05 Feb 2018

China Aviation Industry Newsletter 5 February

Air China takes delivery of 8000th Airbus manufactured A320 family aircraft Air China received the 8000th Airbus manufactured A320 family aircraft an A320neo, at Airbus' Tianjin final assembly line. The aircraft, Air China's third Airbus A320neo, is powered by Pratt & Whitney GTF engines. CALC’s ABS Listed on Shanghai Stock Exchange Debuts China’s First Foreign Currency Asset-Backed Security and First Aircraft Leasing ABS in the Open Market CALC announced that “Huatai Securities Asset Management – CALC Phase I Asset-backed Securities Program”, China’s first asset-backed security (ABS) which is denominated and settled in a foreign currency, and the first ABS in aircraft leasing in the public placement market is successfully listed on the Shanghai Stock Exchange. The successful listing of the ABS opens up a new financing mode and signifies CALC's efforts in exploring new financing channels for the aircraft leasing industry in China. For institutional investors, the aircraft leasing ABS product, with mainly scalable Chinese airlines with good credits as lessees, will enable them to mitigate credit risks while achieving relatively high investment returns. China Accelerates Development of GA Airports China’s general aviation (GA) industry has huge potential for future development, although it is constrained by limited economic scale, operational restrictions, and some competition factors. While it has grown relatively rapidly, China’s GA sector has a tiny fleet of aircraft, about 2,800, consisting of 66 percent fixed-wing, 32 percent rotorcraft, and 2 percent airships and hot-air balloons. The city of Beijing and Sichuan, Heilongjiang, and Guangdong provinces are the primary locations of China’s GA aircraft. In the first half of 2017, there were 345 licensed GA enterprises in China, according to the Civil Aviation Administration of China (CAAC). As of October 2017, the total flight time of GA aircraft reached 661,000 hours, up 2 percent year-over-year. China’s Liberalized Access Policy Bearing Fruit China’s liberal policy of opening its secondary international airports to foreign carriers continues to attract more entrants, particularly from Asia. With Air China, China Southern Airlines, and China Eastern Airlines using their rights for long-haul services from the major airports, the battleground among foreign carriers has shifted to second-tier cities. Under Civil Aviation Administration of China (CAAC) regulations, each of the three major domestic airlines may operate only one flight to those secondary destinations in the interest of discouraging competition on the same route among local carriers. Demand for Older Airbus, Boeing Models Is Rising, BOC Aviation Says Demand for older variants of Airbus and Boeing has picked up in the past three to four months, as the industry’s pace of growth exceeded expectations, one of Asia’s biggest plane leasing companies said. “Part of this is because growth in the industry is higher than what was originally expected,” Robert Martin, Chief Executive Officer of BOC Aviation Ltd. said in an interview at the Singapore Airshow, “Because of this, people want near-term aircraft deliveries.” Embraer Expects E2s To Shine in China, Asia-Pac The relative paucity of orders Embraer has drawn for its E-Jet line in the Asia-Pacific region contrasts sharply with its success in China, a market company executives expect only to grow with the introduction of the first E2 variant. Expecting imminent certification of the E190-E2 as the Singapore Airshow approached, Embraer sees recently announced improvements in hot-and-high performance to draw particular attention from airlines in the People’s Republic, where no fewer than 100 E-Jets already fly with five operators. Everbright plans Silk Road fund for aviation leasing and related businesses China Everbright and its Hong Kong-listed aircraft leasing unit are planning to launch a Silk Road Fund to invest in aircraft leasing and related businesses, to ride on the back of the expected regional aviation boom, says its CEO, Chen Shuang. China’s “Belt and Road Initiative” is expected to create huge new amounts of traffic – both people and goods – within Asia and with the rest of the world, as China’s strives to expand trade with nations along ancient silk trade routes, onwards to Europe. 'Kangaroo Route' Dynamics See New Market Entrants Although Singapore and Dubai remain central to the so-called Kangaroo Route—the services flown between Australia and the UK, via Asia—the emergence of China’s airlines as players between Europe and Asia, as well as the U.S., will continue to affect the dynamics of international air travel. Some 20 airlines are believed to participate on the sector, including Emirates, Etihad, Cathay Pacific, Malaysian, Thai Airways, and a number of Chinese players. Xiamen Airlines and GE sign MoU to strengthen strategic cooperation Xiamen Airlines signed a Memorandum of Understanding (MoU) with GE to further strengthen the strategic cooperation between the parties. Zhao Dong, President of Xiamen Airlines and Bill Fitzgerald, Vice President and General Manager of GE Aviation's Commercial Engine Operations. The MoU will cover several areas including fleet management support and services, digital solutions, leadership training and aviation health management programs, as well as intra-industrial alignment and cooperation to support the globalization of Xiamen Airlines. Acumen Aviation © 5 February All Rights Reserved.