Economy

China's Super Rich Create A Whole New Jet Set

The new status symbol for China's ultra rich businessmen: a private jet. But before this fad can truly take off, authorities have to loosen up strict regulations governing the domestic airspace.

Guarding a private jet at Dalian airport (David Sifry)
Guarding a private jet at Dalian airport (David Sifry)

BEIJING - In China, owning a private aircraft or a jet is becoming increasingly popular among the happy few who can afford such a thing.

A milestone came two weeks ago when Zhuhai Xirui General Aviation Company, a company based in Zhuhai, Guangdong Province, became the first Chinese fixed-base operator (FBO) providing general aeronautical and aviation services.

With the opening up of China's low-altitude domestic airspace, which should happen within the next decade, and the fact that China is the world's fastest growing market for luxury goods and largest spending power, private jets represent a huge potential market.

Zhuhai Xirui's core business is the sales of light airplanes manufactured by Cirrus Aircraft. Even though it was set up only a year ago, the company has already sold 14 jets. "We have more than 50 enquiries per day about buying a plane" says Chen Fei, Zhuhai Xirui's sales manager. This growing interest is the reason the FBO was set up, to provide support services such as fueling, hangaring, tie-down, maintenance and rental. "We can also act as a proxy to file flight plans and make flying a lot easier for private owners', Chen adds.

Zhuhai Xirui is already planning to open up its second operating base in Shenyang in the north-east of China this year.

Airspace reform

Chinese authorities initiated the reform of their low-altitude airspace two years ago. A few pilot provinces and cities will be the first to benefit from this reform, including Zhuhai in Guangdong Province. Between now and 2015, the trials will be expanded nationwide, although still limited to relatively small areas.

According to one conservative estimate, out of the current 300 thousand "rich people" each worth over 10 million RMB (1.2 million €), 30% could be potential buyers of private jets.

The sale, care, and maintenance of these aircrafts is an industry estimated at around 30 billion RMB (3.5 billion €) annually, given current growth estimates.

At present there are only 200 private airplanes registered in China, mostly belonging to the rich businessmen of the Pearl River Delta region. In comparison America has 220 000.

Currently, many Chinese people own airplanes but do not fly them. Apart from the strict regulations on the sector and airspace control, there are only 70 airports in the country destined for general aviation, in comparison with 5000 in the U.SA.

This makes it relatively expensive to fly and own a private jet in China. Zhao Liancheng, Zhuhai Xirui's vice executive president considers that "the cost of civil flying can only be reduced if China has enough airports to build a network".

Read more from 经济观察报E.O in Chinese

Photo - David Sifry

*Newsbites are digest items, not direct translations

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Geopolitics

Iran-Saudi Arabia Rivalry May Be Set To Ease, Or Get Much Worse

The Saudis may be awaiting the outcome of Iran's nuclear talks with the West, to see whether Tehran will moderate its regional policies, or lash out like never before.

Military parade in Tehran, Iran, on Oct. 3

-Analysis-

LONDON — The Iranian Foreign Ministry spokesman Saeed Khatibzadeh said earlier this month that Iranian and Saudi negotiators had so far had four rounds of "continuous" talks, though both sides had agreed to keep them private. The talks are to ease fraught relations between Iran's radical Shia regime and the Saudi kingdom, a key Western ally in the Middle East.

Iran's Foreign Minister Hossein Amirabdollahian has said that the talks were going in the right direction, while an Iranian trade official was recently hopeful these might even allow trade opportunities for Iranian businessmen in Saudi Arabia. As the broadcaster France 24 observed separately, it will take more than positive signals to heal a five-year-rift and decades of mutual suspicions.


Agence France-Presse news agency, meanwhile, has cited an unnamed French diplomat as saying that Saudi Arabia wants to end its costly discord with Tehran. The sides may already have agreed to reopen consular offices. For Saudi Arabia, the costs include its war on Iran-backed Houthis rebels fighting an UN-recognized government in next-door Yemen.

The role of the nuclear pact

Bilateral relations were severed in January 2016, after regime militiamen stormed the Saudi embassy in Tehran. Amirabdollahian was then the deputy foreign minister for Arab affairs. In 2019, he told the website Iranian Diplomacy that Saudi Arabia had taken measures vis-a-vis Iran's nuclear pact with the world powers.

It's unlikely Ali Khamenei will tolerate the Saudi kingdom's rising power in the region.

He said "the Saudis' insane conduct toward [the pact] led them to conclude that they must prevent [its implementation] in a peaceful environment ... I think the Saudis are quite deluded, and their delusion consists in thinking that Trump is an opportunity for them to place themselves on the path of conflict with the Islamic Republic while relying on Trump." He meant the administration led by the U.S. President Donald J.Trump, which was hostile to Iran's regime. This, he said, "is not how we view Saudi Arabia. I think Yemen should have been a big lesson for the Saudis."

The minister was effectively admitting the Houthis were the Islamic Republic's tool for getting back at Saudi Arabia.

Yet in the past two years, both sides have taken steps to improve relations, without firm results as yet. Nor is the situation likely to change this time.

Photo of Iranian Supreme Leader Ali Khamenei in 2020

Iranian Supreme Leader Ali Khamenei in 2020

commons.wikimedia.org

Riyadh's warming relations with Israel

Iran's former ambassador in Lebanon, Ahmad Dastmalchian, told the ILNA news agency in Tehran that Saudi Arabia is doing Israel's bidding in the region, and has "entrusted its national security, and life and death to Tel Aviv." Riyadh, he said, had been financing a good many "security and political projects in the region," or acting as a "logistical supplier."

The United States, said Dastmalchian, has "in turn tried to provide intelligence and security backing, while Israel has simply followed its own interests in all this."

Furthermore, it seems unlikely Iran's Supreme Leader Ali Khamenei will tolerate, even in this weak period of his leadership, the kingdom's rising power in the region and beyond, and especially its financial clout. He is usually disparaging when he speaks of Riyadh's princely rulers. In 2017, he compared them to "dairy cows," saying, "the idiots think that by giving money and aid, they can attract the goodwill of Islam's enemies."

Iranian regime officials are hopeful of moving toward better diplomatic ties and a reopening of embassies. Yet the balance of power between the sides began to change in Riyadh's favor years ago. For the kingdom's power has shifted from relying mostly on arms, to economic and political clout. The countries might have had peaceful relations before in considerably quieter, and more equitable, conditions than today's acute clash of interests.

If nuclear talks break down, Iran's regime may become more aggressive.

Beyond this, the Abraham Accord or reconciliation of Arab states and Israel has been possible thanks to the green light that the Saudis gave their regional partners, and it is a considerable political and ideological defeat for the Islamic Republic.

Assuming all Houthis follow Tehran's instructions — and they may not — improved ties may curb attacks on Saudi interests and aid its economy. Tehran will also benefit from no longer having to support them. Unlike Iran's regime, the Saudis are not pressed for cash or resources and could even offer the Houthis a better deal. Presently, they may consider it more convenient to keep the softer approach toward Tehran.

For if nuclear talks with the West break down, Iran's regime may become more aggressive, and as experience has shown, tensions often prompt a renewal of missile or drone attacks on the Saudis, on tankers and on foreign shipping. Riyadh must have a way of keeping the Tehran regime quiet, in a distinctly unquiet time.

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