PGA Perceptions from the Middle Kingdom

Top-down directed changes with global impact would revolutionize Chinese aviation in ways that wouldn't be possible elsewhere.

The current "trade war" between the US and China is less likely to significantly impact airplane and engine sales than the mass media and some on Wall Street seem to think it will.

During the past 30 years, the Chinese western-built mainline commercial passenger aircraft fleet has grown from about 50 aircraft in May 1988, to about 2,600 aircraft today. This is an extraordinary accomplishment which has revolutionized transportation within China and globally.

The recent multi-airline "package deal" for a large quantity of new aircraft, announced during the U.S. presidential visit to China, is another example of the existing triangle relationship between Chinese Airlines, both major western OEMs and the PRC government.

Chinese cargo airlines ride growing wave of e-commerce volume, but are inhibited by shortage of additional new and converted freighters.

We anticipate that the forthcoming new rules will address several fundamental issues while presumably (hopefully?) also promoting harmony, at least in the long run, among Chinese governmental agencies, Chinese airlines, and foreign airplane OEMs.

Although Taiwan is a small island, it is strategically well positioned geographically to serve as a world hub for the trans-Pacific and South Asian long-haul markets, which greatly favors the established local entrants China Airlines and EVA with their combined long-haul and regional fleets.

Perhaps the most significant Q3 development for the PRC domestic aviation industry was the issuance of CAAC Internal Rule #96 dated August 29, 2016 governing the process for market entry by new startup airlines (hereinafter "the Rule").

We continue to witness steady growth within China's airline industry, despite a challenging business climate in other industries, in China as well as worldwide.

The past few years have seen a robust purchase and expansion phase for both mainland China network carriers and China's newly developed bank-owned operating lessors. The Chinese airlines are continuing to place large orders with western OEMs, whether through stand-alone deals or by participation in a multi-airline "package" deal under PRC Government supervision...