As I stated in my first blog topic a few weeks ago, China's aviation industry is experiencing a large amount of growth at a quick rate, but what about their general aviation sector?
When talking about China's general aviation sector, there is not too much going on. In 2012, there were still fewer than 200 business jets and just over 1,500 general aviation aircraft registered in the country. These numbers include turbine jets, propeller driven aircraft and rotorcraft. Most of the aircraft registered are not modern imports either, they are mainly crop-dusting aircraft, poorly built old domestic planes and run down Soviet-era trainers. With so few general aviation airplanes, there are not many flights that take place from day-to-day. More general aviation aircraft operations occur in one minute here in the U.S. than occur in a whole day in China. To further break it down, there is a larger general aviation industry in North Dakota alone than in all of China (Jackson, 2012).
Another big limiting factor for general aviation in China is the number of airports for general aviation aircraft to use. According to a Civil Aviation Administration of China report, at the end of 2011 there were only 70 airports and 216 landing points for general aviation in China. The CAAC is said to be working on subsides including grants for airport building and pilot training to help boost the general aviation industry (Wen, 2012).
Recently a few things have occurred to get China's general aviation industry moving. Airspace regulations had previously been a huge limiting factor for general aviation in China. As of late November in 2012, approximately 36 percent of airspace below 4,000 meters is open to general aviation. This was a huge step forward and one that was needed to allow general aviation to get a start (NBAA, 2012).
In June 2011, Cirrus and the China Aviation Industry General Aircraft Co., Ltd. (CAIGA) announced that the merger between the two companies was complete. The deal was not a very popular one here in the U.S. because people were afraid that Cirrus would close down its U.S. operations in Minnesota and North Dakota, putting many people out of work in an already struggling economy. A Minnesota congressman also raised concerns that it may lead to national security concerns, but all of these factors were negated by Cirrus' co-founder Dale Klapmeler. The partnership will benefit the customers and the business, according to Cirrus CEO Brent Woulters, because Cirrus and CAIGA both have a vision of worldwide growth. He also says that CIAGA has resources which will allow them to accelerate global expansion and to possibly expand its facilities and staff in the U.S. (Grady, 2011).
I believe that Cirrus merging with this Chinese company is a good strategic move as long as they do not start doing all of their production in China. As long as they keep people here in the U.S. at work, as well as employing people overseas, I think it is a good thing. As the CEO said, merging with CIAGA allows them to utilize more resources and expand more quickly, both here and there. I also believe that Cirrus, and other U.S. companies, merging with chinese companies is a good thing. Not only will it help to get China's general aviation sector going, but it also provides a good foot in the door for other American companies and people to the Chinese aviation industry. If the Chinese benefit from and enjoy the relationships they make with American companies, it may open doors in other areas of the industry as well.
Thanks for reading,
Kyle Wagenknecht
References
Grady, M. (2011). Cirrus finalizes China deal. Retrieved February 25, 2013, from, http://www.avweb.com/avwebflash/news/CirrusFinalizesChinaDeal_204886-1.html
Jackson, C. (2012). China's general-aviation flight of fancy. Retrieved February 25, 2013, from, http://online.wsj.com/article/SB10001424052702304451104577391650977428024.html
NBAA. (2012). China accelerates opening of low-level airspace. Retrieved February 25, 2013, from, http://www.nbaa.org/ops/intl/mid/20121126-china-accelerates-opening-of-low-level-airspace.php
Wen, W. (2012). Sky's the limit for booming general aviation sector. Retrieved February 25, 2013, from, http://usa.chinadaily.com.cn/business/2012-11/27/content_15962670.htm
I think it's interesting that there is more general aviation industry in North Dakota than in all of China. That makes me feel bad for the Chinese citizens not being able to experience what we see as everyday life. Do you think that with companies expanding their operations overseas that one day China will have as much general aviation activity as we do here in the United States?
ReplyDeleteI believe that one day they will surpass the amount of general aviation activity here in the U.S. since their population is so much greater than ours.
ReplyDeleteKyle, the number of general aviation aircraft in China is almost unbelievable. So many people, so few airplanes. I agree that this formula equals huge opportunity for anyone who can get involved in the development of GA in China. I also agree that the long-term benefits could prove to be priceless. Not to mention that Chinese firms have single-handedly saved some American companies' hides.
ReplyDeleteKyle, in reference to Brent Wrouters comment about how the merger of Cirrus will allow the company to expand its global operations and developments that may allow them to expand in the United States with production. Do you think that it is a possibility that they will just open up operations in china with cheaper labor once they have developed their GA industry in the next couple of years?
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