Guoxin Securities: General Aviation ushered in new development opportunities in China, focusing on the three factors of policy, technology and marketization

The Zhitong Finance App learned that Guoxin Securities released a research report saying that China's general aviation industry is ushering in new opportunities driven by policy, technology, and markets. The low-altitude economy has become a national strategy, leading the world in drone and eVTOL technology. In the short term, the industry will focus on high-value professional scenarios such as maritime transportation and follow the “load first, then carry people” path. Compared with the US, our country still has huge potential in terms of infrastructure and fleet size.

Guoxin Securities's main views are as follows:

General aviation focuses on aircraft manufacturing and flight activities. Except for military and civil passenger and cargo flights, all other flight activities can be classified under the category of general aviation

General aviation has flexible and personalized service characteristics. It has a wide range of operations, low operating space, and strong operational timeliness, and involves diverse civil applications. Traditional general purpose aircraft are mainly fixed-wing aircraft and helicopters, and the technology and application are quite mature. Emerging general purpose aircraft are represented by drones and eVTOLs, and are characterized by being intelligent, unmanned, and green.

General aviation ushered in new development opportunities in China, mainly driven by three factors: policy, technology and marketization

In terms of policy, the rise of the low-altitude economy has become a national strategy to drive changes in the airspace management system and improve the construction and improvement of navigation infrastructure and operation systems, creating favorable conditions for industrial development. On the technical side, Chinese companies are deeply involved in the R&D and manufacturing of general aviation equipment through acquisitions, and have also achieved global leadership in the drone market and eVTOL airworthiness certification. In terms of industrialization, China will implement large-scale application scenario expansion actions. The economy of low-altitude operations is expected to be greatly improved in the future. The specialized operation of the industry will focus on application areas with the triple consideration of high value, specialization, and economy in the short term.

The global general aviation market continues to grow, with annual deliveries exceeding 4,000 aircraft for two consecutive years

The annual delivery volume of global aviation aircraft in 2024 is 4,197, with a delivery value of US$31.9 billion. Among them, North America accounts for 70.4% of global deliveries, and the Asia-Pacific region has the fastest growth rate. Fixed-wing aircraft are the main force in the general aviation market, accounting for 75.3% of global deliveries. The global general aviation aircraft market is skewed towards high-value aircraft. According to GlobalMarket Insights, the global general aircraft market will reach US$40.2 billion in 2029, with a compound annual growth rate of 4.72%.

Traditional general aviation aircraft manufacturing is currently dominated by European and American companies, and the market concentration is high

The market concentration for fixed-wing aircraft, helicopters, and helicopters is over 50%. The top three global fixed-wing aircraft manufacturers in 2024 are Western Reed, Textron, and Piper Aircraft. China is deeply involved in international market competition through resource integration after international acquisitions. Wanfeng Aowei's acquisition of Austrian Diamond Aircraft and Aviation Industry Group's acquisition of American Western Rui Aircraft have all had good results.

Low-altitude application scenarios are gradually expanding. The entry threshold for the industry is high, and the Matthew effect is remarkable. In the short term, large-scale low-altitude operations focus on the three scenarios of maritime transportation, port navigation, and logistics distribution

General aviation operations are in the middle of the core industrial chain of general aviation. The various types of general aviation businesses have obvious differences, complex operating environments, and large operating volumes. They place high requirements on production safety, and have high financial, technical management, and operational qualification barriers. The development path of low-altitude applications in China is already very clear: first to carry cargo and then to carry people; first to quarantine and then to integrate; first to the suburbs and then to urban areas. As the technology of new aircraft gradually matures, future reductions in aircraft acquisition costs, energy costs, personnel costs, and operation and maintenance costs will bring better commercial economy to low-altitude operations.

Compared with the Chinese and American industries, China's general aviation development has great potential

The US general aviation industry is a benchmark for global development. In comparison, China has huge room for development in terms of infrastructure scale, number of aircraft, and flight usage structure. By the end of 2024, the number of general purpose airports registered and managed by the United States is about 40 times that of China, the number of general aviation aircraft owned by China is about 65 times that of China, and the number of flight hours for navigation is about 19 times that of China. In the future, China is expected to achieve large-scale growth in high-value-added market segments such as short-haul general aviation transportation and business charter flights.

Risk warning: 1. Low-altitude policy progress falls short of expectations; 2. Low-altitude economic facility construction progress falls short of expectations; 3. Key technological progress falls short of expectations; 4. Risk of deviations in relevant data and industry size estimates.