] rather than tighten up.” (Before the conference NetJets revealed its decision to transfer up to 20 aircraft to Amber Aviation over the next two years alongside other investment).
Boosting business in China – both on the mainland and in greater China – excited Liam Byrne, Bermuda Aircraft Registry, director of Business Development. “It’s heartening to know that the economics for that market are good, with the World Bank predicting 8.5% growth back to pre-pandemic levels,” said Bryne. The Bermuda Aircraft Registry has opened a Shanghai office, appointed a Mandarin-speaking operations manager and invested in a website for Chinese clients.
David Dixon, Jetcraft Asia president was very optimistic for the prospects for business aviation worldwide but less so for Asia. While the OEM’s launch of innovative aircraft would be good for Asia, the region’s pre-Covid legacy of poor infrastructure was likely to constrain growth. “The downside is the infrastructure – there are not lots of airports for the NetJets type of operation.”
Also advising caution was Paul Jebely, formerly Pillsbury Winthrop Shaw Pittman, managing partner Hong Kong office. “Private aircraft trading, chartering and financing deal flows [at present] are very much the feast before the famine,” he warned. While demand would continue to grow in the near term, as businesses return to travel and lockdown restrictions ease, current rates of growth will prove unsustainable. “It will end. Private jets cannot run on fairy dust – despite what some might have you believe. And neither can the global economy.”
The 2022 Winter Olympics in Beijing (February 4th-20th) would stimulate the relaxation of flight restrictions, hoped speakers. Jenny Lau, Sino Jet Management, president said: “By next year, after the Winter Olympics here in Beijing in the second quarter [Q2], hopefully a lot of travel restrictions will be lifted, which will make it operationally easier for us.”
Looking ahead to the promise of urban air mobility (UAM), Yesh Premkumar explained why Hyundai’s Urban Air Mobility division had rebranded as Supernal. Premkumar, the new brand’s senior lead, Partnerships said: “It was to give us our own identity – a name that resonated with the work. The work that reflected our intentions and vision for mobility of the future.”
Sourcing quality pre-owned aircraft was becoming particularly challenging, as prices continue to outpace asset values in an increasingly assertive sellers’ market. Owners who had no intention of selling their aircraft were now tempted by unsolicited offers far above the price they expected their aircraft to command, according to one speaker. Those who succumbed to temptation would add to the burgeoning demand for charter, as OEM delivery extended times to 2023 or 2024.
Some cash buyers are trying to save time by avoiding pre-purchase inspections. But brokers, maintenance specialists and financers highlighted the key importance of knowing the quality of the aircraft under consideration. This was particularly true as travel restrictions had kept aircraft on the ground or in storage for much longer than normal. Rohit Kapur, JetHQ Asia, president said: “We have seen aircraft standing on ramps for years and people still want to see if they can do a deal.”
Corporate Jet Investor’s Asia 2021 virtual conference took place on November 21st 2021.
CJI Asia 2021 sponsors:
Alexander Tang, Global Jet Captial
“We are seeing a lot of wealth shifting into this region…”
Alexander Tang, Global Jet Capital, sales director – South-east Asia, Australia and New Zealand
Event partners
Bombardier
Stonebriar Commercial Finance
Event partners
Bermuda Aircraft Registry
GE Aviation
Jet Support Services, Inc
Supernal
Sponsors
Clyde & Co
JetHQ
Alexander Tang, Global Jet Captial
“We are seeing a lot of wealth shifting into this region…”
Alexander Tang, Global Jet Capital, sales director – South-east Asia, Australia and New Zealand
CJI Asia 2021 sponsors:
Event partners
Bombardier
Stonebriar Commercial Finance
Event partners
Bermuda Aircraft Registry
GE Aviation
Jet Support Services, Inc
Supernal
Sponsors
Clyde & Co
JetHQ
Jet Aviation’s spotless maintenance facility in Hong Kong.
Snakes on a plane
THE PERILS OF long-term aircraft storage in Asia and ground damage were highlighted by Peter Coles, Clyde & Co, partner & head of Aviation Asia Pacific. “There’s insufficient data to estimate the extent of corporate jet damage on the ground and by ground incidents,” he said. “It could be $100m or more and I have seen estimates in the billions – which I don’t believe.” Direct financial damage was not the only risk. Every year injuries and fatalities arise from ground incidents, which can also lead to loss of licences for pilots, engineers or other industry professionals.
The dangers of corrosion – particularly in the humid climates common in parts of Asia – were highlighted by Graham Oddie, Tokio Marine Kiln. A particular worry was aircraft consigned to third parties to store “out of the hands of operators or owners” if corrosion was allowed to develop.
Corrosion was not the only hazard associated with long term storage. Insects and rodents could make their way into unprotected aircraft, warned Andy Pickford, McLarens Aviation, regional director Asia. This, combined with periods of dormancy for aircraft systems, could cause problems such as electrical failure. Incursions by non-furry wildlife could also prove problematic. “There is a bit of a problem in Malaysia where a number of aircraft have had snakes go into their landing gear bays at remote airports.”
