Ready for Takeoff

5 May 2011

Zhuhai builds an aviation hub
By Staff Reporter

Zhuhai city is turning a large area around its airport into an aviation hub, which will include aircraft manufacture, maintenance and logistics and a state company that wants to challenge Airbus and Boeing for mastery of the world’s civil aircraft market.

In the Jinwan area of the city, the Aviation Industrial Park (AIP) will have a total area of 99.02 square kilometres (more than three times the size of Macao), of which 33.83 square km is hilly and 65.19 square km available for development. It is designed for the manufacture of aircrafts, their parts and components, repair and maintenance, training and instruction, services related to the aviation industry and bonded warehouse production. “It will supplement the national strategy on the development of the aviation industry,” according to the park’s official website.

The airport is located in a sparsely populated area southwest of the city and opened in 1995. From 1996, it hosted a bi-annual international air show, attracting aviation firms and manufacturers from around the world.

The AIP stems from the desire to utilise the advantages of the airport and the brand name of the air show. The airport, which is managed by a joint venture company controlled by the Hong Kong Airport Authority, operates at less than capacity; the AIP aims to utilise this spare capacity.

China’s aviation is in a period of unprecedented growth, unmatched in the world. The Civil Aviation Administration of China (CAAC) predicts growth in the market this year of 12 per cent, up from 230 million passengers and 4.46 million tonnes of cargo in 2009, and 700 million passengers in 2020 and 1.5 billion in 2030.

The supply of planes, pilots and other services is struggling to keep pace with this dramatic growth – and it is these shortages which the AIP aims to fill. Another niche it is aiming for is the market for small and executive planes, a market in which supply is far behind demand.

The park is part of the city government’s plan to diversify its economy, by adding aviation and a major port to its existing role as a centre of tourism, real estate and manufacture of household appliances and high-technology products.

In the first quarter of 2010, the city’s GDP grew 13.8 per cent to 24.368 billion yuan from the same 2009 period. Industry accounted for 45 per cent of that GDP, at 10.972 billion yuan, with the main sectors being electronic information, home appliances, petrochemicals, bio-medicine and precision machinery.

Zhuhai airport opened in June 1995, with an area of four million square metres and a terminal building of 93,000 square metres; it is designed to handle 100,000 take-offs and landings per year. It has flights to more than 30 cities in China, including Beijing, Shanghai, Chengdu and Wuhan.

In 2008, it handled 1.1 million passengers and 11,140 tonnes of cargo, increases of 7.8 per cent and 3.7 per cent respectively over 2007; 2008 was the first year in which it achieved a breakeven in its cash flow.

Since 1996, it has hosted the China International Aviation and Aerospace Exhibition, the largest air show in the mainland. The eighth one will be held from 16-21 November this year. At the last one, in November 2008, deals worth US$4 billion were signed, including the sale of 25 ARJ21-700 regional jets by the Commercial Aircraft Corporation of China to GE Commercial Aviation Services of the U.S. At the event, Airbus displayed its latest A380 aircraft and a team from the Indian air force displayed their acrobatic skills.

The biggest project in the park so far is a factory by Aviation Industry Corporation of China (AVIC), involving an investment of 7.6 billion yuan, to build light aircraft. They will be used in agriculture, recreation, training pilots and rescues. The plant is due to start operations in August. Because of the project, AVIC plans to move its headquarters from Beijing to Zhuhai; this is a coup for the city government, to attract one of China’s most important aviation firms.

State-owned AVIC is one of China’s biggest producers of military and civilian aircraft. It has assets of nearly 300 billion yuan and over 400,000 employees; its long-term aim is to compete with global giants Boeing and Airbus in the civilian airline field. It is considering purchase of a manufacturer of commercial planes in Europe or the United States, to accelerate this process. Ownership of a foreign firm would give it brand recognition in western markets, a distribution and support network, technology and experienced personnel.

Its new operations in Zhuhai are an important part of this future

The first product of the new factory will be the Haiou (Seagull), a four- to six-seater, fixed-wing passenger plane that is due to make its public debut at the Zhuhai airshow in November. It is the first light multi-purpose amphibious plane entirely designed and manufactured in China. AVIC has designed it for use over lakes, rivers, dams and shorelines, to carry VIPs, passengers and cargo, train pilots, medical rescue, surveillance of the sky and tourism. Its maximum load will be 1,680 kilograms.

AVIC will also use Zhuhai for part of the production of the ‘Jiaolong-600’, which it aims to be the world’s largest amphibious plane. A single-hull rescue plane with a four-turbine propeller, it will be similar in size to the Airbus 320. Its maximum take-off weight will be 60 tonnes and it will be able to take off and land on both land and water. It is designed for emergency rescue, forest fire-fighting and sea surveillance. AVIC will build in Zhuhai a research and development centre for the new plane.

Another project under negotiation for Zhuhai is an academy to train pilots and alleviate a serious shortage in China. The country has only one civilian training facility, in Guanghan, Sichuan that turns out 800 graduates a year; an equal number are trained at flight schools in Australia, the U.S. and Canada that are licensed by the Civil Aviation Administration of China.

The Pegasus Flight Academy will involve an investment of US$80 million and start with 120 students a year, rising to over 400 over five years. It will have 28 aircraft and 14 simulators and eventually employ 140 full-time academic and support staff. Its director of training strategy will be Captain John Bent, former manager of the Cathay Pacific/Dragonair Flight School in Hong Kong.

Another part of the AIP jigsaw is aircraft maintenance. The city boasts MTU Maintenance, a 50-50 joint venture between China Southern Airlines and MTU Aero Engines, Germany’s leading engine manufacturer and the world’s number one independent provider of commercial auto engine maintenance services.  It has three locations in Germany and a global workforce of 7,500.

This is how the Jinwan government describes its objective for the AIP: “an industrial base for civil aviation in Guangdong, a world-famous aviation exhibition base, a world-class corporate aircraft manufacturing base, an integrated aviation maintenance base for the Asia-Pacific region and an important domestic civil aviation numerical control processing base. It will be competitive and be able to innovate on its own and will finally become a modern aviation city.”

It says that, during the 2010-2015 period, it aims to attract high-tech and competitive aviation firms, expand and improve the aviation maintenance business and build up production of parts and components. “We aim to become one of the main corporate aircraft research and manufacturing bases in the world,” it said.

Du Zhuo, head of the Jinwan district government, said that the district aimed to develop both aircraft manufacturing and the aviation service industry and attract firms in both sectors to the city. “We also want to support ancillary services for the civil aviation sector and promote the consumer market for civil aircraft, attracting domestic and foreign aviation exhibitions, education, training, transport and entertainment. We want to use the advantageous conditions of the growing traffic at Zhuhai airport to attract domestic and foreign firms in the aviation service sector. Our priority is aviation services and logistics.”

One market segment which the AIP is looking at is business jets, flown by  executives and rich people who want the speed and flexibility of their own private aircraft.

This sector is in its infancy in China, despite the fact that tens of thousands of individuals and companies can now afford such planes. Industry estimates put the number of such planes in China at less than 1,000, compared to more than 200,000 in the United States.

The main reason for the slow development of this sector is military controls on the use of airspace and the long time needed to process applications. Executives, on the other hand, want the flexibility to fly where they wish at short notice.

But many people believe that, in response to demand from the business community, the authorities will relax controls. If and when they do, the Zhuhai AIP is ideally placed to take advantage.

MACAUHUB FRENCH