Threshold Aviation Group reaches agreement with China

The Inland Empire company will conduct operations at six airports in China, according to an agreement that took two years to complete.

Threshold Aviation Group will soon be conducting business in China.

The company, based at Chino Airport, has signed an agreement to set up and operate training centers for pilots and mechanics at six Chinese airports, said Doug Crowther, Threshold’s director of business development.

Threshold has partnered with YXST Aviation Industry Development Co., a private company authorized by the Chinese government to provide aviation services in Northern China.

YXST has exclusive rights to develop the six airports. It’s also managing three aircraft and has ordered 10 more planes, Crowther said.

Threshold’s agreement with YXST also allows it to set up fixed based operations and air parks at all six facilities. Air parks are communities designed around an airport, in which residents own their own plane and often have a hanger attached to their home.

In effect, Threshold will do in China what it does in the United States.

Work on the fixed base operations – including fueling stations, repair facilities and hangars – could start in 30 to 60 days.

The agreement, announced earlier this month, took about two years to complete.

“The Chinese are developing a modern commercial aviation system, and they’re way ahead of other countries in that area,” Crowther said. “They don’t have a lot of aviation now, but they’re building it up quickly and they’re following the U.S. model.

“They can see how much aviation has helped the U.S. economy.”

Negotiations accelerated in March, when Threshold hosted the “Inaugural U.S.-China General Aviation Business Conference” to encourage more trade and interaction between the two countries.

“I don’ t remember who approached who,” Crowther said. “I know we’ve been back and forth between here and China for a couple of years. We’ve had people go over there quite a few times.”

YXST has the rights to develop more airports in China, perhaps as many as 300. Threshold officials expect to set up fixed base operations at some of those facilities, but other companies will be in mix for that work.

“We would expect a lot of competition,” Crowther said.

Commercial aviation in China is indeed growing at a frantic pace.

There were 487 million domestic and international flights in China during 2016, a 12 percent increase from the previous year, according to a May 2017 report by money.cnn.com.

Much of that air travel is happening because China’s middle class is spending billions on vacations, both foreign and domestic.

Boeing is predicting that China will need $1 trillion worth of airplanes during the next 20 years to meet demand, and it’s possible that China will pass the United States as the world’s largest commercial aviation market by 2030, the report stated.

China’s bid to become a major player in commercial aviation is being felt at Ontario International Airport.

Last week, China Airlines announced it will expand its flights between Ontario and Taiwan from four days a week to seven.

That service isn’t scheduled to begin until March, but it’s already been expanded because demand has been much stronger than anticipated, according to the Ontario International Airport Authority.

China Airlines is the first airline to offer non-stop, trans-oceanic passenger service to Ontario International, according to the statement

Most of the airports being developed in China will be the size of Chino Airport, Brackett Airport in La Verne and Cable Airport in Upland, Crowther said.

The U.S. and China have no trade agreements, so Threshold is on its own and must work out its own agreements, like any other foreign company.

“The negotiations were difficult,” Crowther said. “We don’t speak Chinese and they don’t speak English. There was also a lot of red tape, because the government has to approve everything, even the small stuff.”

China could one day be the largest commercial aviation market in the world, said Mark DiLullo, Threshold’s founder and chief executive officer.

“This is a huge opportunity for Threshold Aviation Group to expand its business with nearly limitless potential, DiLullo said in a statement. “We are in on the ground floor … providing critical services to help get it off the ground.”

China’s fledgling aviation market does have great potential, but outsiders conduct business there at their peril, said Robert Corona, director of the Riverside Community College District’s Center for International Trade Development.

“A lot of companies, like Walmart, have invested millions of dollars in China, but they haven’t gotten the return on their investment they were looking for,” said Corona, who praised Threshold for reaching a difficult trade agreement. “What I would be most concerned about is losing technology, because that’s all they’re interested in. You can lose your technology and there’s no way to prevent it, or undo it once it happens.”

Any business transaction includes some risk, and Threshold is conducting its dealings with the Chinese knowing it’s not dealing with a conventional business partner, Crowther said.

“YXST is a Chinese company so they know how things work over there,” Crowther said. “We also aren’t making that big an investment, and we’re getting paid to take the risk.”