Greater Bay Area Aviation Report

2019 UPDATE

GREATER BAY AREA AVIATION REPORT

In association with Beijing

Shanghai

Singapore

ABOUT ASIAN SKY GROUP ASIAN SKY GROUP (ASG) is headquartered in Hong Kong, with offices throughout the Asia-Pacific region. Through longstanding and strategic partnerships, ASG’s work extends worldwide. It has assembled the most experienced business aviation team in the region to provide a wide-range of independent services for both fixed-wing and rotary-wing aircraft. The company also provides access to a significant client base around the world.

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Asian Sky Media has a growing portfolio of business aviation reports designed to provide valuable information to readers for a better understanding of the market. Included in this portfolio are the Asia Pacific Fleet Reports for both civil helicopters and business jets, produced annually. Asian Sky Quarterly provides a reader-friendly look at market dynamics within the pre-owned business jet and civil helicopter markets. Additionally, ASG produces the Asia Pacific Business Jet Charter Report; Asia Pacific Training Report; Asia Pacific Infrastructure Report; and the China GA Report — focusing on the status, challenges and future of these respective industry segments.

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DISCLAIMER The information contained in this report is provided free of charge for reference only. While such information was compiled using the best available data as of October 2018, ASG makes no warranties, either expressed or implied, concerning the accuracy, completeness, reliability, or suitability of such information. ASG is not responsible for, and expressly disclaims any and all liability for damages of any kind, either direct or indirect, arising out of use, reference to, or reliance on any information contained within this report.

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CONTACT Suite 1401, Fortis Tower, 77-79 Gloucester Road, Wan Chai, Hong Kong Telephone +852 2235 9222 | Facsimile +852 2528 2766 www.asianskygroup.com | www.asianskymedia.com CONTENTS

02 PUBLISHER’S NOTE UPDATED

03 FOREWORD BY HFW UPDATED

04 EXECUTIVE SUMMARY

05 GREATER BAY AREA OVERVIEW

11 GENERAL AVIATION MARKET OVERVIEW

20 INTERVIEW: KINGS AVIATION

23 INTERVIEW: TAG AVIATION (ASIA) 25 FUTURE DEVELOPMENTS BY HFW UPDATED PUBLISHER’S NOTE

In 2017, Asian Sky Group • On February 18, 2019, the Chinese Government released the inaugural published an outline development plan for the China General Aviation Greater Bay Area including aviation. Report, which focused on the evolving GA landscape To explain further the challenges and opportunities in China. The report was these initiatives present, this ‘updated’ Greater Bay Area timely in that in coincided Aviation Report is published in association with Holman with significant changes Fenwick Willian (HFW) who have a full-service aviation happening in China’s GA team in Hong Kong that provides insight across the full industry. spectrum of developments in the aviation market.

In November 2018, more The scale and potential impact of the Greater Bay developments came about Area is hard to ignore. With that, we hope this second as the Chinese Government continued to place a high edition of the report will help you keep pace with its emphasis on GA in one of the country’s highest producing developments and the significance of the Greater Bay economic regions; the Greater Bay Area, which is made Area. up of nine cities in China’s Guangdong Province, along with Hong Kong and Macau. ASG outlined these initiatives and their significance to GA in our first Greater Bay Area Aviation Report, while also detailed the makeup of the GA fleet — a breakdown of the business jet, helicopter, turboprop and piston fleets.

And now, with the arrival of ABACE, it’s a good time to Sincerely, revisit the Greater Bay Area Aviation Report, as several Jeffrey C. Lowe developments have come about in late 2018 and early Managing Director, Asian Sky Group 2019 including strategic agreements, outlines and MOUs.

• On November 5, 2018, the CAAC signed a strategic agreement with Guangdong Province to accelerate airport construction in the Greater Bay Area;

• On December 10, 2018, the CAAC published its action plan for aviation through 2050;

2 | CHINA GA REPORT - 2019 UPDATE FOREWORD

Aviation has been designated as a strategic industry to play a leading role in China's economic development, and so it is no surprise that the Chinese Government's plans for the Greater Bay Area announced in February this year include substantial support for commercial and general aviation.

These plans represent a significant opportunity for general aviation, despite current geo-political tensions and economic headwinds – not only because of the dramatic projections for increased economic activity within the Greater Bay Area (centred around innovation, technology and e-commerce), but also due to the emphasis on much greater coordination and connectivity between Hong Kong, Macau and the other 9 Greater Bay Area cities.

We are optimistic that general aviation will benefit from the development of the Greater Bay Area, but in order for that to happen, certain key issues will need to be addressed. These include improving the regional infrastructure for general aviation, and better coordination of regional airspace and airport slots. In addition, as connectivity lies at the heart of the Greater Bay Area, the current restrictions on cross-boundary helicopter services should be eased, and those services enhanced.

Other challenges also exist, which will need to be overcome for the Greater Bay Area to succeed. For example, the different legal and political systems, tax regimes, currencies, and customs areas across Hong Kong, Macau and the other Guangdong cities will all require coordination. Nonetheless, given the political will behind the project, and the anticipated economic benefits, the outlook for general aviation is positive.

We hope you enjoy reading this very interesting and informative Greater Bay Area Report published by Asian Sky Group.

Sincerely

Gordon Gardiner Partner, HFW

ABOUT HFW HFW supports the development of general aviation across Greater China and more widely throughout the Asia Pacific region, and is an active member of the Asian Business Aviation Association. We provide legal advice across the full spectrum of general aviation activities, including finance and leasing, commercial contracts and regulatory issues, through to repossessions and management disputes.

For more details please contact our team:

GORDON GARDINER JUSTIN SUN NICK HUGHES PATRICK CHEUNG Partner Registered Foreign Lawyer* Registered Foreign Lawyer* Partner Hong Kong Hong Kong Hong Kong Hong Kong T: +852 3983 7710 T: +852 3983 7713 T: +852 3983 7762 T: +852 3983 7778 M: +852 5325 6046 M: +852 6397 7900/ M: +852 9187 5441 M: +852 9037 4389 E: [email protected] +86 138 0139 2958 E: [email protected] E: [email protected] E: [email protected]

*Justin and Nick are Partners of Holman Fenwick Willan LLP, and Registered Foreign Lawyers in Hong Kong

