“"Many years ago, our company founder, Al Conklin, sold a new twin-engine business aircraft to a very successful entrepreneur. He had established a bit of a rapport with the individual and, after the sale, asked him straight out, 'How can you justify the cost of this airplane?' His reply? 'What is the cost of a divorce?'"–David Wyndham, president, Conklin & de Decker”
U.S.-based NetJets, which revolutionized business aviation in North America with its fractional aircraft ownership model, aims to take a role in China’s business aviation revolution—but with charter and management services, rather than its signature portfolio of shared-ownership plans. To pursue this goal, the company established NetJets China Business Aviation Ltd. in March 2012.
“We have a significant number of [fractional aircraft] owners that travel to, from and within China. Their needs and requirements have been a driving factor in NetJets’ decision to develop a presence there,” said Jordan Hansell, chairman and CEO of NetJets. “Additionally, the Chinese aviation market has phenomenal growth potential, and introducing the NetJets service in China will enhance NetJets’ offerings for customers around the globe.”
Subject to government approval, NetJets China will be a joint venture by a consortium of Chinese investors led by Hony Jinsi Investment Management (Beijing), a subsidiary of Hony Capital; Fung Investments, part of the private investment arm of the families of Dr. Victor Fung and Dr. William Fung; and NetJets.
Berkshire Hathaway, whose chairman and CEO is famed U.S. investor Warren Buffett, owns NetJets and is providing the Chinese company with the financial backing needed for its expansion. In his 2012 annual letter to Berkshire Hathaway investors, Buffett said entry into China will “widen our business moat” and protect NetJets from smaller rivals in the air charter and fractional ownership arena.
NetJets China is pursuing certification by the Civil Aviation Authority of China. Aircraft management services and charter operations will begin when approvals are obtained, which the company anticipates will be sometime in 2013.
The joint venture and its operational base will be headquartered in Zhuhai, by the Pearl River Delta on the southern coast of Guangdong province, an hour by fast ferry from Hong Kong. NetJets signed a Memorandum of Understanding with the Zhuhai Aviation Industry Park in Hong Kong in August 2011.
“We are witnessing demand from both new domestic customers and established customers in the U.S. and Europe,” said Eric Wong, vice chairman of NetJets China. Regarding anticipated charter activity, NetJets China has received interest in aircraft types “across the board, from light to midsize to large” aircraft, with “particular interest in the mid-size and large-cabin aircraft,” said Elizabeth Wise, manager of media relations at NetJets. The company is trolling for locally based aircraft owners interested in generating revenues by allowing NetJets China to use their airplanes for charter.
Meanwhile, though fractional ownership continues to be the bread and butter of its parent company, no answers have been provided on when or whether NetJets China will add jet shares to its list of offerings.