SHANGHAI: China’s rich are foregoing fancy new private jets in favour of second-hand planes or rentals, reflecting how the country’s business elite are increasingly shunning flashy signs of wealth amid slower economic growth.
Planemakers such as Embraer and Bombardier are shifting focus to after-sales services in response, while brokers are refurbishing older jets or hiring out planes as the once high-flying industry braces for its weakest growth in a decade.
Dealers at one of Asia’s top industry shows in Shanghai this week said second-hand jets now made up more than half of sales to wealthy Chinese entrepreneurs and corporations, up from under a third two years ago.
Chinese buyers, who began purchasing new business jets 30 years ago, were also becoming more pragmatic about buying cheaper, second-hand jets and giving them a makeover, they said.
“Now ... while you can still get a Gulfstream 550 for around US$50mil for a new one, you can get an extremely adequate aeroplane for US$30mil,” said David Dixon, president of business jet brokerage Jetcraft Asia.
“So US$20mil is a lot of money to anybody.”
In part the shift reflects a broader trend that is making life tougher for firms selling luxury goods in the world’s second biggest economy, as Chinese buyers increasingly push for bargains on everything from high-end handbags to holidays.
In such a market, where new planes quickly lose their value, dealers said second-hand jets were simply a less risky bet.
“When the economic climate is going down, there’s fewer buyers in the market honestly, so the depreciation rate is higher,” said Jackie Wu, president of Hong Kong-based plane broker and charter firm JetSolution Aviation Group.
She said a new jet typically lost around 15% of its value last year, faster than the 10% loss in 2015. “Now pre-owned aircraft are a better buy,” she said.
Greater China is the world’s second-largest business jet market behind the United States and had seen annual growth of up to 49% before 2012, when president Xi Jinping launched a fierce crackdown on corruption that has discouraged conspicuous displays of wealth. – Reuters (TheStar)