2017 ASIA PACIFIC REGION INFRASTRUCTURE REPORT 2017 INFRASTRUCTURE REPORT | I Beijing Seoul Penglai Chengdu Shanghai Shenzhen Hong Kong Bangkok Manila ABOUT ASIAN SKY GROUP ASIAN SKY GROUP (ASG), headquartered in Hong Kong and with offices throughout Asia, has assembled the most experienced aviation team in the Asia Pacific region to provide a wide range of independent services for both fixed and rotary-wing aircraft. ASG also provides access to a significant customer base around the world with the help of its exclusive partners. ASG provides its clients with the following business aviation services: Sales & Acquisitions | Market Research and Consulting | Operational Oversight | Luxury Charter Services The acclaimed Asian Sky Fleet Reports are produced by ASG’s market research and consulting team, in collaboration with Asian Sky Media — a branch of ASG focusing on media and publications. 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 the portfolio is the Asia Pacific Fleet Reports for both civil helicopters and business jets, and the Africa Business Jet Fleet Report for a breakdown of fleet within respective countries. Asian Sky Quarterly provides a reader-friendly look at market dynamics within the pre-owned markets of civil helicopters and business jets. ASG’s latest reports include the Asia Pacific Business Jet Charter Report, Asia Pacific Training Report and the Asia Pacific Infrastructure Report focusing on respective industry segments showcasing the current status and challenges of the industry. 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 July 2017, 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. CONTRIBUTION Asian Sky Group would like to acknowledge the gracious contributions made by numerous organizations, including OEMs, FBOs, authorized service centers, MRO service providers, aviation authorities and AsBAA in providing data for this report. Should you wish to reproduce or distribute any portion of this report, in part or in full, you may do so by mentioning the source as: “Asian Sky Group, a Hong Kong-based business aviation consulting group”. For information about our aviation services, contact: [email protected] or visit www.asianskygroup.com. For information regarding ASG publications, contact: [email protected] or visit www.asianskymedia.com. CONTACT Suite 3905, Far East Finance Centre, 16 Harcourt Road, Admiralty, Hong Kong Telephone +852 2235 9222 | Facsimile +852 2528 2766 www.asianskygroup.com CONTENTS 02 PUBLISHER’S NOTE 03 EXECUTIVE SUMMARY 04 INFRASTRUCTURE OVERVIEW 08 FACTORS IMPACTING INFRASTRUCTURE: DAVID BEST 10 INTERVIEW: JOHN RIGGIR, JET AVIATION 13 FBO OVERVIEW 16 INTERVIEW: MADONNA FUNG, HKBAC 19 MRO OVERVIEW 24 INTERVIEW: BRUCE WATSON, METROJET 27 CUSTOMER SERVICE NETWORKS - BUSINESS JETS 34 INTERVIEW: SIMON WAYNE, BOMBARDIER BUSINESS AIRCRAFT 46 INTERVIEW: SYLVIA ZHANG, FASTRANSIT 48 CUSTOMER SERVICE NETWORKS - HELICOPTERS COUNTRY PROFILE: JAPAN 58 FOR OTHER COUNTRY PROFILES VISIT: WWW.ASIANSKYMEDIA.COM 65 AVIATION SERVICE PROVIDERS DIRECTORY PAGE 2017 INFRASTRUCTURE REPORT | 1 PUBLISHER’S NOTE An important element of a healthy, sustainable business and general aviation (BGA) industry is the required infrastructure to support it. While the term “infrastructure” can encompass several different services, this report focuses on the three most significant components impacting the BGA industry: airport capacity, fixed-base operations (FBOs) and maintenance, repair, and overhaul facilities (MROs). In the US, airports dedicated to BGA activity and the FBOs and MROs that support it are in abundance: 2,069 airports (with runways longer than 5,000ft), 3,384 FBOs and approximately 2,500 MROs. To put that in context, for every six business jets there is a BGA airport, for every five an MRO facility and for every four an FBO. These are envy inducing ratios, making the US market the standard bearer for the industry worldwide. In Asia Pacific – the region this report covers – we can only look at the US numbers and hope (pray?) for that kind of future. At the end of 2016 the Asia Pacific business jet fleet stood at 1,155 jets, yet despite the size of the fleet and the vastness of the region (almost five times the size of the US), there were a mere 80 MROs and 61 FBOs; equal to only 15 business jets per MRO and 19 per FBO. A significant imbalance one could say. At first glance the situation with overall airport capacity appears positive. The Asia Pacific region boasts 1,017 airports with paved runways