Charter Report Market Intelligence

Places of Potential – Charter Report 2022

Places of Potential – Charter Report 2022
  • With business aviation faltering in Greater China as Asia-Pacific’s biggest market, some of the more savvy operators across the region have turned their attention towards Southeast Asia. It is easy to see why: The region has been leading economic growth across the continent and has seen business jet fleet growth in the past few years.

Part of this growth is caused by a capital inflow, with wealthy individuals moving outside of mainland China and Hong Kong to Southeast Asia in view of existing COVID-19 restrictions, but also, in the case of Hong Kong, due to economic uncertainty following the social unrest.

One of the most sought-after new homebases in the wake of the pandemic is Singapore, with people attracted by its political and economic stability, tax efficiencies and favorable business environment. This helped the city state’s ultra-high-net-worth individuals population swell by 8.6% in 2021, and likely increase by a further 3.4% in 2022.

However, the growth has not just come from people moving into the region. Vietnam, for one, has finally started to deliver on its promises – something many people have been anticipating .

Over the past five years the country’s economy, measured by gross domestic product, increased by an average of just over 4%, although this would likely be much higher had it not been for COVID-19. Vietnam was one of only four Asian countries that has weathered the economic storm brought about by the pandemic, with growth slowing to 2.9% in 2020, and 2.6% in 2021. In the five years prior to the pandemic the country’s economy grew by an average of 6.8%.

Vietnam has seen an explosion in its fleet growth in the past few years. One of the first companies to make a move into the country was Hong Kong-based Metrojet, which managed a Gulfstream G450 on behalf of a Vietnamese owner. This has closely mirrored the expansion in the commercial airline fleets, which have seen massive orders placed not only by state-owned Vietnam Airlines, but also from new start-ups including VietJet.

From a very low installed base, Vietnam’s fleet has grown in double figures in the past two years. This year alone has seen the country add a number of factory fresh aircraft, including a Dassault Falcon 8X and a Gulfstream G650ER.

One operator looking to make a move into the region in the coming months is Hongkong Jet. Speaking exclusively to Asian Sky Group, the company’s Chief Executive Officer Alex Jiao said he foresees huge growth in Southeast Asia in terms of fleet numbers within the next few years, and is hoping to establish a presence in the region soon. Jiao also pointed out that while there is strong market demand in the region, there is also a lack of people with the right skills and experience to handle and operate aircraft.

“We do plan on having a local team and office in Southeast Asia. If you want to establish a successful business overseas, you first have to understand the local culture.” When it comes to operators in the region, there are very few that have a reasonably sized fleet of aircraft, with only Asian Corporate Aviation Management (ACAM) and Seletar Jet breaking into the Top 20 list of the biggest operators in the region. Seletar Jet, as the name suggests, is based at Singapore’s Seletar Airport, whilst ACAM has split bases between Singapore and Indonesia. The region’s other notable operator, Thailand’s Mjets, operates a small fleet from its Bangkok homebase.

It is not just the operators that have their eye on Southeast Asia – business jet manufacturers have moved into the region as well. In mid-2022, Bombardier opened a newly expanded service center at Singapore’s Seletar airport. Dassault moved its senior staff from Hong Kong to Kuala Lumpur, and Gulfstream also expanded its presence in the region.

While Singapore is the favored location due to its friendly business environment, Dassault’s move into Kuala Lumpur comes at a time that the Malaysian Government is putting extra emphasis on the business aviation sector. Subang Abdul Aziz Shah Airport, the main business jet airport serving the country’s capital city Kuala Lumpur, is seeing massive investment with the aim of turning it into a class region business aviation hub. Dassault, which acquired ExecuJet’s maintenance facility at the airport several years ago, is investing in its facilities at the airport, as are other aviation companies including Airbus Helicopters, which also has a maintenance base at the airport.

Overall, the region’s business jet fleet is predicted to grow significantly over the next few years, both from local operators and from operators entering the region from elsewhere. This increase will fall in line with an expansion in the region’s economy, which the Asian Development Bank is forecasting to expand by 4.9% in 2023, and a further 5.2% in 2023.