CHINA GA REPORT - 2019 UPDATE | 3 EXECUTIVE SUMMARY

• The Greater Bay Area (GBA) of China comprises nine cities • There are currently 160 helicopters in operation in the Greater and two Special Administrative Regions (SARs): Guangzhou, Bay Area. This number is expected to grow as the Greater Bay Shenzhen, Zhuhai, Foshan, Zhongshan, Dongguan, Huizhou, Project increases connectivity and economic output from the Jiangmen and Zhaoqing, all of which are in the Guangdong region. Airbus and Sikorsky are the leading OEMs in the region Province, along with Hong Kong and Macau. The GBA region is with 49 helicopters (31%) and 38 helicopters (24%), respectively. located on the Southeastern border, surrounding the Pearl River. Medium size helicopters are the most popular size category, comprising 43% of the Greater Bay helicopter fleet. • With a population of approximately 67 million, the GBA region represents only a small portion of the total 1.4 billion population • There are 42 fixed-wing aircraft in the region that are either in Mainland China. Guangzhou has approximately 14.5 million, pistons or turboprops. Cessna dominates the fixed-wing while Shenzhen is home to approximately 12.5 million. By area, turboprop/piston market in the region with 22 aircraft (52%), the GBA makes up 56.5M km2 — 0.5% of China’s total 9.6M km2. followed by Cirrus and Diamond with 8 (19%) and 7 (17%), respectively. Single-engine turboprops make up the most • China is on track to overtake the US, as the world’s largest popular size category with 52%. economy by 2030. The past five years have consistently seen around 7% GDP growth, with the GBA contributing around 12% • There are currently 15 operational airports and 19 helipads in of its overall GDP. The GBA also produces 48% of the country’s the Greater Bay Area. Of the 15 airports in operation — 7 are total exports and accounts for 12% of the region’s inbound dedicated for air carriers, 6 for helicopters and 2 for general tourists. It is the fastest-growing province in China, many times aviation. 8 helipads in the region are ground based while 11 are exceeding 16% growth. overhead. There are only 4 FBOs in the region 2 in Mainland China and 1 each in Hong Kong and Macau. • With the Greater Bay Area Initiative well under way, the business and general aviation markets in the region have been • Over the past few years, the Civil Aviation Administration of expanding in response to the Greater Bay Area development. China has required aircraft owners and operators to abide by There are currently 244 fixed-wing aircraft, 160 helicopters and strict regulatory policies. In 2017, several regulations were 7 other aircraft in this region. Hong Kong and Shenzhen have relaxed, simplifying the permit process, as well as making it the largest aircraft fleet among all the cities in the Greater Bay. easier for general aviation (GA) companies to set up in China. Of the 52 operators in the region, more than half (almost 54%) Still, GA operators are faced with restrictions regarding parking are dedicated to operating only business jets. 25% operate only and slots, which are prioritized for commercial aviation. helicopters and around 10% operate only turboprops/pistons. Additionally, the lower-altitude airspace policies that have slowly opened up the country’s skies haven’t offered much in • Of the 244 fixed-wing aircraft, 202 (almost 83%) are business the way of relief for operators, who continue to advocate for jets. Gulfstream and Bombardier are the leading OEMs in the low-altitude airspace reform. region with 94 aircraft (47%) and 71 aircraft (35%), respectively. Long-range business jets are the most popular, contributing to 62% of the business jet fleet.

4 | CHINA GA REPORT - 2019 UPDATE GREATER BAY AREA OVERVIEW City: Shenzhen

China Economics Since the introduction of the ‘Open Door Policy’ in 1978, China’s economy has sky-rocketed. Its gross domestic product (GDP) has averaged an unprecedented 9.5% growth rate through 2017, according to the World Bank. The reform policy, set in place by then-party leader Deng Xiaoping, opened China up to foreign investment, trade and the setup of foreign businesses. The country has since evolved into one of the largest economies in the world, heavily focused on manufacturing and agriculture; it is now the largest and fastest- growing consumer market.

Although GDP growth has slowed in recent decades, China is on track to overtake the US, becoming China's GDP is the world’s largest economy by 2030, according to the International Monetary Fund. While the expected to reach first few decades of China’s open economy can be defined by record-breaking growth, reaching US$24.6 trillion by an impressive 15.2% in 1984, the past five or so years GDP growth have typically seen around 7% 2020, as forecasted growth. In early 2019, the Chinese Government announced its 2018 GDP, which came in at a 28- by Standard year low of 6.6%. The Chinese Government has since announced its plans to ‘rebalance’ focusing Chartered Bank. on domestic demand.

Fueling Growth President Xi Jinping has outlined several initiatives and two large scale projects to make China more competitive on a global scale. Unveiled in 2013, President Xi announced the Belt and Road Initiative. The infrastructure and investment project aims to connect China to Asia, Europe and Africa along a series of routes, BEIJING to boost trade and further stimulate each economic area. XIAN WUHAN The Greater Bay Area Initiative is the second of China’s mega SHANGHAI CHONGQING projects, bringing together the Special Administrative Regions HANGZHOU (SAR) of Macau and Hong Kong, along with the Guangdong Province in Mainland China. This initiative hopes to develop the HONG KONG/ region into one that is comparable to California’s San Francisco MACAU Bay area, the Greater New York area or the Greater Tokyo area.

CHINA GA REPORT - 2019 UPDATE | 5 GREATER BAY AREA OVERVIEW

Financial Data in USD GREATER TOKYO NEW YORK METRO MAIN INDUSTRY: MANUFACTURING MAIN INDUSTRY: FINANCIAL SERVICES 36.7K Population (M) 43.8 34.5K Population (M) 23.7 Surface area GDP (T) Surface area GDP (T) ( km2) 1.9 ( km2) 1.8 GDP Per Capita (K) 42.4 GDP Per Capita (K) 77.2 GDP Growth 3.6% GDP Growth 3.5% SAN FRAN BAY GREATER BAY AREA MAIN INDUSTRY: TECHNOLOGY INNOVATION MAIN INDUSTRY: TECHNOLOGY INNOVATION, FINANCIAL SERVICES, MANUFACTURING 17.4K Population (M) 7.7 56.5K Population (M) 67.7 Surface area Surface area 2 GDP (T) 2 GDP (T) ( km ) 0.8 ( km ) 1.4 GDP Per Capita (K) 105.3 GDP Per Capita (K) 20.4 GDP Growth 2.7% GDP Growth 7.9% Source: Deloitte CN CXO Greater Bay Area Whitepaper

In recent decades, manufacturing — which has moulded the Greater Bay Area Greater Bay Area’s economy into what it is today — has begun Included in this region are nine cities and two SARs: Guangzhou, to decline. Higher property values, a crackdown on smog and Shenzhen, Zhuhai, Foshan, Zhongshan, Dongguan, Huizhou, cheaper labor have pushed factories to move inland or out of Jiangmen, Zhaoqing, Hong Kong and Macau. The region, commonly China completely; typically to Vietnam, Sri Lanka and Cambodia. known as the Pearl River Delta, surrounds the Pearl River which This has left the Government to look for alternative industries to flows into the South China Sea. While the entirety of China has generate economic growth. approximately 1.4 billion people, the Greater Bay Area, located on the Southeastern border, has 67 million people; only a small portion The expectation now is that the Greater Bay Area will act as a hub of the total population. Guangzhou, alone has approximately 14.5 for innovation, while still capitalizing on the region’s manufacturing million, while Shenzhen is home to approximately 12.5 million. strengths. This region, and China as a whole, will focus on The Greater Bay Area’s population is considerably smaller than homegrown technology, to be fostered in the Greater Bay Area China’s population, but still it is region. This means more automation, more financial services and a significantly larger than other city- more service-oriented economy. Greater Bay clusters in the world; 8.8 times Area, particularly larger than the San Francisco However, becoming a region that fosters technology and innovation Guangdong Bay Area, 2.8 times larger than requires a more open economy to those who will be at the forefront Province, has been New York Metropolitan and 1.5 of growth — entrepreneurs, small and medium-sized enterprises at the forefront of times larger than the Greater (SMEs) and venture capitalists. The Government will need to allow reform in China Tokyo Area. these private companies to work freely in an industry that has since the opening typically been dominated by state-owned enterprises (SOEs), much of the economy Size-wise, China is 9.6 million like other industries across China. km2, with the Greater Bay Area making up 0.5% of that area. As a comparison, the US is 9.8 Additionally, cultivating an area where innovation is possible requires million km2. The Greater Bay Area is still much larger in terms of talent. This is an area the Government needs to focus on; attracting area; 1.5 times larger than Greater Tokyo Area, 1.6 times larger the right talent means making the Greater Bay Area a region where than New York Metropolitan and over 3 times larger than the San the right talent wants to stay. Francisco Bay Area.