of 5,000ft or longer, but these are rarely if ever dedicated BGA airports, and usually aren’t even designed with the idea of serving the business aviation community at all. Rather they are huge, international “ports of entry” with the sole purpose to serve commercial carriers and the millions of passengers passing through their terminals. Therefore, our industry faces a different challenge with airports and that’s one of “access”; access to and from airports (slots), and access to space when we get there (parking bays). Over the next 20 years, commercial passenger traffic in the Asia Pacific region is forecast to increase by 1.8 billion, which is the same amount for the rest of the world combined. More passengers mean more aircraft which mean more movements and less access – slots and parking – for business aviation. Within the next two years alone Beijing, Manila and Singapore will reach runway capacity. Hong Kong is already over capacity. Terminals are no better, with eight of the top 11 airports in Asia already classified as “full”. Unfortunately, from a capacity perspective there does not appear to be light at the end of the tunnel, at least for now. Yet, while capacity constraints will only get worse before they get better, there are positive takeaways regarding Asia Pacific’s existing FBO and MRO landscape. Asia Pacific offers some extremely competent MRO service centers, providing everything from basic line maintenance to painting and interior work to significant heavy maintenance capabilities. These facilities include OEM factory owned service centers, large independent multi- country and multi-product authorized service providers, and smaller single country dedicated operations. Asia Pacific also offers business aviation users a number of first class FBO operations to choose from that often outshine their western counterparts in terms of both scale and service. This report will provide ASG’s usual comprehensive detail cataloguing the ownership, operations and capabilities of those MRO/FBO facilities – for business jets, turboprops and helicopters – while delving into the specific benefits, issues and challenges faced by each of the countries in our region (Please visit the recently launched www.asianskymedia.com for specific country profile reports). One final note of thanks to our contributors, who are among the foremost regional experts and operators in the industry: David Best and John Riggir of Jet Aviation, Madonna Fung of the HKBAC, Bruce Watson of Metrojet, Simon Wayne of Bombardier, and Sylvia Zhang of Fastransit. We hope you find this new report useful. We face significant issues and challenges that as an industry we will have to come together and tackle in order to continue the growth trajectory of the Asia-Pacific BGA market. Sincerely, Jeffrey C. Lowe Managing Director, Asian Sky Group 2 | 2017 INFRASTRUCTURE REPORT EXECUTIVE SUMMARY • There are 1,017 airports in the Asia-Pacific region, including registries for Indonesia, Thailand, and other countries. This partly airports with paved runways of 5,000ft or greater length. accounts for why both OEMs and large independent MROs are Those airports have a total of 62 FBOs serving the region’s clustering in Singapore, where one facility and operation can hold growing number of business jets and 206 MRO facilities for double digit country approvals and achieve economies of scale. fixed-wing and helicopter maintenance, operated by 189 FBO • Textron Aviation has the largest service center coverage, with and MRO companies. one factory-owned MRO and 15 authorized facilities, matched • Hong Kong faces the most severe over-capacity issue in the by Embraer with 16 authorized service centers. Bombardier also region. With 130 business jets based in the city and an influx of has significant service center coverage in terms of facilities, with traffic from around the world, the international hub is underserved two factory-owned service centers and nine authorized service/ with only one airport, one FBO, four fixed-wing MROs, one piston warranty centers, followed by Gulfstream with one factory helicopter MRO and limited parking capacity. 1 service center and six authorized facilities, and Dassault Falcon with six authorized service centers. • Australia is the most-developed country in terms of infrastructure, reflecting a market that more closely identifies with the US and • Helicopter manufacturer Airbus Helicopters has the most Europe, rather than that of the Asia Pacific, with its