Simon Lawrenson, a partner in the Hong Kong office of Mourant Ozannes, examines the use of British Virgin Islands companies as the corporate vehicle of choice for high net worth individuals and companies in the acquisition, financing and leasing of corporate and private jet aircraft and helicopters.
The business-jet market has seen remarkable growth over the past fifteen years, notwithstanding the significant challenges posed by the recent global financial crisis. The evolution of fractional ownership programs (the period 1995 to 2010 saw delivery of over 1,150 business jets to fractional operators), the growth of a new class of millionaires and billionaires in emerging markets such as Russia, the Middle East and more recently China, and the increasing use of corporate jets by companies for high-speed business travel, have all contributed to the market's increasing maturity.
Chinese interest is relatively new, and growing quickly. Recently local media have reported a 45.3 per cent growth in private jet acquisitions in mainland China for 2011. Last month a high profile joint venture between NetJets and a consortium of Chinese investors led by the private equity firm Hony Capital and Fung Investments took place.
Additionally, Embraer recently estimated a rise in demand for private jets up to 11,200 aircraft by 2021, with the Asia Pacific region contributing between 16-19 per cent of total demand.
With aircraft order books beginning to bounce back and more liquidity available from private banks and institutional lessors, more and more purchasers and financiers will be looking to structure acquisitions using vehicles established in tax efficient, creditor friendly and cost-effective jurisdictions such as the BVI.