6 | CHINA GA REPORT - 2019 UPDATE Economically, the Greater Bay Area, particularly Guangdong Province, has been at the forefront of reform in China since the opening of the economy in the late 1970s. The Government announced this area as a Special Economic Zone, offering attractive conditions and tax incentives to foreign investors. This resulted in an export-led economy, acting as a manufacturing base to much of the world. The region has since transformed into the fastest-growing province in China, many times exceeding 16% GDP growth. It currently stands as the 15th largest economy, with expectations of becoming the world’s 9th largest economy by 2025, according to the 2018 IMF World Economic Outlook.

In 2017, the Greater Bay Area produced 48% of the country’s total exports and contributed to 12% of its GDP, helping China become the largest exporting country. This region also accounts for 12% of the region’s inbound tourists, with four of the Area’s cities ranking as Top 10 China destinations for overseas tourists.

City: Macau Future of Greater Bay Area In recent years, China-based companies have played an increasing they’re thousands of miles apart from each other. The Greater role in the region’s economy. Different cities and the two SARs have Bay Area offers all of these industries, as well as manufacturing, developed their own sense of identity. Guangzhou remains known within an area reachable in less than an hour by air. Combined for its manufacturing industry; Shenzhen is earning praise for its these cities and SARs of the Greater Bay Area have the capacity innovation and entrepreneurial sense; Hong Kong continues to be to rival the better-known economic clusters throughout the world. a financial center; Macau is notable for entertainment; Zhuhai has Source: Deloitte CN CXO Greater Bay Area Whitepaper Implementation of the Greater Bay Area Initiative is already become a top holiday spot in the country. underway, with several infrastructure projects connecting the These major industries — financial services, entertainment and region. A high-speed railway now links Hong Kong, Shenzhen and casinos, and technology — can all be found in the US, however, Guangzhou, while the Hong Kong-Zhuhai-Macau Bridge — 55km and the world’s longest bridge — offers an easy and efficient City: Guangzhou driving option.

Further integration of the region offers the potential for even more connectivity. Currently, there are four international airports within the area: Hong Kong International, Macau International, Guangzhou Baiyun and Shenzhen Bao’an. While these offer international and domestic departures, there is still room for aviation connectivity within the region.

The new Hong Kong-Zhuhai Macau Bridge, which cost approximately US$18.8 billion and almost a decade to construct, as well as the Guangzhou-Shenzhen-Hong Kong Express Rail Link, which cost over US$10.8 billion and over a decade to construct, still do not offer the quickest routes to some of the most sought- after areas within the Greater Bay Area.

As the region hopes to promote opportunities through different industries, the use of general aviation will be essential. Commuter and charter flights will offer a convenient way to bypass the still relatively long distance to travel between significant points within this region, such as Central, Hong Kong to Guangzhou’s Central Business District.

CHINA GA REPORT - 2019 UPDATE | 7 GREATER BAY AREA OVERVIEW

Financial Data in USD KEY CITIES OF THE GREATER BAY AREA - CITY STATS

DONGGUAN FOSHAN Area (km2): 2,460 Area (km2): 3,798 GDP (B): 110 GDP (B): 138 Population (M): 8.3 Population (M): 4.6 Annual Visitors (M): 41.4 Annual Visitors (M): 49.2 Export Value (B): 101 Export Value (B): 45 ZHAOQING Area (km2): 14,891 GDP (B): 32 HUIZHOU Population (M): 4.1 GUANGZHOU Annual Visitors (M): 42.2 Area (km2): 11,345 Area (km2): 7,434 Export Value (B): 3 GDP (B): 56 GDP (B): 312 Population (M): 4.7 Population (M): 14.5 Annual Visitors (M): 53.9 Annual Visitors (M): 62.7 Export Value (B): 33 Export Value (B): 83

ZHONGSHAN Area (km2): 1,784 GDP (B): 51 ZHUHAI Population (M): 3.3 2 Annual Visitors (M): 13.3 Area (km ): 1,732 HONG KONG Export Value (B): 30 GDP (B): 37 Area (km2): 1,106 Population (M): 1.77 GDP (B): 333 Annual Visitors (M): 39.8 Population (M): 7.3 Export Value (B): 27 Annual Visitors (M): 58.5 Export Value (B): 495

JIANGMEN Area (km2): 9,505 GDP (B): 38 MACAU SHENZHEN Population (M): 4.5 Area (km2): 31 Area (km2): 1,997 Annual Visitors (M): 22.5 GDP (B): 45 GDP (B): 325 Export Value (B): 15 Population (M): 0.6 Population (M): 12.5 Annual Visitors (M): 32.6 Annual Visitors (M): 60.2 Export Value (B): 1 Scale:20km Export Value (B): 239

Airport Facilities Available Port Access Available Source: www.bayarea.gov.hk

8 | CHINA GA REPORT - 2019 UPDATE GREATER BAY AREA OVERVIEW

CONNECTING THE GREATER BAY AREA - LAND & SEA ROUTES

ZHAOQING GUANGZHOU HUIZHOU

FOSHAN

DONGGUAN

SHENZHEN

ZHONG- ZHUHAI JIANGMEN SHAN HONG KONG

MACAU

Scale: 20km Bridge In Service High Speed Rail In Service Bridge Under Construction High Speed Rail Under Construction/ Planned

Note: The map only includes major bridges connecting Hong Kong, Zhuhai, Macau, Shenzhen, Zhongshan, Guangzhou and Dongguan.

