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Emerging markets prefer larger jets

The customer base for business jets in emerging markets is less diverse than in the US or Europe. The demand in these markets is driven by individuals distinct preference for larger business jets because of their luxuriousness and longer range.

For instance, in China, business jet demand is driven by a step rise in the number of wealthy entrepreneurs and by an increase in business activity between China and foreign countries. As a result, the market for business jets in China currently favors aircraft in the larger product segments.

But in India, the trend is somewhat different. In India, light to medium-sized business jets accounted for nearly 50% of the country’s business aircraft fleet in 2009. During that year, India reportedly had 30 aircraft produced by US firm, with the country’s remaining business jet fleet consisting mainly of larger business jets produced.

China, too, is likely to increase its demand for light to medium-sized business aircraft as the country’s air space opens up, facilitating growth in domestic business aviation.

Rising affluence in Russia and increasing participation in international business has simulated the sale of high-end business jets into Russian market.

In addition, fractional ownership is gaining popularity in Russia, as well in neighboring CIS countries.

Despide the current preference for larger business jets in emerging markets, demand for smaller aircraft in these countries will likely increase as their domestic business environments mature an intra-country travel increases.

In Brazil, for example, very light and light business jets have already become popular in the domestic market.

The prospect for increased business jet demand in emerging markets are moderated by certain challenges - these include inadequate general aviation infrastructure in many emerging economies, regulatory barriers that impose restrictions on imported aircraft.

In China, for example, only about 150 airports can be used by business aircraft, versus 5.300 airports in the US. In addition, the China Civil Aviation Authority restricts the use of airspace as certain altitudes and requires that all aircraft fly within predetermined routes, or ‘‘corridors’’, which are often heavily trafficked by commercial airlines.

In India, USITC says, the business aviation sector is hampered by an inadequate number of general aviation airports, a dearth of maintenance and repair facilities for business jets, and tight government control over the country’s airspace. India also imposes a 25% import tax on general aviation aircraft and high tariffs on imports of aircraft parts.

Nonetheless, the Indian government has taken steps to improve the business aviation environment, including plans to build additional airports as well as to establish service centers that maintain inventories of spare parts for business aircraft operating in the country.

Fonte: Financial Express (04/07/2013)

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