By Fang Yan and Matthew Miller
BEIJING (Reuters) - Investor Warren Buffett's NetJets Inc has been caught by surprise by headwinds in China amid Beijing's austerity drive and a slowing economy, the business aircraft supplier's chief executive officer said.
Less than three months after NetJets won regulatory approval to provide charter services in China, business in and around China is slowing as domestic firms cut the number of aircraft they are importing, Jordan Hansell told Reuters in a recent interview.
"I didn't think it would drop until it actually occurred. It surprised us a little bit," said the CEO of NetJets, a subsidiary of Buffett's Berkshire Hathaway Inc.
The slowdown is a temporary setback for the country's fledgling general aviation market. With hopes for the sector high, plane makers from Brazil's Embraer SA to Gulfstream Aerospace Corp have either started manufacturing jets in China or reinforcing sales staff.
But China's economic growth weakened to 7.3 percent in the third quarter, and November's soft factory and investment figures suggest full-year growth could slow to 7.1 percent in 2015 from an expected 7.4 percent this year.
Beijing's austerity drive also hurt sales of luxury items, which includes not only expensive cars and yachts, but also business jets. China bought only 16 business jets during the first nine months of the year, down from 30 in 2013, and the number of chartered flights is also set to fall below last year's 20,000.
"There was a blip in the middle of the summer where it really slowed down," said Hansell. "And then it started picking up back again but you don't make up for the drop of the summer."
Still, Hansell views NetJets' China investment as "a long-term proposition," saying the country "has the highest growth potential than any market in the world".
Hansell said NetJets is offering only "a handful" of chartered flights in China, utilising two Hawker 800XPs aircraft - one in Shenzhen and one in Shanghai.
The company that pioneered fractional ownership, offering its clients access to more than 700 aircraft worldwide, has no plan to bring more jets into China or start selling shares in aircraft right now, Hansell said.
NetJets operates its China private aircraft charter service through a three-way tie with Chinese private investment firm Hony Capital and Fung Investments, the private investment arm of Victor and William Fung, the controlling shareholders of Li & Fung Ltd.
(Editing by Kenneth Maxwell)