Zhang Yue's company, Broad Air Conditioning, was the first industrial company in China to own a business jet. The company, in Hangzhou, Zhejiang province, now owns two Cessna Citations. The use of business jets in mainland China is limited -- only 40 corporate jets are based in the entire country. But that figure is expected long term to grow to about 300, according to Bombardier Aerospace. Worldwide, demand for business jets is surging, especially in Europe. In addition, China, Russia and India are emerging markets and will eventually be major contributors to overall demand, said Bombardier officials. While U.S. demand is strong, "we are seeing faster growth in the international markets," said Roger Whyte, Cessna senior vice president for sales and marketing. "Where we're seeing real volume growth is in Europe at the moment." In response to the higher demand, planemakers like Raytheon, Cessna and Bombardier Aerospace are increasing their sales and marketing efforts overseas.
The companies are showing off their products at more international shows and opening offices in more countries. Cessna recently added a regional manager in Dubai and is deciding what to do in the former Soviet Union. Raytheon established an office in Switzerland more than a year ago. "There's not a corner of the world that's not busy right now," said Sean McGeough, Raytheon Aircraft vice president for international sales, who is based in Geneva, Switzerland. Over the last few years, international sales at Cessna have grown from about 40 percent of its business to about 50 percent, Whyte said. At Raytheon Aircraft, international sales represented 16 percent of its business in 2004. Last year, it made up 29 percent, the company said. In the next three years, Raytheon's goal is to make international sales 50 percent of its business, the company said. "We're going to really push hard," McGeough said.
Industrywide, the number of business aircraft deliveries internationally was 30 percent of all deliveries in 2001. That figure has grown to 45 percent so far this year, according to a presentation by Bombardier Aerospace. The figure is higher at Bombardier. So far this year, business aircraft deliveries to non-U.S. customers has totaled 59 percent of its business, the company said. Pierre Cote, head of Bombardier's business aircraft unit, told reporters last month that diversifying its customer base internationally decreases Bombardier's sensitivity to the U.S. economy. The increase in demand is due to a number of reasons. In Europe, the fall of the Berlin Wall and an agreement that opened up the borders within the European Union have spurred business jet sales, Whyte said. Before then, planes could fly only between large airports because they had to go through customs. With a few exceptions, they no longer have to clear customs, which makes it easier to fly to smaller airfields. "It made the use of business jets more valuable," Whyte said.
The use of business jets in the former Soviet Union also is on the rise. While only 44 corporate jets are registered in the Russian federation, more are in service. Owners are more likely to register their aircraft outside Russia because of high taxes. "They're trying to change that," McGeough said. The Middle East also has opened up. "At one time in Saudi Arabia, you had to be very high up in the royal family to have your own jet," Whyte said. "That's all gone away, and business people are able to have their own jets." In India, airlines are expanding but the country isn't training pilots quickly enough, he said, a fact the government there is finally realizing. "We're expecting to see expansion in the training markets there," Whyte said. And Indian companies are becoming more accustomed to the idea of having a business jet. There are 54 business jets based in India, according to AvData. The long-term potential is about 200, according to Bombardier Aerospace officials. And in China, there is "tremendous opportunity," McGeough said.
The biggest challenges are government regulations, which control the air space. When corporate jet operators want to fly, they have to file an application well in advance of the trip, Whyte said. "You don't have the flexibility to decide when you want to go," he said. In addition, China has less than 200 airports. By comparison, the United States has 19,000, of which 4,000 to 5,000 are regularly used by business aircraft, he said. Once airspace restrictions are lifted, "we think we will see very healthy growth in that area," Whyte said.
