The first Aircraft Disassembly Operation in China will be constructed in Harbin, capital of Northeast China’s Heilongjiang province, according to the memorandum of understanding (MOU) between the Harbin municipal government and China Aircraft Leasing Group (CALC) (1848.HK) on Dec 3.

According to the MOU, the disassembly operation is located in the airport economic zone near Harbin Taiping Airport. With an investment of $2 billion, the base was established to remove valuable components from aging aircrafts and reuse the dismantling parts in another aircraft.

"With a mission to support and develop China’s aviation industry, the group intends to fill the gaps in China's aviation industry. After more than a year of technical preparations, together with the strong support of the provincial government of Heilongjiang and the municipal government of Harbin, we decided to establish the Aircraft Disassembly Operation in Harbin," said Dr. Mike Poon, chief executive officer and executive director of CALC, at the signing ceremony in Harbin on Dec 3.

Generally speaking, an aircraft will end its economic life after around 20 years. Maintenance costs will increase as the aircraft gets older, and new aircrafts with newer technology have a higher passenger comfort and lower utilization cost.

However, the technological life of the aging aircrafts can be continued. After reasonable modifications and investments, most of the aging aircraft components can be recycled and reused. There is giant profit potential in the international aviation market.

Currently, US aircraft disassembly and dismantling companies have occupied the international aircraft recycling market with a profit of $7.6 billion every year.

Being one of the four aviation bases in China, Harbin has solid industrial foundations, with the advantage of having a large number of airline employees and direct contact with the Russian market. When the aircraft disassembly base finishes construction, it will be capable of dismantling over 50 aircraft annually after five years, aiming to become one of the largest civil aircraft disassembly centers in the world in the medium term to serve both China and other markets globally.

Hong Kong-based CALC is jointly controlled by State-owned China Everbright Group, China Aerospace Science and Technology Corporation, and Friedman Pacific Investment Holdings. The Aircraft Disassembly Operation will help to extend the aviation industry value chain, expedite the development of the aviation disassembly industry and promote the advancement of the air transport industry in China.