““CEOs go to their vacation homes just after companies report favorable news, and CEOs return to headquarters right before subsequent news is released. More good news is released when CEOs are back at work, and CEOs appear not to leave headquarters at all if a firm has adverse news to disclose. When CEOs are away from the office, stock prices behave quietly with sharply lower volatility. Volatility increases immediately when CEOs return to work.” —David Yermack, a New York University finance professor, whose recently released study shows a correlation between when CEOs take their private jets on vacation and movements in their companies’ stock price ”
Asia Embraces Business Aviation
Just a few years ago, the term "FBO" would have drawn blank stares throughout most of Asia. Today, the region is savvier about general aviation and more focused on making itself hospitable for private aircraft. Still, travelers should not expect Western-style infrastructure or support.
To accommodate private aircraft for this year's Olympics, Beijing has built the world's largest terminal/FBO. The 10.6-million-square-foot facility at Beijing International Airport will accommodate four 747s and 10 to 15 corporate jets. The $2.9 billion project is part of China's $62 billion airport expansion program, which includes construction of 97 airports by 2020, bringing the country's total to 244.
The Olympics could provide the catalyst for Chinese authorities to adopt a friendlier attitude to business aviation, according to Judith Moreton, managing director of Bombardier's Skyjet International block-charter program.
Skyjet is looking to boost its capacity in the region by partnering with a local firm to buy jets to base in cities such as Singapore and Hong Kong. Although significant numbers of business jets are now being delivered to customers in Asia, their owners usually don't want to make them available for charter as is commonly the case in North America and Europe.
"We have had to turn flight requests down because not enough aircraft are available in Asia," Moreton said. "But the situation is gradually improving and we are trying to encourage people to see the commercial benefits of having their aircraft available for charter."
Capacity Is Increasing
While demand that far exceeds capacity remains a concern among charter operators in the region, capacity does appear to be increasing.
Honeywell Aerospace's 2007 market survey indicates the onset of a reversal of the historic trend of the U.S. being the prime customer for airframe manufacturers. "Asia is up strongly and is expected to account for up to 15 percent of total business jet demand in the next five years," the report stated.
Inadequate capacity isn't the only reason the region can be challenging. "As someone who has flown with the owner of one of our GIVs through Malaysia, Singapore and China, I've found you have to be a good handler and have the right connections," said Andrew Gulsrud, director of flight operations for Western Air Charter (doing business as "Jet Edge"). "Our aircraft are U.S. registered, which brings up issues of cabotage occasionally." (Cabotage is a legal restriction on transporting passengers within a country on aircraft registered in another country.)
A bigger problem, Gulsrud said, is that "every country has different rules and some are stricter than others." For instance, some countries don't allow privately owned aircraft to fly within their borders while others do but with restrictions. That's why you need local contacts-because even an experienced international flight crew can't keep up with the constant changes in every country.
This is where companies such as Universal Weather and Aviation come in. Universal recently opened a center in Manila, in the Philippines, to provide scheduling services for operators throughout the Asia Pacific region. Universal has personnel all over the area so flight crews get the latest, most accurate information on airports, customs, hotels, permits and fuel pricing.
One great concern is what happens if you find yourself in need of a charter operator once you're in Asia. "In the U.S., we have extensive audit services that will tell you everything about a charter operator you're considering," said Debra Fanjoy, senior vice president of Hays Companies, a Chicago-based insurance and risk-management firm. "The problem is that most of the audit services have limited capabilities to review flight operations in Asia.
"Even if there is an audit of an Asian flight operation, it probably will not have been done on site," Fanjoy continued. "Someone will do only a 'desk audit' by making some phone calls and asking some questions. In that case, you really want to stick with the big-name international charter operators to be sure of getting the safety and quality we're used to in the U.S."
