The economic recession has persisted in some quarters but one group that is increasingly growing richer is certainly the rich. The increasing wealth of the world’s ultra wealthy means that the demand for private jets is set to increase in the next few years according to aerospace consultants.
The aerospace and defence consultancy group Teal Group estimates that the demand for private jets will increase to 9000 jets in the next 10 years. One country that is growing exceedingly rich and where the demand for private jets is expected to increase in the coming years is China.
The costs of owning private jets in China
According to the Teal Group, the need for jets in China will increase from the current 100 to between 700 and 1400 over the next decade. Some of the companies that are currently serving the Chinese private jet market include Gulf stream, Falcon and Dassault. Another major player in the Chinese market is Bombardier. The main bottlenecks that many in China are faced with are the complexities associated with owning a private jet. According to sales figures, the majority of the buyers are individual customers. The other major market segment in China for private jets are the corporate buyers with banks, insurance companies and leasing companies accounting for a large part of the purchases.
Chinese buyers of private jets also face massive taxes. For example, the tax for private jets in China is a whopping 22.85% for those private jets that are registered in China. However, those private jets that have been registered in foreign countries have a much lower tax rate.
The challenge many owners of foreign registered private jets are likely to face is that of applying for rights to fly in China as the procedure is exceedingly complicated. Some of the operational costs that many Chinese private owners will grapple with include a 4% insurance fee and management fees which may run into tens of thousands of pounds depending on the type of aircraft and the kind of aircraft management company that they will choose to work with.
Overcoming challenges of private jet ownership in China
Due to the many challenges associated with the private jet ownership, many Chinese are likely to opt for new options. For example the air charter market is expected to grow rapidly in the Asian country. Also many buyers are expected to opt for new options such as fractional ownership and even the purchase of second hand jets.