Tuesday, 12 March 2013

Reports Indicate All Commercial Aircraft In China Must Begin Installing Satellite Communication Systems

FLYHT Aerospace Solutions Ltd.
TSX Venture: FLY
Shares Issued: 140,386,166
Fully Diluted: 179,132,626


The Howard Group has been informed that the Chinese government has accepted recommendations for mandatory planning and installation of satellite communications on all aircraft in the country:

Following an October 2012 proposal (http://usa.chinadaily.com.cn/china/2012-10/18/content_15828660.htm) from the CAAC (Civil Aviation Authority of China), the following recommendations were reportedly adopted by the Chinese Government:

  • Stage 1:Yearend 2013 - all Chinese airline operators shall write an implementation plan of their fleet equipped with satellite avionics based on individual fleet type.
  • Stage 2:  Yearend 2014 - 45% of the fleet must have satellite avionics.
  • Stage 3: Yearend 2015 - 70% of the fleet must have satellite avionics.
  • Stage 4:Yearend 2016 - 100% of the fleet must have satellite avionics.
  • Imported aircraft after January of 2013 must have satellite avionics.

(Note: We recommend Google Translate http://translate.google.ca/ for a rough translation of the Chinese Government document).

According to the guideline translated into English, there are 1,745 transport aircraft registered in China and 1,124 for general aviation.

The obvious questions is, “What could this mean for FLYHT?”

To date, the FLYHT AFIRS™ solution is the only certified Iridium based satellite communications system for commercial aircraft in China. The other option for Chinese airlines is using providers of satellite communications through the Inmarsat network.

According to FLYHT management, the company is in an extremely good position, as it costs five to seven times more just to install the Inmarsat systems and it has limited functionality compared to an Iridium based solution.

According to FLYHT management, it is awaiting additional clarification on the potential impact of these regulations. We remind readers that FLYHT receives orders from China on a quarterly basis as disclosed in the Management Discussion & Analysis.