凤凰通用航空项目商业计划书.doc

1.China GA industry analysis 1.1 Profile of GA Industry1.1.1 Definition of General AviationAviation sector is usually divided into civil aviation and military aviation by use categories. Civil aviation can further be divided into airline aviation and general aviation (GA). Airline aviation includes flight activities for public transportation whereas GA includes flight activities for industrial, agricultural, forestry, fishery, medical, rescue and emergency, mining, construction, weather survey and maritime monitoring and survey. GA also includes flights related to scientific experimentation, remote sensing survey, education, sports, recreation and sightseeing. Figure 2 Sub-sector of Aviation1.1.2 Features of China GA industry IrreplaceabilityThe market of Chinas civil aviation mainly concentrates in large and medium-sized cities and the business of this industry mainly focus on airlines between large cities. It is international common practice to adopt general aviation in many small towns, remote regions or other places without quick and convenient transportation. General aviation, particular the field of helicopter services, is irreplaceable in aviation industry for its low attitude flight, short-routes conveyance, high flexibility and wide business range. Universality, scatterance and unpredictability.The universality of this industry means that it involves recreation, physical culture and various sectors in national economy. The industry is distributive in that the aviation aircrafts are possessed by various units and individuals. Its business spreads to plateaus, plains and oceans; its flight attitudes covers super-low, low and high attitudes, and its flights extends all throughout the year. Some of its projects, such as aerial thermal infrared scanning and microwave radiation, call for flights overnight. The third is its unpredictability, that is: the business flights of general aviation are unpredictable and involve dealing with an emergency, putting out a forest fire and the prevention and cure of pests, etc. High adherence to other industriesWith the development of productivity and the tendency of integration, general aviation tends to leech on to other relating industries. For example, the aircraft used in farming aviation has become one important part of the farming machineries and the prospecting aircraft has become one frequently used tool in geological prospecting. The utilization of such aircrafts makes it easy to organize production, to raise efficiency and equipment utilization. Regional differencesChina is a country with a vast expanse of land, and different regions are distinctive with different economic bases and natural recourses. Therefore, the development of general aviation is distinctive in its regional differences. In accordance to this, we should adopt different policies in different regions based on local conditions to promote the development of general aviation. Thus development of aviation in farming and forestry in northeast and northwest China and in forestry in southwest China should be supported and development of aerial remote sensing and photography and aerial aiding in offshore oil exploitation in east and south China should be supported too.1.2 Current status of Chinas GA industry1.2.1 Hours flownGeneral aviation was reconstructed in 1952 in China and hours flown amounted to 39739 in 1979. However, from 1979 to 2000, hours flown fluctuated near 40,000 with no notable increment. By the end of 2003, total hours flown of China general aviation amounted to 1.56 million hours. From 2000 to 2004, general aviation industry recovered and hours flown reached 60,000 hours every year. But general aviation has good market potential in China and is a green field waiting to be developed. According to Table 1, total hours flown of general aviation in China is only 0.2% of that of U.S.AFigure 3 Total hours flown of general aviation industry in ChinaTable 1 Hours Flown Comparison Between China and U.S.A（10,000 Hours）1.2.2 Total market size of Chinas GA industrySeven key general aviation enterprises are set up by CAAC to guarantee national mandatory emergency services and important general aviation activities. These enterprises include China Northern Airlines Heilongjiang General Aviation Corporation, China Northern Airlines Chaoyang Flight Team, China Northwest Airlines Lanzhou Branch Flight Team, China Eastern General Airlines, China Southern Airlines Zhuhai Helicopter Co.,Ltd. Dongbei General Aviation Corporation,Xingjiang General Aviation Company.In 2002, total GA revenue of enterprises set up by CAAC totaled 132.65 million yuan, less than 1% of all revenue of Chinas civil aviation industry. Figure 4 Total GA revenue of enterprises set up by CAAC(1950-2002)Source: CAACFigure 5 Revenue Structure of Enterprises Set up by CAAC,2002Table 2 Revenue of Enterprises Set up by CAAC( 2001-2002)（Unit:10 000 yuan）In 2001, hours flown of general aviation in China amounted to 55937 hours in which enterprises set up by CAAC reached 12002 hours, accounting for 21.5% of all hours flown, other enterprises reached 43935 hours, accounting for 78.5% of all hours flown. Chinas GA industry is yet developed for total revenues of GA industry in China will be less than 700 million yuan in 2001 in view of the proportion of hours flown of enterprises set up by CAAC.1.2.3 General aviation aircraft Total number of general aviation aircraft By the end of 2004, total number of general aviation aircraft reached 436. General Administration of Civil Aviation of China (CAAC) estimates that in the next 10 years, the nation needs at least 2,000 aircrafts for civil use; the number will reach 10,000 by 2020. Figure 6 Aircraft number of GA industry in ChinaFigure 7 Gap of aircraft number between current status and plan Number by aircraft types Table 3 gives the information about number of general aviation aircraft by aircraft types and hours flown by aircraft types in 2002. Aircraft types with the highest hours flown are Super Puma, EC-155B, Caravan, CL-604, Z-11, S-76, A109 and HAWKER-800XP respectively. ConfidentialPage 25 of 43August, 2005TELFAX E-mail:ADD：D2105 Xian Dai Cheng 88 JianGuo Road Chao Yang District, Beijing P. R. China. 