Chinese demand for business jets is slowing as its economy weakens, with customers looking to diversify from large aircraft, industry executives said at the Singapore Airshow.
China’s business jet fleet grew 6% in 2015, the slowest in the past 10 years, according to data from Embraer SA, one of the largest business jet manufacturers.
“In the past, customers would simply buy the biggest and best plane out there,” said Claudio Camelier, vice president of marketing and sales, Middle East and Asia Pacific, at Embraer Executive Jets.
“Nowadays they may consider a mid-sized jet if their travel needs are only within certain region or they don’t travel with a lot of people.”
Earlier this month, Embraer delivered a Legacy 500—its new mid-sized jet worth nearly $20 million at list price—to its first Chinese customer, movie star Jackie Chan.
China’s economy grew at the slowest pace in a quarter of a century last year.
David Dixon, president of Jetcraft Asia, a business jet brokerage based in Hong Kong, said he had seen signs of a less buoyant market in China—slower order flow, deferment of delivery, and cancellation of orders, but also signs of maturing customers.
“There are people who used to place large orders, speculative orders,” Dixon told Reuters in an interview. “That has largely gone away in the case of China.”
Some industry executives were more optimistic.
Roger Sperry, Gulfstream’s head of sales for Asia, told Reuters in an interview his company is talking to more potential buyers now than two years ago, despite the perception of a weaker economy.
“Is it growing the way it was two years ago? No, that’s a known fact,” Sperry said of Chinese demand.
“Are we concerned about it? No, because we’ve seen this time after time… This is just the first time the economy has been going down in China since there’s been a business in the aviation market so people look at that and go, ‘oh my God, it will never recover!”
Gulfstream, a unit of General Dynamics, had the largest share—32%—of mainland China’s business jet market in 2014, according to consultancy Asian Sky Group.
Longer term, the country was still seen as having good potential.
Embraer forecast a total of 800 business jets to be delivered to China in the next 10 years, compared with the country’s fleet of 360 at end of 2015.
China’s increasing business interest overseas is also expected to create new demand.
“China is moving into Africa, it’s moving in South America. Those are a long way away from here. You’ll find the only way to get there is to have a private airplane,” said Dixon of Jetcraft Asia.
(Reporting by Rujun Shen and Fathin Ungku; Editing by Muralikumar Anantharaman)