Hongkong Jet operates on a grand scale by comparison with other Chinese and Asian recent arrivals on the business aviation scene. Not many business aviation companies in China, or indeed, in Asia, could add ten aircraft in ten weeks to their portfolio, including a Gulfstream 550 and a Gulfstream G-IV. The expansion of the company’s fleet of aircraft is particularly impressive when one remembers that it was only granted its Air Operator’s Certificate (AOC) by the Hong Kong Civil Aviation Department some 16 months ago, in November 2011. But then Hongkong Jet has the good fortune to be a wholly owned subsidiary of the HNA Group, which has assets in excess of 68 billion Renminbi and has been nominated as the Fortune 500 Enterprise of China for the last six years.
As Hongkong Jet CEO Chris Buchholz notes, HNA is a highly experienced player in China’s commercial aviation industry as well as being a well diversified group, with interests in real estate, retail, tourism, hotel and airport management and container leasing. The Group includes over a dozen aviation companies and operates over 300 aircraft. Its businesses include airlines, cargo and business jet operators. “Business aviation is a relatively small part of the HNA Group, but the Group Board is highly committed to developing business aviation in China and the Board has provided the funding to make Hongkong Jet a premier operator, charter company and MRO services provider in the region,” Buchholz says.
“We are really going for this in a big way! HNA is the largest non-government owned aviation group in China and it has been very supportive in helping us to secure the best international team of aviation and engineering experts anywhere in the region,” he adds.
The aim has been to put together a top international team to support an international business model, headquartered in Hong Kong. The HNA Group is very keen to internationalise its operations and has been acquiring businesses based outside of Asia. It bought a 48% stake in the French Airline Aigle Azure for a reported $40 million in October 2012, but this transaction pales against the $1.2 billion HNA paid when it acquired the marine container-leasing company GE SeaCo from General Electric at the end of 2011. The Group also recently invested in MyCargo and MyTechnic, an MRO based in Turkey. The HNA Group is now one of China’s largest conglomerates.
The way in which all this connects to Hongkong Jet, Buchholz says, can be seen from the fact that a little over a year ago, the HNA Group moved its international headquarters from mainland China to Hong Kong. “As a halfway house between China and the world, Hong Kong is seen by the top mainland China companies as an ideal platform for expansion overseas. Hong Kong is still governed by English Common Law and is very much a piece of the West on the doorstep of China. Although we are only a small part of a large conglomerate, the Group is very passionate about business aviation and is keen to attract the best talent in the world to turn its ambitions into reality. Business aviation is tremendously exciting to the Group because of the role general aviation can and will play in promoting economic development across the region,” Buchholz says.
As Hongkong Jet has already proven with the team it has managed to assemble in a relatively short time-frame, one of the great advantages of Hong Kong is its status as one of the world’s most fascinating cities. This makes it very easy for ambitious Hong Kong-based companies to attract top Western talent. “Hongkong Jet is not just about our operations here. We have aircraft based right across Asia, but the Hong Kong brand is a tremendous draw card. By naming the company after the city we have committed ourselves to ensuring that we provide a service that encapsulates the best of the West and the East combined.
So we have world class safety standards that we adhere to, and a commitment to service that is in the best Asian traditions,” he adds.
This is not just market speak. As Buchholz notes, if you travel first class on one of the top Asian airlines and compare that experience to travelling first class on many of the mainstream US airlines the experience is as different as night and day. “Asian clients do not mind paying more for the highest standards of service, but having paid, they expect the very best,” Buchholz notes.
When people buy a jet in Asia it will generally be their first jet, since the history of business aviation in Asia is still in its infancy. “Their experience prior to buying their own jet is the first class service they have received on Asian airlines and they expect the service they get from their jet operator to be better than they received from a commercial airline and more personal. So the bar for service is set very high. That suits us because business aviation is a very personal business,” he says. Typically an Asian jet owner will not want to spend time in an FBO lounge. They expect to be able to arrive five minutes before the plane’s departure. But for the brief time they are there in the FBO they expect everything to be a five-star service, including baggage handling and the quality of service on the ramp.