CHINA GA REPORT - 2019 UPDATE | 9 GREATER BAY AREA OVERVIEW

SAMPLE ROUTE TIMES - FROM HONG KONG CENTRAL TO GUANGZHOU TIANHE CBD

BY FERRY BY DRIVING BY HIGH SPEED RAIL BY HELICOPTER

CIQ & waiting Transit Transit Rooftop heliport West Kowloon

China Ferry Drive 10 Station

15 Terminal On board 28

CIQ & waiting 20 Shenzhen Bay CIQ & waiting 30 40 CIQ & waiting

CIQ & waiting 10 35 MINS

60 On board

140 On board Guangzhou South Station

Drive 140 SAVES

Drive to 40 destination 75% TRIPTIME CIQ & waiting 140 Panyu MINS

10 Lianhuashan Port 190

60 MINS Drive to destination

245 MINS

10 | CHINA GA REPORT - 2019 UPDATE GENERAL AVIATION MARKET OVERVIEW

Number of Fleet: 411 Number of Airports: 7 Number of GA Airports: 2 Number of Heliports 6 Number of Helipads: 19

City: Guangzhou GREATER BAY AREA MARKET OVERVIEW

he Greater Bay Area is home to some of the busiest There are currently 244 fixed-wing aircraft, 160 helicopters and 7 airports in China. Notably, Hong Kong International balloon aircraft in this region. T Airport has already reached passenger traffic and aircraft movement capacity, while Guangzhou Baiyun Airport has Hong Kong and Shenzhen have the largest aircraft fleet among all exceeded its passenger traffic capacity. the cities in the Greater Bay. Hong Kong is home to 139 business jets and 23 helicopters while Shenzhen houses 40 business jets With the Greater Bay Area Initiative well under way, the Chinese and 70 helicopters. Together these two cities contribute to almost Government is taking the necessary steps to ensure that airports 66% of the total fleet in the region. With 39 aircraft, Zhuhai has in this region can support growing aviation traffic. Investments the largest fixed-wing turboprop/piston fleet of all the cities in the have poured into the development of the Guangzhou Baiyun Greater Bay. Dongguan is the only city with balloon aircraft. Airport, paving the way for the airport to act as an aviation hub. In April 2018, the second terminal at the airport opened, with Of the 52 operators in the region, more than half (almost 54%) expectations of increasing passenger traffic capacity to 100 are dedicated to operating only business jets. 25% operate only million passengers a year by 2025. helicopters and around 10% operate only turboprops/pistons. Currently there are 2 operators that handle jets and helicopters, The business and general aviation markets in the region have 3 that operate helicopters and turboprops/pistons and 1 that been expanding in response to the Greater Bay Area development. operates jets, helicopters and turboprops/pistons. Fleet by Base 139 Business Jet Helicopter 70 Turboprop/ Piston Others

40 39 31 23 20

12 10 6 8 7 1 3 2

Hong Kong Shenzhen Zhuhai Guangzhou Macau Zhongshan Dongguan

Fleet by Type Number of Operator by Type

Business Jet Others 7 (2%) 202 (49%) All Type 1

Turboprop/Piston 42 (10%) 28

5 Turboprop/Piston & Helicopter 3 411

Business Jet & Helicopter 2 13 Total Number of Business Jet Operators 31 Helicopter49+ 160 (39%) 39+102+G Total Number of Helicopter Operators 13 Total Number of Turboprop/ Piston Operators 9

12 | CHINA GA REPORT - 2019 UPDATE HELICOPTER MARKET

There are currently 160 helicopters in operation in the Greater Bay Fleet by OEM Area. This number is expected to grow as the Greater Bay Project increases connectivity and economic output from the region. Bell 7 (4%) MD 5 (3%) Airbus and Sikorsky are the leading OEMs in the region with 49 Russian Helicopters 8 (5%) Airbus 49 (31%) helicopters (31%) and 38 helicopters (24%) respectively. Medium size helicopters are the most popular size category and comprise Leonardo 10 (6%) 43% of the Greater Bay helicopter fleet. Piston helicopters and AVIC 17 (11%) heavy helicopters are the second and third most popular size categories and comprise of 23% and 20%, respectively. The 160 helicopters in the area are mostly used for multi-mission purpose (36%), offshore operations (35%) and training purposes (7%). COHC is the leading helicopter operator (in terms of fleet size) Robinson, 26, (16%) Sikorsky, 38 (24%) with a fleet of 68. China Southern comes in second with 23 31+24+16116543+G helicopters in its fleet. Fleet by Mission

Law Enforcement 4 (3%) Others 7 (4%) Top 10 Helicopter Operators Charter 5 (3%) Multi Mission 57 (36%) 68 Air Tour 6 (4%)

Training 12 (7%) SAR 13 (8%) 160 Offshore 56 (35%)

23 19 36+35+8743+G Fleet by Size Category 7 6 5 4 4 3 3 Light Twin 7 (4%) Medium 68 (43%)

Single 16 (10%) COHC

AVICLUB Heavy 32 (20%) Suilian Heli GA 68+23+19+7+6+5+4+4+3+3China Southern 160 China National Police Sky Shuttle Helicopters Zhongsan Xiongying GA Hong Kong Aviation Club Aviation Hong Kong Heliservices (Hong Kong) HK Government Flying Service HK Government Piston 37 (23%) 43+23+20104+G CHINA GA REPORT - 2019 UPDATE | 13 GREATER BAY AREA MARKET OVERVIEW

BUSINESS JET MARKET

Of the 244 fixed-wing aircraft, 202 (almost 83%) are business Fleet by OEM jets. Gulfstream and Bombardier are the leading OEMs in the region with 94 aircraft (47%) and 71 aircraft (35%). Long-range Embraer 6 (3%) Airbus 4 (2%) business jets are the most popular, contributing to 62% of the business jet fleet, followed by large cabin and corporate airliners, Boeing 6 (3%) Hawker 2 (1%) with 25% and 7%, respectively. Business jets in the area are Dassault 19 (9%) mostly used for private/corporate use (90%) and only a few provide charter services (10%). TAG Aviation is the leading jet operator (in terms of fleet size) with a fleet of 26 business jets. It Bombardier Gulfstream is closely followed by Jet Aviation and HK Bellawings with 21 and 71 (35%) 202 94 (47%) 20 aircraft, respectively.

Business jets have a higher acquisition cost and a shorter life span, compared to other fixed-wing aircraft. Their use is 47+35+9321+G mostly concentrated to first-tier cities. As the Greater Bay Area Fleet by Mission progresses and transforms into the economic powerhouse of the country, and in turn, the world, the business jet market will Charter 21 (10%) continue to grow. Private/ Corporate 181 (90%) 202 Top 10 Business Jet Operators 90+10+G 26 Fleet by Size Category 22 21 20 18 14 12 Medium 12 (6%) 6 6 5 Corp. Airliner 13 (7%)

BAA Long Range Sino Jet Metrojet Large 51 (25%) 126 (62%) Brilliant Jet Jet Aviation Jet

TAG Aviation TAG 202 Hongkong Jet Hongkong HK Bellawings GAMA Aviation 26+22+21+20+18+14+12+6+6+5Amber Aviation 62+25+76+G 14 | CHINA GA REPORT - 2019 UPDATE GREATER BAY AREA MARKET OVERVIEW

TURBOPROP/ PISTON MARKET

Fleet by OEM

There are 42 fixed-wing aircraft in the region that are either pistons Others 5 (12%) Cessna 22 (52%) or turboprops. Cessna dominates the fixed-wing turboprop/piston market in the region with 22 aircraft (52%), followed by Cirrus and Diamond with 8 (19%) and 7 (17%), respectively. Single-engine AVIC 7 (17%) turboprops make up the most popular size category with 52%, followed by single-engine pistons and multi-engine pistons with 42 29% and 17%, respectively. The low acquisition and operating costs of piston aircraft make them extremely versatile, capable of Cirrus 8 (19%) being used for a wide-range of mission segments. These aircraft are typically used for agriculture, fishery, recreational and training, among other segments. Most of the piston and turboprop fleet 52+19+1712+G is used for multi-mission purpose — around 45%, followed by air tour (26%) and charter (19%). The fixed-wing piston and turboprop Fleet by Mission aircraft are mostly used for training and agricultural purposes; Aero-Sport 2 (5%) Others 2 (5%) and as such are limited to second- and third-tier cities. AVIC GAC is the leading turboprop/piston operator (in terms of fleet size) with a fleet of 16 aircraft.

