The fleet in the region, which includes Greater China, India, Australia and numerous other countries, totaled 1,155 aircraft at the end of 2016, up just three percent from a year before. It will likely be 1,167 at the end of this year, a net growth of just 12 business jets.
Overall, the region added 112 aircraft last year – 57 new and 55 pre-owned – but also saw 78 aircraft leave. That net growth of 34 aircraft compares with 58 net additions in 2015.
Among the Highlights
• Pre-owned acquisitions and sales into and out of Asia Pacific saw a dramatic increase in 2016 from 71 in 2015 to 127. Of the 78 aircraft leaving the Asia-Pacific market, 73% went to the U.S.
• The Top Four markets of Mainland China, Australia, India and Hong Kong represent two-thirds of the region’s business jet fleet, with 769 aircraft.
• Mainland China remains the largest single market in the Asia-Pacific region with 313 business jets. It also saw the largest number of aircraft added to its fleet in 2016 with a net increase of 13 business jets.
• Greater China, which includes Mainland China, Hong Kong, Macau and Taiwan, holds firm as the leading market in the region with a fleet of 477 aircraft, some 41% of the total for the Asia-Pacific region.
• The top three OEMs in the region by market share were Bombardier, Gulfstream and Cessna, with 26%, 24% and 19% of the fleet, respectively.
• Gulfstream significantly outperformed all other OEMs, adding a net 20 new and pre-owned aircraft.
• The most popular model added across the region was the G650/G650ER, with an incredible 17 new and six pre-owned aircraft, representing 40% of the G650/ER’s worldwide deliveries. ASG Managing Director Jeffrey Lowe noted there are five “attractive, incentivized” G650s on the market at the moment at under $50 million versus their new list price of $66.8 million. “A good airplane at a good price will sell well,” he added.
A Dramatic Shift to Pre-Owned
The market is seeing a dramatic shift towards pre-owned aircraft, Of all deliveries into Asia-Pacific last year, 51% were new and 49% pre-owned (55 aircraft versus 57). “This is a significant shift towards pre-owned aircraft compared with 2015’s ratio of 62% to 38%,” says Lowe. “Buyers are getting much more value conscious, a lot wiser and price conscious, more value oriented.”
At the same time, buyers outside the region are recognizing that there are many low-time, well-maintained business jets available in Asia-Pacific.
Just a few years ago buyers in Asia-Pacific predominantly preferred factory-new aircraft.
“You can go through the year with a feeling, thinking you known what is going on, but the numbers never lie,” says Lowe. “Half a year ago I would have said most transactions were of aircraft leaving the region.”
Angst Amongst Operators
The older, traditional aircraft management and charter companies, mostly based in Hong Kong, are seeing their business jet fleets shrink as new, boutique operators are taking market share away from them.
“Young upstarts are grabbing their business,” says Jeffrey Lowe, Managing Director of Hong Kong-based business aviation consultancy Asian Sky Group.
The traditional companies have a dilemma: how to change their business models from gold-plated, full-service aircraft management to match the nimble, customized pay only-for-what-you want upstarts. And they, too, have their dilemma: How to cope with the growth that comes from success, and execute for their existing customers, without the economy of scale enjoyed by the oldies. Many of the newer competitors operate fleets of six or fewer aircraft; together they now operate 31% of Greater China’s fleet.
What’s happening, says Lowe, is that aircraft owners, many on their second or third jet, have come down the learning curve from owning their first jet, when they often wanted everything doing for them. “Now they want to pick and choose the services, not pay for the whole inclusive package.”
The top 10 operators in Asia-Pacific operate 26% of the region’s total business jet fleet. However, Hong Kong Jet, Sino Jet and Lily Jet are the only ones in the top 10 that saw growth in 2016, with the rest suffering declines. The highest growth rate was achieved by two-year-old Bellawings (+267%) with a fleet of 11 aircraft and more to come this year, and the largest decline by Metrojet (-23%) to 23 from 35 in 2014.
The top operator in Greater China continues to be Mainland-based Deer Jet. In 2014, it had a fleet of 68, which fell to 59 in 2015 and to 47 in 2016 after selling a total of seven, mostly older Hawker models, to buyers in the U.S.
Aircraft operator Sino Jet was one of the few based in Hong Kong to see a big increase. In 2015 it had 18 aircraft, and now 30.
A Better Year for Some Than for Others
Gulfstream: Deliveries included 17 new G650/ER and six pre-owned G650s, four new G550s and four pre-owned, plus one pre-owned G200. Six G450s, five GIV/IV-SPs and four G550s left the region. Gulfstream now has 283 aircraft in the region and 179 in Greater China.
Bombardier: Deliveries totaled nine new Global 6000 and two pre-owned, while four Global Express and four Challenger 605s departed. Bombardier’s fleet now comprises 301 in Asia-Pacific, and 138 in Greater China.
Boeing: Added four pre-owned BBJs, one new VVIP Boeing 787 Dreamliner, and a new 747-800 for the Sultan of Brunei. It now has 34 BBJs in Asia-Pacific and 17 in Greater China.
Embraer: Delivered five new Phenom 300s. Its fleet totals 79 aircraft in Asia-Pacific and 32 in Greater China.
Dassault: Delivered two new aircraft, seven pre-owned found buyers, and two departed. Fleet size is 100 in Asia-Pacific and 45 in Greater China.
Cessna: Delivered three new aircraft, five pre-owned entered Asia-Pacific, and 10 left. Cessna has 218 aircraft in the region, and 35 in Greater China.
Airbus had one pre-owned addition, and lost two. Fleet size in Asia Pacific is 33, in Greater China 19.
Three pre-owned Hawkers joined the Asia-Pacific fleet, while another 11 left the region, reducing the Hawker fleet there to 86 aircraft and just 12 in Greater China.
The 2016 Asia-Pacific Region Business Jet Fleet Report by Hong Kong-based business aviation consultants Asian Sky Group can be downloaded from www.asianskygroup.com/media-reports