100022Table 3 Number and hours flown by aircraft model, 2002 1.2.4 List of aircraft manufacturers in China Profile of main aircraft manufacturers in Chinal Shijiazhuang Aircraft Industry Co.,Ltd manufactures Y-5 series of aircraft, Y-5 is a multi-purpose aircraft with 12 seats.l Shaanxi Aircraft Company manufactures Y-8 series of aircraft. The Y-8 is a medium size medium range transport aircraft based on the Russian Antonov An-12. It is a fully pressurized aircraft equipped with four turboprops and tricycle landing gears with low pressure tires and disc brake system. l Harbin Aircraft Manufacturing Company manufactures Y-11 and Y-12 series of aircraft. Y-11 and Y-12 can be widely used in remote sensing survey, maritime monitoring, agriculture and forestry related activities, aero exploration of mine spots and military purpose. Y12 aircraft has been certified by CAAC, JAA and FAA.l Nanchang Aircraft Manufacturing Company manufactures N5A airplane, a multipurpose agricultural airplane.List of light or ultra-light plane manufacturers in China l Shijiazhuang Aircraft Industry Co.,Ltd. manufactures Dragonfly airplanel Nanjing University of Aeronautics and Astronautics (NUAA) manufacturers AD100 and AD200 ultra-light multi-purpose plane.l Beihang University (BUAA) manufactures Honey Bee series of aircraft. Honey Bee is a kind of 2 seats ultra-light multi-purpose plane.l Shenyang Zhongti Light Aircraft Manufacturing Company manufactures Petrel light aircraft;l Nanjing Light Aircraft Company manufactures AD500 business aircraft, a 5-seat aircraft developed by Nanjing University of Aeronautics and Astronautics (NUAA) l Guizhou airline and Evektor-Aerotechnik a.s. manufactures EV97 aircraft, a 2-seat ultra-light aircraft. Market shares of main aircraft manufacturersAs the market shares of main aircraft manufacturers, Shijiazhuang Aircraft Industry Co.,Ltd takes the first place by number of registered aircraft in China by the end of April, 2005. The number of Y-5 airplane, made by Shijiazhuang Aircraft Industry Co., Ltd, amounted to 148. Harbin Aircraft Manufacturing Company takes the second place with 52 Y11 or Y12 aircraft registered. See report Market Shares of Main Aircraft Manufacturers according to Registered Aircraft in China for details.Table 4 Market shares of aircraft manufacturers by registered aircraft, 2005 1.2.5 Hours flown by primary use Benefit from the opening up of on-sea petroleum service, hours flown of oil field service increase rapidly, taking a large proportion of all hours flown at present. Agriculture and forestry related services also play an important role in Chinas GA market.Figure 8 Hours flown by primary use of Chinas GA market,2003 Figure 9 Comparison of Hours flown by primary use ,1986 to 2003 1.2.6 Hours flown by region China covers a vast area and great regional difference exists between traditions, natural resources, economic base and development speed, which makes GA activities have great regional difference. For example, agriculture and forestry market are developed fully in Northeast China and Northwest China whereas petroleum services market are developed fully in East China and South China. In 2001, a good year with high hours flown and revenue for GA industry, hours flown of industrial activities reached 21752, in which central south making up 46.4 percent of hours flown. Hours flown of agriculture activities reached 30754 with North China accounting for 41.2 percentFigure 10 Hours flown by region of industrial activities and agricultural activities , 2001Figure 11 Hours flown by province of agriculture and forestry related activities, 2002Figure 12 Hours flown by province of industrial activities ,2002GA industry developed well in Guangdong, Xinjiang and Heilongjiang province and main GA activities are on-sea petroleum service, on-land petroleum service and agriculture and forestry related operations respectively 1.3 Introduction of GA enterprises in China1.3.1 Number of enterprisesIn 2003, CAAC lowered the approval rights for the set up of general aviation enterprises to local administration department of civil aviation, which created a warm environment for the development of general aviation industry in China. By the Sep., 2004, general aviation enterprises amounted to 44, including 9 enterprises invested by airlines State Physical Cultural Administration, 2 invested by aviation schools of State Physical Cultural Administration, 6 invested by aviation bureau and other invested by local investors. Other 11 enterprises were approved and preparing for setup.Figure 13 Num. Of GA Enterprises in ChinaFigure 14 Supervision Bureau and Number of GA Enterprises1.3.2 Registered capitalAccording to our investigation on 39 main GA enterprises in China, there are only 4 enterprises with registered capital over RMB 100 million yuan, 31 enterprises with registered capital between RMB 10 million yuan and RMB 100 million yuan and 5 enterprises with registered capital below RMB 10 million yuan. GA enterprises with registered capital between RMB 20 million yuan and RMB 30 million yuan make up large proportion of all enterprises. There is only one GA public enterprise, CITIC Offshore Helicopter Co.,Ltd. listed in Shenzheng Security Exchanger. Table 5 Registered Capital of Main GA Enterprises in China 1.3.3 Fleet by GA enterprises in China(2005) According to statistics of CAAC, the top 5 GA enterprises by fleet