Charter 8 (19%) 42

Top Turboprop & Piston Operators Multi-Mission Air Tour 11 (26%)45+26+195+5+G 19 (45%) 16 Fleet by Size Category 6 6 4 3 2 2 2 1 Multi-Engine Piston 7 (17%) Multi-Engine Turboprop 1 (2%) AVIC GA AVIC AVICLUB Joy Win GA Joy Guangdong GA 16+6+6+4+3+2+2+2+1China Southern 42 Zhuhai Xiangbang GA Zhongshan Xionying GA Zhongshan Xionying Guangdong Lingkong GA Guangdong Lingkong Single-Engine Piston Single-Engine Zhuhai Dragon Aviation Club Zhuhai Dragon Aviation 12 (29%) 52+Turboprop29+172+G 22 (52%) CHINA GA REPORT - 2019 UPDATE | 15 INFRASTRUCTURE

There are currently 15 operational airports and 19 helipads in the Greater Bay Area. Of the 15 airports in operation — 7 are dedicated for air carriers, 6 for helicopters and 2 for general aviation. 8 helipads in the region are ground based while 11 are overhead. There are only 4 FBOs in the region 2 in Mainland China and 1 each in Hong Kong and Macau.

Hong Kong International Airport and Guangzhou Baiyun International Airport are the busiest airports in the Greater Bay Area. They are among the top 50 busiest airports in the world by passenger traffic, coming in at number 8 and 34, respectively.

Due to increased commercial passenger traffic, airports in this region are dealing with increased commercial aircraft movements. As such, GA is granted limited slots and faces strict restrictions on the allocation of slots during selected operating hours (“Prohibition Periods”). Some of the airports, namely Guangzhou Baiyun, Shenzhen Bao’an and Zhuhai Jinwan, are too busy to spare slots for helicopters to land. These regulations, though not significantly restrictive, do pose a hindrance to GA flight coordination, thus the development of the GA sector of the region.

16 | CHINA GA REPORT - 2019 UPDATE GREATER BAY AREA MARKET OVERVIEW

GREATER BAY AREA AVIATION INFRASTRUCTURE - AIRPORTS, HELIPORTS & HELIPADS

16 Guangzhou Baiyun Int'l Airport 20 15 HUIZHOU GUANGZHOU

Foshan Shadi Airport 17

11 12 Huizhou Pingtan Airport 23 8 FOSHAN DONGGUAN 3

19 Shenzhen Bao'an Int'l Airport 1 SHENZHEN

27 4 10 9 13 25 24 26 21 JIANGMEN ZHONGSHAN

5 Hong Kong Int'l Airport 18 2 6 20km 7 22 Macau Int'l Airport 14

Zhuhai Jinwan Airport

Int'l Airport Domestic Airport GA Airport Heliport Helipad

1 Zhongshan Sanjiao Airport 15 Zengcheng Golden Leaf Resort 2 Zhuhai Baijiao GA Airport 16 Cong Du Qiao Xin International Conference Center 3 Guangzhou Panyu GA Airport 17 Huizhou Zhongzhou Golf Club 4 Shenzhen Nantou Heliport 18 Peninsula Hong Kong 5 Zhuhai Jiuzhou Airport 19 Humen Wisdom Hotel 6 Shun Tak Heliport 20 The Spring Legend Resort 7 Macau Heliport at Outer Harbour Ferry Terminal 21 Zhongshan Keppel Sacred Bay 8 Dongguan Zhengyang Heliport 22 Zhuhai Phoenix Tree 9 Eastern Chinatown 23 Guangzhou Chimelong Amusement Park 10 Excellence Century Center Building 1 24 Shenzhen Bay 1 11 Yuexiu Financial Building 25 Sheraton Grand China Hotel 12 Guangzhou International Finance Center IFC 26 Futian China Merchants Bank Building 13 Zhongshan Liangan Building 27 Xili Qilin Villa 14 Hengqin Free Trade Zone

Note: Only limited civil operations are permitted in Foshan Shadi Airport and Shek Kong Air Base as they are also military airports.

CHINA GA REPORT - 2019 UPDATE | 17 GREATER BAY AREA MARKET OVERVIEW

GREATER BAY AREA AVIATION INFRASTRUCTURE - MRO & FBO

Guangzhou

1 HUIZHOU GUANGZHOU

FOSHAN DONGGUAN 7

Shenzhen 2 SHENZHEN

ZHONGSHAN 8

JIANGMEN 6

5 Hong Kong HONG KONG 3 20km

10 Macau

9 4

MRO FBO MRO and FBO In Operation Coming Soon

1 Guangzhou Baiyun Int'l Airport 4 Zhuhai Jinwan Airport 9 Coloane Helipad H&P General Aviation Service Metrojet Skytech Aircraft Engineering Guangzhou FBO 5 Zhuhai Jiuzhou Airport 2 Shenzhen Bao'an Int'l Airport China Southern GA 10 Macau Int'l Airport BAA 6 Shek Kong Air Base Macau Business Aviation Center Shenzhen FBO Hong Kong Aviation Club Macau TAG Aviation FBO 3 Hong Kong Int'l Airport 7 Guangzhou Panyu GA Airport GAMA Aviation Guangzhou Suilian Helicopters Hongkong Jet Jet Aviation 8 Shenzhen Nantou Heliport Metrojet Avion Pacific TAG Aviation Asia COHC GAMEC Hong Kong Business Aviation Center

18 | CHINA GA REPORT - 2019 UPDATE GREATER BAY AREA MARKET OVERVIEW

OPERATIONAL CHALLENGES

The Civil Aviation Administration of China (CAAC) has maintained a three-level service system for low-altitude flights by 2020. The a strict stance on aircraft operation in the past. However, the CAAC comprehensive system provides operational information and is relaxing the regulations that once made it hard to develop the scheduling arrangement, still many in the industry believe more business aviation industry in China. A number of minor rules, needs to be done. related to flight paths and repair work, were loosened by the aviation administration in 2017. By simplifying the procedures and loosening the strict regulations on non-commercial aircraft Low-Altitude Airspace registrations, operation permit applications and infrastructural approvals, the CAAC is progressing and contributing to economic The Greater Bay Area, however, suffers from complex growth of the country by allowing for more opportunities of operational difficulties. Though the Greater Bay has been connectivity between regions. suggested to be one of the first regions in the country to “open” up its low-altitude air space, the air space isn’t truly “open”. Additionally, the CAAC has made the process of setting up new Every flight is subject to military and CAAC approval before general aviation (GA) firms easier. Companies are now only required takeoff and the military continues to hold priority above all to own or lease two aircraft, rather than the being required to solely other flights. The industry, namely GA operators, have been own two aircraft. Safety and maintenance regulations are also being advocating for reform with little success. While the Greater improved. Consequently, there has been an increase in the number Bay Area presents ample opportunity for all segments of GA, of authorized service centers able to provide comprehensive and it is unlikely to materialize without significant low-altitude detailed safety supervision and maintenance. airspace reform.

