Hong Kong’s China Aircraft Services (CASL) and France-based Elior Group on Thursday announced the establishment of a joint venture in the city dedicated to the dismantling of aircraft and trading in aircraft parts.

The partnership should fill a long-standing market gap in the region and anchor Hong Kong more firmly within the global aviation supply chain, executives from both companies said.

At a ceremony on Thursday morning, representatives of CASL and the French aeronautic services company signed a memorandum of understanding to establish the joint venture, with each side holding a 50 percent stake.

The CASL-Elior joint venture will bring together resources and expertise from both enterprises to form a closed-loop cycle in Hong Kong spanning aircraft maintenance, dismantling, parts recycling, certification and trading, said Norbert Marx, chief executive officer of CASL.

Marx added that the partnership will cement Hong Kong’s aviation ecosystem, create job opportunities in aviation, insurance and other related sectors, and benefit the city’s positioning as a global aviation hub.

CASL, which is mainly owned by China National Aviation Corp (Group) Ltd and CK Hutchison Holdings, was founded in 1995 to provide aircraft maintenance, cabin services and ground services equipment, as well as supply chain management services in Hong Kong.

Aircraft are designed to operate for over 30 years, yet owners often choose to retire them after around 20 years to reduce maintenance costs, a phenomenon that creates a prosperous market for used aircraft parts.

A worldwide shortage of airplane engines has caused the non-delivery of over 5,000 aircraft since 2019, according to a report issued by the International Air Transport Association (IATA) last year, further pushing up the sector’s demand for replacements.

Zhan Zhong, president of China National Aviation Corp — a major shareholder in CASL, said that recycling high-value parts from retired aircraft has become a crucial part of the global aviation supply chain.

Hong Kong's geographical advantages, top-notch business environment, and well-developed professional service network provide exceptionally favorable conditions for developing high-end aviation recycling industries, Zhan added.

The collaboration between CASL and Elior is in response to the global green transition, demonstrating Hong Kong’s capability to reshape of the global aviation industry value chain and reflecting the city’s contribution to the national development goals, Zhan said.

Hong Kong identified aircraft recycling as a new growth area in its latest Policy Address. Last March, the special administrative region introduced Elior, a leading European aeronautic services company with decades-long cooperation ties with Airbus, as a pioneer to develop the industry locally.

ALSO READ: Experts call for better governance to deal with AI risks

In December, Elior, in partnership with the Hong Kong International Aviation Academy, launched a mechanic training program on dismantling aircraft, hoping to expand the talent pool for the recycling industrial chain it aims to build in the city.

According to CASL and Elior, retired planes will fly to Hong Kong and park at CASL’s hangars to be examined for usable parts. The planes then will be transported to a plant outside the Hong Kong International Airport, whether by road or waterway, for dismantling and parts trading.

Marx said it will take more time to secure a proper land site for building the plant, and the joint venture will accelerate preparatory work so that the entire recycling process can begin before the end of the year.

“We need the Hong Kong government to do more promotions about the project for Southeast Asian countries or even for Belt and Road countries (economies engaged in the Belt and Road Initiative),” said Janet Cheung, CEO of Elior Asia.

Cheng explained that there is no such center in Southeast Asia, meaning local airlines send their retired planes to America or Europe for dismantling. “Now they can fly to Hong Kong.”

Marx and Cheung said that Hong Kong’s aircraft-parts processing and trading services are aiming to attract businesses such as airlines, parts trading firms and, particularly, airplane leasing companies.

About 58 percent of the fleet of global commercial airlines is leased, according to an IATA report in 2024.

“If we can bring more leasing companies to Hong Kong, we can actually have more opportunities for recycling and also retiring,” said Cheung.

Contact the writer at: williamxu@chinadailyhk.com