Given the commitment to provide the highest quality of service at all times, aircrews are naturally a vital ingredient in Hongkong Jet’s approach to building and sustaining the relationship with the customer. “They see the clients more frequently than our sales and management teams and they act as ambassadors for Hongkong Jet. Clearly, piloting is one skill and client relationship management is a different skill set entirely but we are not interested in simply flying the airplane well. When we recruit, of course we put the pilot into the simulator to check their skills and we test their references. For first officers we look for pilots with significant command time behind them, people who have had the rank of captain before. They will become captains again when the time is right, and for a lead captain we look for a lot more. We look for that extra special something, for people who like being part of a successful team. When we manage airplanes for our clients we have a dedicated crew who only fly airplanes for that particular corporation or that particular jet owner. We instil in our aircrews the business principles of Hongkong Jet,” he says.
We like to keep our pilots very active even when they are not flying. That way they become much better communicators with the client
Chris Buchholz, CEO
To ensure that air crews stay fully committed even during stretches when the jet is not flying, Hongkong Jet ensures that pilots take on additional roles in their non-flying hours. “They get involved in the ownership of the entire operation – so they have an accounts management role, they will see all the invoicing that goes to the client.
They will schedule the maintenance on the aircraft and so on,” Buchholz considers. That way if the client has a trip planned over a period when maintenance is due, the pilot can ensure that the maintenance can be slightly brought forward so the client is not inconvenienced. “We like to keep our pilots very active even when they are not flying. That way they become much better communicators with the client and they are much happier as part of the Hongkong Jet team,” he says. Typically, the company will have three pilots per aircraft under management and it currently has over 30 pilots on its staff.
Hongkong Jet operates charter services as well as managing aircraft for clients. However, as Buchholz points out, in Asia only a very small percentage of jet owners put their aircraft into the hands of charter companies. “Because this is the first jet for many buyers, they regard it as a very personal thing. It is the equivalent of their home office and the only people they want to share it with are their invited guests,” he says.
This means that Hongkong Jet has had to have its own aircraft for its charter business. According to Buchholz, demand for charter is growing strongly across Asia as companies increasingly look to do business in areas that are not well served by charter, or easily served by scheduled airlines. Even where a city pair has a commercial airline flying between the cities, senior executives often prefer the privacy and convenience of charter.
One of the problems in Asia, of course, is the lack of any equivalent infrastructure to that enjoyed by jet owners in the United States or Europe. “In the Greater Los Angeles area, for example, you have nine business aviation airports to choose from. In Beijing there is just Beijing International Airport. This poses a variety of challenges for operators. First, because of fuel protectionism across some parts of Asia there is insufficient competition to hold fuel prices down. Moreover, in Mainland China for example, the FBO operator will themselves not be able to make a profit on fuel services, so this leaves FBO owners with little choice other than to charge heavily for those services that are under their control. While this level of cost may be bearable for an owner of a Gulfstream 550 or 650, the costs would be far too high for, say, the owner of a light jet. “This is one of the major reasons blocking the development of a light jet market in Asia,” Buchholz says. “There is plenty of latent demand out there, more than enough entrepreneurs doing regional trips of under 2,000 kilometres who would want to own a light jet. But you buy a light jet because it has a lower entry price that fits your budget and you expect a certain level of running cost. FBO charges in China and much of Asia would weigh far too heavily on a light jet owner for small jets to be viable with the business aviation infrastructure that we have here at present,” he suggests.
There are also issues with slots. “Beijing is a very busy airport and while you will get a slot, it may well not be the slot that you wanted and asked for. This creates logistical issues for operators and owners and it is something that we work to minimise,” he says. However, Buchholz emphasises that Hongkong Jet is now very much regarded as a member of the airport community at Beijing and other Chinese airports as well as at Hong Kong. Another point is that hangar space is extremely scarce at Beijing Airport and indeed, across China, and is also an issue in Hong Kong. “There are only three jet hangars in Hong Kong and they are all full. There are more than 70 jets based in Hong Kong so the vast majority of these are parked outside on the apron,” he says.
This immediately creates a cleaning problem. “In Hong Kong we never have freezing weather, so ice is not a problem, but northern China is very dusty and most of China does have freezing weather in winter. When the dust mixes with some of the pollutants aircraft can get dirty very quickly. So top quality cleaning services are vitally important,” Buchholz continues. When an owner brings his business friends and acquaintances to see his or her jet they would lose face enormously if the jet were grimy. Hong Kong Jet has very sizeable cleaning teams and spends a lot of time buffing the leading edges and keeping the aircraft looking good. “We have a mobile cleaning team here with their own generator to drive buffing tools so we can polish the leading edges at remote parking bays. We make sure that owners are able to feel good about their aircraft so that they can be relaxed and productive on their flight,” he concludes.