The Chinese government realizes the potential of the GA sector and Additionally, cross-boundary flights are currently subject to has put special emphasis on GA in its 13th Five-Year Plan (2016- the regulations of each government — Hong Kong, Macau and 2020). The proposed plan has made it evident that the government Mainland China. Each authority has different requirements will focus on developing an efficient airport network and promote making the process more complex. A truly integrated region GA operations to improve the sector and boost the economy of requires integration across the board. China. In July 2018, the CAAC announced their plan to implement

Business Jet and Helicopter Operation Facilities Business Jet Operation Helicopter On-Site Operation Airport Airport Type AOE CIQ FBO Additional Notes

Foshan Shadi Airport Joint Civil/Military Airport Only handleing domestic flight

Guangzhou Baiyun Int'l Airport International Airport ● ● ● ●

Huizhou Pingtan Airport Joint Civil/Military Airport No parking; Operation from 0800-2200

Shenzhen Bao'an Int'l Airport International Airport ● ● ●

Zhuhai Jinwan Airport Domestic Airport ● Only handleing domestic flight

Hong Kong Int'l Airport International Airport ● ● ● Heavily slot restricted; Limited parking space ●

Macau Int'l Airport International Airport ● ● ● Limited parking space ●

Airport mainly for helicopter operation: Zhongshan Sanjiao Airport, Guangzhou Panyu GA Airport, Shenzhen Nantou Heliport, Zhuhai Jiuzhou Airport, Dongguan Zhengyang Airport

CHINA GA REPORT - 2019 UPDATE | 19 TOWARDS A GA PARADISE IN GUANGDONG PROVINCE INTERVIEW WITH JINSHAN TU, CHAIRMAN AND GENERAL MANAGER, KINGS AVIATION Interview by Roderick Li

his year, Mr. Tu, who has over 10 years of experience in the general aviation (GA) sector, joined Shenzhen-based helicopter operator Kings Aviation as Chairman and General Manager. He is T now set to lead Kings Aviation to expand their business with his rich experience in the helicopter industry and knowledge of developing emergency medical services (EMS) in China. In this interview, Mr. Tu shares his views on the Greater Bay Area initiative and the opportunities it brings to GA in China.

WHAT WAS YOUR EXPERIENCE PRIOR TO company to provide the Chunyun EMS during Chinese New Year. JOINING KINGS AVIATION? I’ve had a lot of experience with Kingwing Aviation and I’m now happy to use this knowledge with Kings Aviation. I started as Chairman and General Manager of Kingwing Aviation in 2007. Throughout my time with the company, I had the opportunity to understand and develop the market. Shortly TELL ME ABOUT KINGS AVIATION? after starting with the company, Kingwing was asked by the Kings Aviation has been established for six years. Our main government to provide EMS rescue support for the Wenchuan business segments include power line inspection, forestry and (Sichuan) Earthquake. In 2010, I had the opportunity to organize aerial photography, which are served by medium- to heavy-sized and participate in the Sino-US Intercontinental Helicopter Forum, helicopters — two Airbus AS350B3s and one Sikorsky Schweitzer fostering helicopter sales and international cooperation. Kingwing 300CBi. Our next step is to focus on our special missions training worked with top OEMs, providing feedback from Chinese users program at our Yangjiang facility, which we hope will evolve into to help those manufacturers setup their China operations. a top training center in the country. Just a few years later, myself and the company researched sky tour routes between Mount Wutai, Shanxi and Kaifeng and laid Additionally, we are in the process of exploring maintenance the groundwork for its development later. In 2017, I became support. Currently, we only repair our own aircraft and provide the General Manager (South China and Guangdong province) maintenance for MD helicopters. However, we are in the middle and successfully lobbied for an air passage for EMS flights of the application for an MRO certification. I hope we can throughout 21 prefecture-level cities in Guangdong, serving establish a repair base in China, saving the cost and pain of over 300,000 clients. This year, I collaborated with an insurance sending aircraft outside of the country.

20 | CHINA GA REPORT - 2019 UPDATE INTERVIEW: KINGS AVIATION

WHAT ARE THE CURRENT WHAT INFRASTRUCTURE SUPPORTS KING’S GA CHALLENGES FOR GA? OPERATIONS? One of the difficulties is that the region is so highly We use different temporary operating bases according to each populated that airports must digest a massive passenger mission. For example, we are now administering a power line flow, especially the Guangzhou, Shenzhen and Zhuhai inspection in Genhe, Mongolia. airports. As a result, GA has to deal with remarkable restrictions when operators seek approval to use these Our main operating base is the Yangjiang facility. Yangjiang airports. The government will be carrying out extensive has been the bridgehead of GA in the Pearl River Delta. GA construction projects in Zhuhai and Yangjiang in hopes has flourished here for more than 80 years. There are seven of alleviating the pressure. The Zhuhai airport is already GA companies and over 20 aircraft operating based in the under construction. city. Yangjiang has a lot of advantages which allow for GA development: ample government support with beneficial To establish a localized GA industry and contribute to the policies, established infrastructure, an abundance of talent and region’s economy, the government needs to give the green a stable client base. These conditions strengthen Yangjiang’s light to land use, talent and infrastructure. Yangjiang is competitiveness and allow for the continuity of GA businesses. expected to have even busier passenger traffic for it is now Apart from that, Yangjiang’s geographic layout consists of open to an international market. With the completion of the mountains, sea, a lake and forest, which makes this ideal for Express Rail Link and Shenzhen-Zhongshan Bridge which helicopter operations training. enhance connectivity between cities like Guangzhou and Shenzhen, the demand for GA is expected to rise. THE GOVERNMENT IS FOCUSING ON THE GREATER Another challenge is the declaration and approval for cross- BAY AREA. WHAT DOES THIS MEAN FOR GA? border flights. To land in Hong Kong or Macau, mainland First of all, the Guangdong province has always had tremendous operators must apply through the Air Force, as well as the Civil potential for GA. In Guangdong, there are around 50 GA Aviation Department. Normally, if you submit an application companies and over 20 airports for GA use. Flying between cities before 3 pm, you receive the permission the next day. Although is frequent, and the number of aircraft in this province is among the procedures are not necessarily complex, it is still far from the top 3 in the country. Thanks to its geographical advantage, convenient, which is a key component of low-altitude flying. Guangdong can absorb more foreign funds and talent, thus Operations are overseen by several official bodies and must learning from foreign practices. There is also an annual airshow carefully comply with every regulation. Air space is in the in Zhuhai, which definitely gives GA a little push. Besides, in scope of the Air Force. Flying is in the scope of Civil Aviation Guangdong, more diverse flying missions and longer flight hours Administration of China (CAAC). Safety is under Public Security, result in more refined flying techniques. Therefore, the prospects and certification is under the business department. For the of the Guangdong market are pretty promising. sake of future GA development, more negotiations by the industry and government bodies are needed. Compared to the north, Guangdong has a milder climate which is safe to fly almost the whole year. It explains why there are This is the reason why the industry always calls for more corporate flights, while in the north, demands are higher opening low-altitude air space. Speaking of air space, there for agricultural missions. The north is also an excellent location is one thing that needs to be clarified: the government for agricultural missions training. However, due to weather did promise a ‘release’ of the low-altitude air space, but restrictions and the lack of talent, mission types are not as never an ‘open’. This ‘release’ is gradual and conditional, diverse as the south. like how they set up the green passage for EMS flight, but a complete ‘open’ is impossible since the Air Force is Guangdong is the cradle of GA in China, the current leader, and in always the first on the priority list. If the Air Force is having the future the most competitive paradise for the industry. a training session, all GA flights must be suspended for the sake of safety. We should never confuse a ‘release’ in the air space with an ‘open’ of the air space.