Chuck Woods, CEO of Macao-based Jet Asia, said he has seen tremendous improvements over the past several years but stresses that significant problems remain throughout the region. "Hong Kong has become very business-aviation friendly and the Hong Kong Business Aviation Center is a first-class FBO," he said. "Singapore now has economic incentives for business-aviation-related companies to help stimulate growth there and we're seeing FBOs there as well as in Beijing and Shenzhen." Woods added, however, that "it still takes too long to get permits, there aren't enough landing slots and there's still very little infrastructure."
JAS (Jet Air Services) of Tokyo, a global freight forwarder and aviation services provider founded in Italy, has renovated a facility at Haneda/Tokyo International Airport, which includes a crew and passenger lounge and reception area. It also has available a new crew and passenger vehicle. The company plans to provide similar facilities at other airports in Japan, including Narita, Kansai and New Chitose.
After the new airport opened in Nagoya, the Aichi Prefecture purchased and rededicated the old Nagoya Airport as a business aviation and regional airline facility. Nakanihon Air Service, a general aviation company headquartered there, has a small business aviation facility that offers private customs, immigration and quarantine so those arriving on private aircraft don't have to wait in long lines with airline passengers. The facility allows aircraft to taxi right to the entrance and there is a ground-side carport.
"We are dedicated to making Nagoya a business aviation center for Japan," said Aichi Prefecture Governor Masaaki Kanda. "We have a lot of room to grow."
From a maintenance perspective, the region has scant FAA-approved options. Metrojet offers an FAA-certified maintenance, repair and overhaul facility in Hong Kong and Hawker Beechcraft Asia Pacific recently selected Hong Kong-based Avion Logistics Limited to be an authorized parts distributor to provide 24-hour support. Additional operations are in development.
While business aviation infrastructure is slowly being built in a few major population centers, most of Asia remains unprepared to deal efficiently with private aircraft. More often than not, passengers are required to go through customs and immigration with airline passengers.
"Don't expect to be whisked off into your limo when you land," said Gulsrud. At best, expect a long taxi in, and then perhaps remaining on board as you wait for a "luxury van" often supplied by the airport or the handler. The van will transport passengers and their English-speaking handler to the main customs and immigration office.
"Some airports offer VIP immigration and lounges separate from the airline passengers, but this is always an extra charge, which can be significant," he said. "The ones I've been in weren't impressive. They were basically a room with old couches where personnel offered tea while we waited for them to clear our passports.
"Just gaining access to airports can be challenging, as many are not open to foreign-registered aircraft," Gulsrud noted. "We tried to get into one airport in China and the authorities told us we would need an onboard Chinese navigator. We got one, but were still denied entry. Even getting from Point A to Point B can defy the laws of geography when [traveling between] airports with a straight-line distance of 1,000 nm requires a 1,400-nm flight because of the airway system. Everything in Asia takes more time, so be prepared to hurry up and wait.
"Finding a reputable charter operator is tough," he emphasized. "The marketing mechanisms and aircraft listings are different there and a lot of communication is by word of mouth. You really have to do your homework to make sure you are dealing directly with the operator and buying from a legitimate charter certificate.
"The good news is that there are now a number of reputable brokers in the region, such as Hunt & Palmer and TAG Aviation Asia, that are branching out and really do know the ins and outs. They can arrange for a reputable operator, but expect to pay a lot more for charter when flying in Asia."
Gulsrud said many things conspire to drive up the cost of charter in the region, including low supply and high demand, longer airway routings resulting in longer-than-anticipated flight times, expensive international and navigation fees, and broker fees.
"The one saving grace is that fuel prices are consistent and low almost throughout Asia, with the exception of Hong Kong, so you can expect to get quotes without the nasty little temporary fuel-surcharge section," he said.
Woods, who is chairman of the Asian Business Aviation Association, stressed that "in China, it's all about guanxi [loosely translated as connections or relationships]. It is important to know someone who is well positioned and has political or social access to important individuals. Every country is completely different from the rest and has its own airspace, tax codes and cultural nuances. You simply can't expect to fly to an Asian country without laying the groundwork well in advance."