HONG KONG -- Demand for chartered private jets is soaring in China as companies adopt more cost-effective travel polices for their high-flying executives.
The rapid expansion of Chinese companies into overseas markets has driven demand for corporate jets, both for convenience and as symbols of status. But as companies realize their high cost of ownership and the economy begins to cool, many have sold off their private planes and turned to more economical charter jets.
The initial purchase price is only part of the cost of jet ownership. After that, annual maintenance and operating fees can easily run $2.5 million. This makes ownership an iffy proposition for cost-conscious companies.
Hong Kong-based JetSolution is cashing in on the shift toward charter services, recently adding the 13-passenger Embraer Legacy 600 to its fleet of private business jets.
The plane features a luxurious interior with large leather chairs and sofa beds, and can fly up to seven hours without refueling. Passengers can choose from a selection of fine wines and top-class cuisine. Boarding at Hong Kong International Airport is through a private gate.
Of course, this all comes at a price, but not too different from first-class fares charged by commercial airlines. For example, a round-trip flight between Hong Kong and Osaka costs around 38,000 Hong Kong dollars ($4,900) per passenger.
People from China, Hong Kong and Taiwan account for 60% of JetSolution's passengers, according to President Jackie Wu. The passengers come from mining companies, real estate developers, casinos and other businesses that require executives to fly overseas on a frequent basis.
"I can fly to directly to a number of cities without having to worry about flight connections," said the head of a Chinese real estate company. Chartered private jets are attractive as they offer easy access to many cities in Asia and Africa that are not fully served by normal flights, the executive added.
Airports in China are beginning to catch up with the trend. More than 300 airports now accept private jets, with the number expected to increase to about 500 by 2020. An airport in Hangzhou, the city where Alibaba Group Holding is headquartered, opened a terminal for private jets earlier this year.
There are 1,200 private jets in Asia, with 1,000 of them in China, Hong Kong and Taiwan. While in the U.S. private jets are mostly seen as practical alternatives to commercial air travel, in China they symbolize power and wealth, Wu said, adding that three of China's five richest persons are JetSolution customers.
As China continues to crackdown on corruption, the country's wealthy have become wary of drawing undue attention from authorities. Also, listed companies are selling their planes in the face of mounting shareholder demand to streamline assets.