Hurdles to buying a private jet in China
Staff Reporter 2012-10-16 10:11
A private aircraft at an exhibition in Shanghai. (Photo/Xinhua)
Chinese citizens can consider buying a private jet if their wealth amounts to 5 billion Chinese yuan (US$797.19 million) and they spend at least 300 hours a year up in the air, a report in the Chinese-language 21st Century Business Herald said.
According to Teal Group, an aerospace and defense industry consultancy, the global demand for private jets is expected to reach 9,000 planes in 10 years, while their number is set to rise from the current 120 to between 600 and 1,200 in China.
In early September, the Beijing International Business Aviation Show was held for the first time in the Chinese capital, with leading companies from the industry, including Bombardier, Dassault Falcon, and Gulfstream, taking part in the event.
However, owning a private jet in China is a complicated and time-consuming process, the newspaper noted, as it is not only about making a payment.
Among the over 20 clients from China who bought jets from Dassault, 60 percent were individual buyers and 40 percent were banks or airline companies, said Timothee Marcie, district sales manager for the French aircraft manufacturer in Northern China.
"If you want to buy this jet (Dassault Falcon 7X), the standard delivery time is 18 months. The time can be shorter if you choose standard equipment, as we produce a limited amount of jets every year," said Marcie.
Besides the cost of the aircraft itself and the cabin interior, other expenditures involved in owning a private jet included tax, insurance and an annual management fees, the newspaper said.
If the jet is registered in China, it will be taxed a whopping rate of 22.85%, while taxes imposed on foreign-registered aircraft are lower. However, the procedures involved in applying for flights within China are more complicated, the newspaper noted.
The insurance fee charged is usually 4% of the jet's value, while the management fee varies based on the type, the base and the management company of the aircraft. A Dassault Falcon 7X based in Shanghai costs 12 million yuan (US$1.91 million) every year, and an additional 10 million yuan (US$1.60 million) is charged for flight hours of 300 hours.
Meanwhile, the management companies supervise the manufacturing process and help apply for necessary documents and permits required for a private jet in China, the newspaper added.
For those who do not want to spend so many hours in the air or do not have the sufficient funds to buy a jet, there are several other options available.
Those spending less than 300 hours on a plane could consider chartered services, which cost 40,000-80,000 yuan (US$6,370-$12,759) per hour on an average. Persons unable to afford buying a jet could consider financial leasing currently provided by several Chinese banks, including the Bank of Communications and Minsheng Bank.
The China Private Jets Club also suggested purchasing second-hand jets, if they were well maintained.