Last but not least, we should not forget the fact that the ‘Greater Bay’ is merely a concept at the moment, in terms of GA. To prepare for further actualization of this plan, it is good for the industry to envision the opportunities this will bring about.

CHINA GA REPORT - 2019 UPDATE | 21 INTERVIEW: KINGS AVIATION

WHAT IS THE POTENTIAL OF HELICOPTER CHARTER OPERATIONS? If we want to talk The Greater Bay Area is a large economy. Corporate helicopter flights and offshore operations are in line with the economic about opportunities strength of the region. If we want to talk about opportunities from the Greater Bay initiative, to expand corporate commuting is from the Greater definitely one of them. We are looking forward to supporting our parent company Avion Pacific to develop business jets services in Bay initiative, to response to the market through our experience with helicopters. Beechcraft’s King Air will be a perfect example of Avion Pacific’s expand corporate regional jet business. commuting is In addition, we are soliciting cooperation with golf courses in the region to start a golf charter helicopter service. Guangdong definitely one of has the most and best golf courses of the country, with also the highest number of golf club members. This will be the best them. location to roll out the golf course shuttle helicopter service.

As far as the future of GA in China, it is still an untapped treasure. WHAT ARE YOUR EXPECTATIONS FOR KINGS There is still room for development since the number of GA AVIATION? companies and aircraft is relatively small. I hope I can help boost We hope to establish a brand for Yangjiang special missions our country’s GA development and start establishing industry training and elevate its prestige to a national training center. We norms with small contributions. are also planning to develop air tour programs within the Pearl River Delta. Additionally, we’d like to diversity our product line by http://www.kingsaviation.cn launching a corporate flying time card. Users will be charged at hourly rates to lower both their cost and our operating cost. COMMITTED TO DEVELOPMENT INTERVIEW WITH JOLIE HOWARD, CEO, TAG AVIATION ASIA Interview by Litalia Yoakum

n 2006, Switzerland-based TAG Aviation expanded into the Asian market with the opening of a subsidiary in Hong Kong. The jet operator provides aircraft management, charter and maintenance I services throughout the Asia-Pacific region. Headed by CEO Jolie Howard, TAG Aviation Asia has positioned itself as a top operator in the Asia- Pacific region. While, like many operators in the region, the company focuses much of its attention on China, TAG Aviation Asia is now giving special attention to the Greater Bay Area. The company is set to operate an FBO at the Macau International Airport, where it hopes to cater to the growing demand of business jets based in the region.

WHY IS THE GREATER BAY AREA INITIATIVE IMPORTANT? The Greater Bay The Greater Bay Area is a significant contributor to the Chinese Area is a significant economy. This initiative offers a chance for more connectivity. The Hong Kong-Zhuhai-Macau Bridge was already opened and contributor to the now with the existing high-level highways and rail transit, traffic on both sides of the Pearl River Estuary will be more convenient. Chinese economy.

This area establishes a firm land transport link between the east This initiative and west banks of the Pearl River. It enhances the economic and sustainable development of all three places — Guangdong offers a chance for Province, Macau and Hong Kong. Not only does it provide opportunities in aviation, but also for logistics centers, cargo more connectivity. hubs, real estate, and the retail and service industries.

CHINA GA REPORT - 2019 UPDATE | 23 WHAT ARE THE FACTORS REQUIRED TO PROMOTE GA? There needs to be There are several challenges that need to be taken care of. established flight Although the Chinese Government has lowered the altitude airspace there is still much more that needs to be done. Airspace routes connecting among these three areas needs to have a common set of regulations. Secondly, there needs to be established flight routes the Greater Bay connecting the Greater Bay Area to the inside of China, as well as to main airports outside of China. Thirdly, airports — particularly Area to the inside those with FBO and MRO facilities — need to cater to a wide- range of aircraft types. of China, as well

Additionally, the growing GA fleet will require personnel to as to main airports support it. This means more training facilities, which the industry and the Government must offer incentive for. And finally, overall outside of China. tax incentives are a motivating way to get private companies involved in the growth of GA.

WHAT CAN THE INDUSTRY DO TO MAKE THIS HAPPEN? planning. From the Government, a coordinated effort is required to develop standardized regulations. This would make flying The most important aspect here is industry involvement. Groups, cross border much more efficient. such as the Asian Business Aviation Association (AsBAA), work diligently on behalf of the industry to promote general HOW IS TAG AVIATION COMMITTED TO THE and business aviation. The industry plays an important role in DEVELOPMENT OF THIS REGION? TAG Aviation believes in the long-term development of this region and we believe there is a lot of potential for general aviation. With that in mind, we are set to operate a Fixed-Base Operation (FBO) at the Macau International Airport. We have come to terms with a six-year agreement with the Macau Airport Authority to provide a full-service facility operation, 24/7. This is set to open in the fourth quarter of 2018.

www.tagaviation.com

24 | CHINA GA REPORT - 2019 UPDATE FUTURE DEVELOPMENTS UPDATED BY HFW China's plans in relation to the Greater Bay Area play a significant strategic role in the country's overall economic development: the region's current gross domestic product of US$1.5 trillion is predicted to almost double to US$2.8 trillion by 2025 (making it the 9th largest economy in the world). The aim is to create a centre for innovation and economic growth through the flow of people, goods, capital and information across the Hong Kong-Macau-Guangdong region, to rival the Bay Areas of San Francisco, New York and Tokyo.

