The Revised Provisions On The Administration Of Business Licensing For General Aviation

The Ministry of Transportation issued the revised Provisions on the Administration of Business Licensing for General Aviation (Order of the Ministry of Transportation [2016] No. 31)("Order No. 31") on April 7, 2016.  Order No. 31, which became effective on June 1, 2016 amended the Provisions on the Administration of Business Licensing for General Aviation issued by the Civil Aviation Administration of China in 2007 (Order of the Civil Aviation Administration of China [2007] No. 176) ("Order No. 176").

General aviation refers to civil aviation operations other than scheduled air services and non-scheduled air transport operations. Order No. 31 introduced a number of major changes to the business licensing for general aviation.

According to Order No. 31, a company must satisfy the following requirements to obtain the business license for general aviation:

(i)         The company must be an enterprise legal person, with general aviation being its major business, and the legal representative of the company is a Chinese citizen;

(ii)        The name of the company should reflect the nature of its general aviation business;

(iii)       The company owns at least two civil aircraft through purchase or lease, and such aircraft must be registered within the People's Republic of China and conform to the airworthiness standards;

(iv)       The company has a flight crew that is capable of handling the civil aircraft, having received professional training and obtained relevant licenses or training certificates;

(v)        The company has administration, operation and safety management departments as well as professionals with the relevant experience to operate its business;

(vi)       The senior management of the company has completed the training required by the general aviation regulations and the personnel responsible for flight and operation must have at least three years' experience cumulatively in recent six years  in the relevant professional field;

(vii)      The company has a base airport suitable for its civil aircraft and corresponding infrastructure;

(viii)     The company has qualified facilities and equipment satisfying the relevant laws and regulations and standards;

(ix)       The company has the ability to provide full indemnification and maintains ground third party liability insurance and other required insurance;

(x)        Other requirements of Civil Aviation Administration of China.

As compared to Order No. 176, Order No. 31 reduces the threshold of market access for general aviation company. Order No. 31 no longer requires the company to own the aircraft, rather the aircraft can be obtained either through ownership or lease.  Also Order No. 31 removes certain requirements relating to the use of the company's own funds to purchase the aircraft under Order No. 176.  These amendments were intended to alleviate the capital requirements of the general aviation company as well as to support the development of aircraft leasing business in China.

Order No. 31 simplifies the approval procedures for the establishment of general aviation business.  Order No. 176 contains a series of approval requirements for a preparatory stage, but Order No. 31 removes the approval requirements for a preparatory stage and now a company can directly apply for a general aviation business license without going through the preparatory stage application process.

Order No. 31 introduces rules to standardize the operation and management of the company, for instance, it requires the company to have administration, operation and safety management departments, the senior management to complete the training of aviation regulations and the personnel responsible for flight and operation to have three years' experience cumulatively in recent six years in the relevant professional field.  In addition, Order No. 31 requires the company to update its operation manual in a timely manner in accordance with the laws, regulations and standards.

Another significant change to Order No. 176 is the revision to the classification of general aviation business under Order No. 31 in light of the existing market demand.  Under Order No. 176, the business license was classified into three categories, Order No. 31 classifies the business license into four categories.  Air sight-seeing, which used to fall under category A is moved to category B.  Aircraft hosting business and trainings for private or commercial pilot licenses which used to fall under category A is moved to category C.  Personal flight for recreational purpose is added to accommodate the increasing market need.

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