size are China Flying-Dragon Special Auiation Corp(36 aircraft), Xingjiang General Aviation Company(32 aircraft), Longken General Aviation Corporation(29 aircraft), CITIC Offshore Helicopter Co.,Ltd (27 aircraft), AnYang General Aviation Company (16 aircraft).Fleet size are less than 10 for most GA enterprises in China. See report Fleet by GA enterprises in China,2005 for details.1.3.4 Business scope of GA enterprisesBusiness scope of GA enterprises in China mainly includes industrial, agricultural, forestry, fishery, medical, rescue and emergency, mining, construction, scientific experimentation, remote sensing survey, education, sports, recreation and sightseeing. Only a small number of enterprises can engage on Class A activities. For 39 enterprises listed below, only 7 enterprises can engage in Class A activities with others all limited to Class B and C activities. Of these GA enterprises, 16 enterprises specialize in agriculture and forestry related activities, 6 enterprises specialize in helicopter services,12 enterprises have flight training qualification and 2 enterprises provide business flight services. Table 6 Business scope of GA enterprises in China 1.3.5 Economic benefits of Chinas general aviation industryGenerally speaking, Chinas GA industry is now undergoing its hard times. Despite the fact that CAAC has once issued the No.53 order to promote the development of GA industry, very few companies among the newly emerged, less than a dozen joint stock general aviation companies are operating with a better balance of income and expenditure. The majority of these companies are struggling for survival. In China, general aviation companies are only allowed to involve in agriculture and forestry related service, aerial photography and the helicopter aiding in offshore oil exploitation. They are not allowed to engage in the business of carrying passengers and cargo, thus many business opportunities to bring fully the advantages of aircrafts into the business are hindered, which results in inadequate flight hours. For most general aviation companies, it is not profitable to engage in agricultural flights, whereby there are quite limited demands for industrial flights. As a result, dozens of general aviation companies are competing for the limited market in China, and this results in average annual hours flown per aircraft is less than 200 in general aviation industry (in 2002, annual hours flown per aircraft is 177 for all the registered aircrafts, and it turns to 219 hours considering all the aircrafts available), which is far from the 500-600 hours required for a balance of income and expenditure.In the background of a general stagnation in the industry, there are still very a few profitable companies such as Citic Offshore Helicopter Co., Ltd.( COHC), which seizes the great opportunity brought about by the development of offshore oil exploration industry and engages itself in providing general aviation service for offshore oil exploitation and exploration. The company maintained a secure flight record of 18657 movements and hours flown of 14012 hours 51 minutes in 2004 with increases of 10.3% and 16.8% respectively than the previous year. The experience of COHC shows that there will be larger market space for general aviation industry with the development of Chinas industry, and there will be a better development for companies as far as they seize the business opportunity without hesitation.Table 7 Financial Summary of Citic Offshore Helicopter Co., Ltd（Unit:Yuan）As for Guangdong Baiyun General Aviation Co., Ltd, it mainly concentrates in providing training for private pilot license, patrol flights and aerial photography. With a total of 3200 flight hours, it is now a generally profitable general aviation company with a steady and healthy development.For its ownership of aircraft E-120, Capital General Aviation Co., Ltd has got the 5-year contract for the project of Northeast Power Line Inspections, which extends for 2400 kilometers and covers ZhangjiakouDatong, BeijingTanggu. With annual sales revenue of about RMB 7 million, there expected to be an annual profit of over RMB 4 million.1.4 Current status of general aviation airports in China 1.4.1 Introduction of general aviation airports in ChinaAccording to classification of civil airports in China in 2002, there are 47 general aviation airports, see table 8 for details:Table 8 Classification of civil airports in China and lists of main general aviation airports. Table 9 Table 10 1.4.2 Facilities of general aviation airportsSee report China General Aviation Airports for details. 1.5 Policies, regulations and industry supervision system 1.5.1 Industry supervision systemGeneral aviation industry is a lot strictly controlled by the government. CIVIL AVIATION GENERAL ADMINISTATION OF CHINA and Regional Administration of CAAC are the main governing departments for general aviation activities. The government administrates general aviation mainly by the following means: Market access administrationThe government has a strict system for the market access of general aviation. When the certification to operate with the permission of CAAC and other Regional Administrations of CAAC is not acquired, any unite or individual is not allowed to organize general aviation enterprises, rent general aviation aircrafts or operate general aviation by its own. Operating competency managementFor the enterprises that already have the certification to operate the general aviation, the government has strict regulations for their operating competencies. General aviation enterprises can but operate general aviation in the prescriptive business range. According to “General Aviation Enterprise Examination and Approval Regulation”（ CCAR-102LR）,the operating items for general aviation are divided in t