As far as aviation is concerned, civil aviation has been designated Of particular note, China is almost aiming to double the number as a strategic industry playing a primary and leading role in of airports, from 234 airports at present to a target of 450 airports China's economic development. The opportunities and challenges by 2035. As part of that, attention will be focused on raising for general aviation presented by the Greater Bay Area therefore the competitiveness of Beijing, Guangzhou and Shanghai as need to be assessed in that broader context, given the possibility international hubs. The new Beijing Daxing International Airport that the significant growth predicted in Chinese civil aviation is scheduled to open in September this year, initially operating might hinder the development of general aviation. four runways and eventually up to eight runways, with the aim of serving up to 100 million passengers per year. CHINA'S AVIATION AMBITIONS China will soon displace the US as the world’s largest aviation The Civil Aviation Administration of China (CAAC) published an market (forecast to occur around 2022, depending on economic over-arching action plan in December 2018 aimed at transforming growth). The International Air Transport Association (IATA) China into an aviation powerhouse by 2050. While the initial focus predicts that China will serve 1.5 billion passengers per year by is to address shortfalls in areas such as infrastructure and airspace 2036, which is consistent with Boeing's recent forecast that China capacity, from 2020 the ambition is for China to become a global will need 7,690 new commercial aircraft over the next 20 years. It leader in air transport. In order to build internationally competitive is therefore no surprise that aircraft finance and leasing activity airlines, the CAAC says that it will encourage re-organisation of in the region remains high and, subject perhaps to one or two carriers, strategic co-operation, and mergers and acquisitions. It economic bumps in the road, will likely remain so. will also support the development of low-cost carriers, as well as regional and cargo airlines.

CHINA GA REPORT - 2019 UPDATE | 25 FUTURE DEVELOPMENTS

AVIATION WITHIN THE GREATER BAY AREA

An Outline Development Plan for the Greater Bay Area was published by the Chinese Government on 18 February 2019. It comprises eleven chapters, covering a number of different areas aimed at guiding the current and future cooperation and development within the Greater Bay Area.

As far as aviation is concerned, the objectives are as follows:

• To consolidate and enhance Hong Kong’s status as an international aviation hub, raise the competiveness of Guangzhou and Shenzhen airports as international hubs, strengthen the functions of airports such as those in Macau and Zhuhai, and pursue differential development and positive • To support Macau airport in developing regional business interaction of airports in the Greater Bay Area. aircraft services. • To support the construction of Hong Kong Airport's third • To strengthen airspace coordination and air traffic runway, as well as the reconstruction and expansion of management collaboration, optimise airspace structure, Macau’s airport, commence a preliminary study for the enhance the efficiency of the utilisation of airspace resources, construction of a new airport in Guangzhou, and study the and enhance air traffic management capacity. development of a batch of feeder airports and general aviation airports. • To deepen management reform in low-altitude airspace, expedite the development of general aviation, steadily develop • To further expand the Greater Bay Area’s domestic and cross-boundary helicopter services, and set up general international aviation networks, and proactively take forward aviation demonstration zones in Shenzhen and Zhuhai. inter-modal code sharing service.

• To proceed with the setting up of airport economy zones in • To leverage Hong Kong’s strengths in financial and logistics Guangzhou and Shenzhen. services, and develop high value-added freight, aircraft leasing and aviation financing services. Three months prior to the publication of the Outline Development • Strong support for the development of general aviation Plan, and in support of the Chinese Government's vision for industry in Guangdong. This includes setting aside areas a Greater Bay Area, the CAAC and the Guangdong Provincial for general aviation in the newly built, reconstructed and Government signed a Strategic Agreement on 5 November 2018 expanded hub and feeder airports; establishing fixed base to accelerate construction of a group of world-class airports in operators at selected airports; developing plans to establish the Greater Bay Area. Much will depend on whether there will be general aviation airports in Guangzhou, Foshan, Dongguan, cooperation (as is proposed) or whether, in reality, competitive Jiangmen, Zhaoqing and other cities; and accelerating the pressures and regional rivalries prevail. Unsurprisingly, that construction of an aviation industry park in Zhuhai. Strategic Agreement was consistent with the subsequent Outline Development Plan. It stated that: The construction of a third runway at Hong Kong's airport should also play a role in easing the current capacity constraints in Hong • The CAAC will proactively support and help Guangdong to Kong for general aviation (with potential implications for other formulate a development plan for a world-class airport group in Greater Bay Area airports), although all three runways are not due the Greater Bay Area, in a bid to build, in conjunction with Hong to be in operation until the end of 2024. Kong and Macau, an integrated airport cluster characterised by shared resources and coordinated development.

• The layout and structure of the airspace for both civil and military airports in the Pearl River Delta region will be adjusted, in order to optimise it.

• Attention will be focused on enhancing the competitiveness of Guangzhou and Shenzhen airports as international aviation hubs. In particular, the infrastructure of Guangzhou airport will be improved, and efforts will be made to actively expand the route networks at both airports in order to build internationally competitive transfer hubs.

• Efforts will be made to further deepen civil aviation cooperation between Guangdong, Hong Kong and Macau. This includes cooperation in airport operation, management and facilities; logistics; aircraft maintenance; and general aviation.

CHINA GA REPORT - 2019 UPDATE | 27 FUTURE DEVELOPMENTS

Much of the Outline Development Plan is vague, although the That will be facilitated once additional parking is available, aim is to have a framework in place by 2022 for the development following the reclamation of the land between the taxiways and objectives. What is clear, however, is that if the Greater Bay Area the sea. vision is to be realised, there has to be a very significant degree of cooperation, coordination and connectivity between Hong CROSS-BOUNDARY CONNECTIVITY Kong, Macau and the 9 other cities. Even so, it faces considerable challenges nonetheless, including the differing tax regimes, Owing to the extensive helipad on top of Macau's Taipa ferry currencies, and legal and political systems which exist across terminal, Macau is also well placed to gain from the Outline Hong Kong, Macau and the other Guangdong cities. Development Plan's objective of developing cross-boundary helicopter services and reforming low-altitude airspace. As part of the regional cooperation, the work of the Pearl River Delta Region Air Traffic Management Planning and Implementation The CAAC is actively looking at this at present, and on 17 January Tripartite Working Group has also continued. It comprises the 2019 it issued a Notice in relation to its preparatory work for CAAC, Hong Kong's Civil Aviation Department, and the Civil Guangdong-Hong Kong-Macau cross-border helicopter services. Aviation Authority of Macau. The main aim of that Working Group This Notice set out the requirements for companies wishing to is to optimise airspace and air traffic management in the Greater operate such services, including Part 135 certification, a record Bay Area given the number of major airports in the region. In of operating charter flights within the previous 6 months, a good particular, it aims to reduce flight delays along the east coast of safety record, and no accidents within the past year. Interested China, which have historically been bad owing to military aviation operators were requested to apply to the CAAC by 25 March 2019. activities (as the large majority of China's airspace is controlled by the military). The position is however improving, in part due to the As far as Hong Kong is concerned, the Hong Kong Government recent opening of an additional flight route between Hong Kong has said that it is studying the feasibility of enhancing cross- and Shanghai. boundary helicopter services between Hong Kong and the Greater Bay Area. If this is to be effective, however, this would require greater efforts to develop commercial heliports in Hong Kong. FOCUS ON MACAU Although plans have been put forward for the Kai Tak heliport One of the objectives of the Greater Bay Area plan is to support to be co-shared between the private sector and the Government the reconstruction and expansion of Macau's airport, as well as Flying Services, based on past experience with the heliport at the the development of business aviation services at that airport, Hong Kong Convention and Exhibition Centre, the Hong Kong with a view to making it a regional business aviation hub. Macau rotorwing community is scepticism about the viability of any such recorded 3,274 annual business jet movements in 2018 and, with plans for commercial use. two FBOs now operating at Macau, further growth is expected.

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