{"id":62324,"date":"2018-04-05T12:14:16","date_gmt":"2018-04-05T12:14:16","guid":{"rendered":"https:\/\/www.biphoo.com\/bipnews\/?p=62324"},"modified":"2018-04-05T12:14:16","modified_gmt":"2018-04-05T12:14:16","slug":"china-tariffs-on-u-s-business-jets-seen-a-boon-for-canadas-bombardier-others","status":"publish","type":"post","link":"https:\/\/www.biphoo.com\/bipnews\/business\/china-tariffs-on-u-s-business-jets-seen-a-boon-for-canadas-bombardier-others.html","title":{"rendered":"China tariffs on U.S. business jets seen a boon for Canada’s Bombardier, others"},"content":{"rendered":"

China tariffs on U.S. business jets seen a boon for Canada’s Bombardier, others<\/span><\/strong><\/h2>\n

China\u2019s plan to slap tariffs on some U.S.-made planes will hit demand for Gulfstream and Boeing business jets but benefit Canada\u2019s Bombardier (BBDb.TO) and other rivals seeking a larger share of Asia\u2019s biggest market, jet brokers and analysts said.<\/span><\/p>\n

China\u2019s Ministry of Commerce announced plans on Wednesday to place a 25 percent tariff on U.S. aircraft with an \u201cempty weight\u201d of between 15,000 kilograms and 45,000 kilograms amid a trade spat between the nations.<\/span><\/p>\n

That category would include General Dynamics Corp\u2019s (GD.N) popular Gulfstream G550 and G650s and the larger Boeing (BA.N) Business Jet 1 that competes against models from European rival Airbus SE (AIR.PA).<\/span><\/p>\n

Gulfstreams are the top-selling business jet brand in China, where they compete fiercely against Bombardier\u2019s Global series and, to a much lesser extent, against the smaller Falcon models of France\u2019s Dassault Aviation SA (AVMD.PA).<\/span><\/p>\n

The United States remains the world\u2019s largest market for business jets, but the Greater China market is expected to be the fastest-growing major market over the next 20 years, with the fleet size more than doubling, according to a Bombardier forecast.<\/span><\/p>\n

Jackie Wu, president of Hong Kong-based plane broker and charter firm JetSolution Aviation Group, said Gulfstream has traditionally been the market leader in China because it entered earlier, but Bombardier had increased marketing in the last three years in an effort to catch up.<\/span><\/p>\n

\u201cIt is just like Apple and Samsung,\u201d she said. \u201cThey keep enhancing the product niches having the new generation of the models and competing with each other. This (the higher tax rate) will definitely favor Bombardier over Gulfstream\u2019s products.\u201d<\/span><\/p>\n

Bombardier and Gulfstream representatives said that it was \u201cpremature\u201d to comment on the Chinese tariffs, while Boeing said neither government had yet imposed the \u201cdrastic measures\u201d while dialogue between the countries continued.<\/span><\/p>\n

Mainland China had a fleet of 318 business jets at the end of 2016, data from aviation consultancy Asian Sky Group shows.<\/span><\/p>\n

Of the mainland China business jet fleet, 102 were made by Gulfstream, 80 by Bombardier, 37 by Dassault, 15 by Airbus and 10 by Boeing.<\/span><\/p>\n

Growth in new jet sales stalled between 2013 and 2016 due to an anti-corruption drive that some led wealthy Chinese to buy used jets or charter them instead but brokers have since reported signs of a rebound.<\/span><\/p>\n

Gulfstream\u2019s G650 jets will continue to have unmatched flight range at the top end of the pure business jet segment until Bombardier brings the competing Global 7000 long-range jet into service this year.<\/span><\/p>\n

U.S. aerospace analyst Richard Aboulafia said that Bombardier would benefit if the trade battle is sustained.<\/span><\/p>\n

\u201cAdding 25 percent to the cost of a G650ER is very good news for the Global 7000, just as it enters production,\u201d he said.<\/span><\/p>\n

The Gulfstream G650ER has a list price of around $67 million, versus the Global 7000 at around $73 million.<\/span><\/p>\n

Bombardier has marketed the Global 7000 heavily in countries like China, Singapore and Australia because of its ultra long range reaching Beijing to New York.<\/span><\/p>\n

\u201cChina remains an important international market for business aircraft with expectations that as airspace is continued to open that demand should follow,\u201d said Toronto-based AltaCorp Capital analyst Chris Murray.<\/span><\/p>\n

But Murray said he would be cautious on any near-term benefit generated for the Global 7000 by Chinese tariffs on Gulfstream, in light of its heavy backlogs.<\/span><\/p>\n

\u201cThere is such a long wait for Bombardier to deliver the aircraft,\u201d jet broker Wu said. \u201cIf you order today the delivery will be around 2022.\u201d<\/span><\/p>\n

Reporting by Allison Lampert in MONTREAL and Jamie Freed in SINGAPORE; Additional reporting by Brenda Goh in SHANGHAI; Editing by Muralikumar Anantharaman<\/span><\/p>\n

Source:-https:\/\/www.reuters.com\/article\/us-usa-trade-china-jets\/china-tariffs-on-u-s-business-jets-seen-a-boon-for-canadas-bombardier-others-idUSKCN1HC1CC<\/span><\/p>\n

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