But half a century later jet travel has become common place, it only those with the spare cash to have their own jet on standby that the term jet set really applies.
Up until now those people had been primarily Westerners as recently as last year China and Hong Kong had only 125 business jets operating within their borders, against 11,000 such jets in the US but that looks set to change as Chinese millionaires and billionaire move up the rich lists, and China government becomes more comfortable with allowing them to fly the Chinese skies. Some estimates from local companies involved in the industry expect a ten-fold increase in the overall market size by 2020.
The big break through will occur just this year. In late last year China's regulators announced that they would be opening up altitudes up to 1000 meters to flights without the owner of the craft being required to register a plan first. Below 4000 meters, the owner will need to file a plan, but will not need to get approval. There is hope that this will translate to easier approvals at higher altitudes, and the opinion of more air-fields for business jet landings. Currently under 200 airports in China are open to civil use, against over 5,000 in the US.The government has even gone so far as to support private jet expos, with the first occurring last August at Shanghai Hongqiao international airport. In November Zhuhai sported a government sponsored air show which also put the capacities of some private jets on display.
Whatever the current size of the market, there is no doubt that there's interest, and its growing fast.
Trouble up above.
The market might in fact be much bigger than the official numbers suggest. There is thought to be a sizable - though no one is sure quite how sizable - number of planes that fly unregistered. The reason being, according to the state run newspaper China Daily, because "the existing procedures for registering private planes are very complicated." The fee for flying unregistered aircraft is also well below the level a private jet owner would care about.
And besides over regulating the government has also been overtaxing. Jets imported into China are hit with a 17% value-added tax and a 5% import tax, a sizable chunk of change for a multimillion dollar piece of equipment. Once you have the plane bought you are often saddled with dozens of unnecessary crew members and maintenance workers, and while registering your plane in China might have some benefits if you are mainly planning on flying inside the country, if you want to leave the country an external registration destination can save you a lot of money.
Most Chinese are taking this route. According to Mike Walsh, the CEO of Asia Jet, a private aviation company that operates one of the largest fleets in Asia, Chinese citizens are atypical because instead of starting small and moving up to bigger and better jets, they have entered the market buying the biggest and the best jets they can - they don'twant to just go from the inland factory to the coastal office, they want to go across the world both for business and pleasure.
"We're flying Chinese to the Maldives. A lot of Chinese fly on private jets to Australia, especially the Gold Coast, to do property deals. Many fly to Europe on their private jets for summer holidays," Walsh told South China Morning Post. Once you decide to leave the country it doesn't matter how far afield you go. Aircraft Registered half a world away are treated the same as planes registered in Hong Kong and Macau, they are all foreign as far as the Chinese regulators are concerned.
Port of Call.
There are a number of reasons to use an offshore center to register your jet. The most obvious two being taxes and asset protection. Most offshore destinations have a 0% VAT, and registration fees can often go as low as a few thousand dollars, compared to the possibly millions you'd have to pay for establishing your aircraft with mainland China.
Asset protection on an aircraft is also considerably more complicated than with other objects. Unlike art or real estate, where holding value is largely a matter of maintaining the quality of the product, having a complete paper trail that lists the inspections and registrations that a particular plane has gone through can be crucial for maintaining that value of your investment.
A level of personalized service in a jurisdiction known to be stable, and adhere to the international standards for aircraft registration can add decently to the resale value of your craft. Like any other assets, secrecy is also often an issue. In most cases the ownership of your plane will not be part of the public record in offshore jurisdictions. And in all other cases a good asset manager should be able to structure ownership through offshore trusts that completely hide final ownership.
Easy Landing.
Each individual jurisdiction provides particular benefits, Aruba touts itself as a no tax jurisdiction, with a strong name in other countries you may be flying to - the registry has been open since 1995, and even has an office in Miami, Florida. But it targets the high end market with licensing fees between US$ 15,000 and US$ 65,000 a year, whereas registration fees in the Cayman Islands are now capped at US$ 6,098.
The Cayman Islands also pushes customer service to farther than most other registries, with a willingness to send inspectors to the destination of the aircraft, instead of requiring you to come to the island. "We pride ourselves on providing quality client service that is customized and tailored to fit our clients' needs, including flexibility in scheduling, dispatching surveyors and inspectors to clients' preferred location and providing experienced surveyors/inspectors that have worked elsewhere in the Asian market," says P. H. Richard Smith, Director-General of Civil Aviation.
The Isle of Man,until just recently prided itself on being the only offshore aircraft registry, which can help to assure compliance with often finicky European tax regulations. This is particularly important if you are attempting to transfer goods or passengers between any two European locations, which would otherwise be taxable. The Isle of Man has recently begun to receive some competition from Malta, which opened its registry last year, and vaunts not only access to European markets, but an extensive number of double taxation agreements that can keep your investment from costing you more down the road.
The friendly skies.
While the fines for improper registration of aircraft in China might not be of worry to the average Chinese super rich, an imprecise regulatory environment can mean a world of trouble for you fur-ther down the road. It is not unheard of for businessmen to see their planes grounded indefinitely somewhere in Central Asia because inspection and registration papers were improperly or sloppily filled out.
In these cases the simplification that comes from registering at an offshore center, with their limited number of clients and streamlined registration process focused on maximum international compatibility, is not only convenient but crucial for protecting your assets.
