Relaxing rules on
civilian flights will open up a whole new market. Claire Hack
writes.
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China has begun to deregulate
4,000 feet of airspace, signalling the start of a potential boom in
aviation leasing.
Irish arranger PAS Capital
Solutions, a specialist in business aviation finance, has
researched the market and is now looking to gain a foothold
there.
PAS director Michael Gilhooly
said: “The Chinese market for aviation is very
interesting.
“The big problem historically
was that airspace was controlled by the military. In terms of
flying somewhere within China, it wasn’t always the easiest thing
to do.”
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By GlobalData“The story here is growth.
Leasing has a role to play in business aviation in China,” Gilhooly
added.
Germany’s DVB Bank has also
begun to look at funding Chinese lessors in aviation and shipping
containers.
DVB Bank CEO Wolfgang Driese
said: “On the container box side, we have good relationships but we
are very much driven by specific transactions.
“It is not that we are saying
we have now identified China as the market for DVB – it is one of
many others and it has got growth potential.”
DVB supplied a term loan
facility to ICBC Financial Leasing, a wholly-owned subsidiary of
the Industrial and Commercial Bank of China.
A portfolio financing of
eight aircraft on operating leases to four international and
Chinese airlines was written in September 2010.
“The volume was $163m,”
Driese said. “This was a cornerstone transaction as it proves we
have the ability, the competence and the willingness to support any
Chinese companies seeking someone to provide foreign
finance.”
Meanwhile PAS may team with
manufacturers to enter China.
Gilhooly said: “There is an
import tax of 22.8% and if the end user takes a finance lease, they
can spread that out. If you bring assets in through certain Chinese
jurisdictions, you can use that mechanism.”
“The normal rules still
apply. We are looking for introductions in China, banks in China
have Irish offices and trade shows are important as well. Two or
three aviation trade shows are taking place in China this
year.”
“We want to use our asset
expertise to advise professionals and businesses and we are
obviously looking to see if we can transact business.
“We are talking to a couple of institutions there,” he
added.
