At first private school, Chinese learn to fly

Fellows Fall 2005

By Alan Bjerga

June 03, 2009

Jack Li at the Beijing PanAm International Aviation Academy.

Jack Li at the Beijing PanAm International Aviation Academy.

SHIJIAZHUANG CITY, China -- To want to buy a plane, you must first be able to fly one.

That's what Jack Li is working on at the Beijing PanAm International Aviation Academy, China's first privately run flight school.

It trains pilots for Chinese airlines, but could also train pilots for charter aircraft, business jets and private planes when China's demand for small aircraft takes off.

Li is betting that happens soon. So are Wichita's small-aircraft manufacturers. They view China as an infant market that could someday become the world's second-largest if obstacles in regulation, training and culture are overcome.

"China is at the center of the future," said Jason Liao, Raytheon's sales director in China.

It's a future that could fuel Wichita job growth.

Set to take off

China's growing prosperity has potential big benefits for Raytheon, Cessna and Bombardier, the companies that together provide Wichita about one-tenth of its wages.

The country already is a big consumer of Boeing and Airbus jets. But in the past, the Chinese government blocked private plane sales. Military control of airspace discouraged the growth of small airports and nonairline air transport.

The market for private business jets is expected to grow from about 20 planes to 600 in the next decade, according to China's state-run news service. A similar ascent is expected in general aviation aircraft.

The numbers are small compared to the 200,000 aircraft in North America, the world's biggest small-plane market. But it's an important new source of sales.

And it's especially important to Wichita, which last year shipped 40 percent of all the corporate airplanes produced.

China's own ability to build world-class small aircraft remains years behind the West's, and the low labor costs that offer advantages to giants like Airbus or Boeing aren't as apparent for smaller planemakers.

China, which debuted its first home-grown regional jet this fall, won't become a competitive small-aircraft manufacturer for at least a decade, predicted David Dixon, Bombardier Business Aircraft's regional sales vice president for Asia and the Pacific.

In the meantime, it will be a good market, he said. Bombardier is the leading supplier of regional jets in China and also sells Learjets for use by charter services.

"They need planes now, and the West has the planes," Dixon said.

Cessna's focus also is on selling airplanes to China, not building them there, Mark Paolucci, a Cessna sales vice president, said. Next year it will start delivering 42 Cessna 172 Skyhawks to the Civil Aviation Flying University of China. More sales are in the works.

Selling aircraft for pilot training, along with helping China with maintenance, support and infrastructure are ways to help open up China's market --and ensure that Chinese pilots want Cessnas when it does, Paolucci said.

That's a different approach than some of Wichita's competitors take.

Bombardier arch-rival Embraer is assembling regional jets in the northern city of Harbin. Cessna rival Diamond of Austria began a joint venture with a Chinese company this fall, building DA-40 trainer jets in northern China.

Cessna could someday send work to China, but not until China is a big enough market to justify the commitment, Paolucci said.

"We believe we can keep our name in the forefront of Chinese minds and later be able to time any heavy investment to coincide more closely with the blossoming of the market," he said.

A slow climb

Li, the 44-year-old chairman of the private flight school, started in air traffic management in China in 1983. He said he's never seen Westerners compete so hard for Chinese business. But they need to keep in mind that China won't open overnight.

China is "not capitalist, and it's not socialist," he said. "It's trying to manage growth and maintain stability. This takes time."

Serious obstacles with regulation, infrastructure and culture could slow China's emergence as a small-aircraft customer.

"China has very good potential" for business jets, said Yang Guoqing, deputy director general of China's counterpart to America's Federal Aviation Administration, in a meeting with Kansas Gov. Kathleen Sebelius in October.

But Yang avoided discussing China's key regulatory issue --opening its skies to small-plane traffic -- in his meeting with the governor.

For decades, Chinese airspace has been controlled by the People's Liberation Army, which gives military routes priority over other aircraft. The Chinese military tends to resist challenges to its power.

Beyond that, smaller aircraft would further tax an already burdened aviation infrastructure. China has far fewer airports than the United States. Small aircraft also require air traffic controllers and other support to fly safely and efficiently.

Some officials predict relaxed regulation by the 2008 Olympics in Beijing, but others view that skeptically.

"There isn't the infrastructure," said Wu Song, who advises the Chinese government on aviation policy.

Another barrier is Chinese culture itself. For decades, officials and businessmen have flown on airliners, and many see no reason to change. Personal aircraft are still seen as distasteful displays of wealth by much of the public.

Liao counters these attitudes with an appeal to Chinese family values. He tells customers that a Raytheon jet is just what a busy Chinese entrepreneur needs to make sure he can eat breakfast with his family, attend a business meeting in another province and return for dinner.

"My job is different from any of my colleagues from around the world," Liao said. "In other countries there's a greater understanding of how business jets are a tool to improve productivity. Here you also have to make other arguments.

"We're building a market from scratch."

Liao said the strategy has found some success. In December 2004, Qiu Dedao, a Chinese corporate president, bought the first private Raytheon business jet sold in China, a Beechcraft Premier I.

Qiu said the purchase, which Chinese media reported as costing $6.3 million, raised eyebrows.

"Some people said it's not necessary to buy an aircraft," he said. "Some people said it's wasting money.

"It's not like that in fact," he said. "It's useful to buy a business aircraft."

Liao mails a quarterly magazine to about 2,000 Chinese that Raytheon has identified as possible customers, including Li, who said he's considering adding Raytheon planes to the Diamond fleet at his growing flight school.

Li is a prime example of someone who might want to buy a jet of his own -- though he said he lacks the money and the pilot's license.

He plans to start flying lessons this spring.