General aviation firms await industry take-off

Zhongfei General Aviation Company was established the same day as Hainan Airlines but has gone on to considerably less success.

The 16-year-old Shaanxi-based company remains in "pretty much the same" place as when it started said Liu Jianhua, the company's Party secretary, even though it's the fifth largest general aviation firm in China.

"It's impossible for any Chinese general aviation business to make much money," he said. General aviation refers to all flights other than military and scheduled airline flights. It includes private civilian flights, rescue operations, resource exploration and aerial photography.

When Liu joined Zhongfei in 2003 the company's annual profits were only between 200,000 and 300,000 yuan a year. But that was an improvement on previous years when the company was in the red, he said.

Zhongfei initially focused on aerial photography and airborne geophysical exploration. The photography accounted for the bulk of business, but making money from it depended on the weather.

"With good conditions, an aerial photography project could be done in a month. But if the weather was poor, the project might take three to four months. The costs would become huge and no profit would be left," he said.

Zhongfei fortunes changed slightly in 2007 when it started offering aircraft modification and repair service, remote sensing and telemetry.

The firm's traditional services (aerial photography and geophysical exploration) are still its bread and butter, but the other services push it from a barely profitable company to a somewhat profitable one.

A switch of emphasis from photography to exploration also helped, leaving Zhongfei's bottom line less at the whim of nature.

"The aerial photography has shrunk to account for one-fifth of the company's total business, but the growing demands for energy and resources have boosted airborne geophysical exploration, which now accounts for one-third of the total business," said Liu.

Zhongfei also started a private pilot training program in 2007.

"We hope as Chinese people grow richer, buying a private airplane might become a popular thing. So we established an aviation club, where people can spend 130,000 yuan getting a private pilot license over six months," he said.

But it hasn't caught; the club has trained 11 pilots in two years.

Permits for low-altitude flights (which all private flights need) take three days to arrange through the military.

Industry insiders suggest that only when low-altitude airspace is opened, like it is in the United States, will people start buying private jets and the general aviation industry start growing.

The civil aviation authority is carrying out a trial project that opens low-altitude airspace in Northeast China.

Heavy import tax on small planes, high landing fees at small airports and losing pilots to big airlines are other problems hampering China's general aviation industry, said Liu.

"It is hard to say when the general aviation sector will take off but it will happen some day," he said.

(China Daily 03/09/2009 page8)