Airplanes are big business in China. Boeing estimates that the Greater China region will need 3,400 new planes by 2026 and the US firm is battling Europe’s Airbus to meet this rising demand.
But the launch of China’s first domestic jumbo jet manufacturer in May could be the first step in a government-backed effort to break the Boeing-Airbus duopoly.
Analysts say it will be decades before the Commercial Aircraft Corporation of China (CACC) – which is 31.6% held by the state-owned Assets Supervision and Administration Commission – has the technology to be a serious player, and that’s before considering the business challenges.
“There’s a tendency to think in terms of the technical obstacles,” said Andrew Herdman, director general of the Association of Asia Pacific Airlines (AAPA), an industry body that represents international airlines based in the Asia Pacific region. “But that’s just the beginning.”
China has some things going for it. It has developed a healthy industry for manufacturing aircraft parts and providing maintenance, repair and overhaul services. Kenneth Chan, a Malaysia-based aerospace and defense consultant for Frost & Sullivan, says China’s commercial aerospace manufacturing industry was worth US$2.5 billion in 2006. He expects the market to grow to US$12 billion by 2013.
Model plane
China has also produced a small regional commercial aircraft, the ARJ21, which can seat 78-90 passengers. However, the plane’s maiden flight, scheduled for March, was delayed until autumn due to late delivery of components. Its commercial future remains unclear.
Even if the ARJ21 does prove a success, there is no guarantee of similar results with larger jets.
According to Hua Cheng, a professor in the mechanics and engineering department of Fudan University, building planes that can carry up to 150 passengers presents a host of new technical challenges, such as relocating the engine to the wing and developing materials that are both light and strong enough to support the craft.
China’s new jet-maker, however, will likely receive assistance from its rivals, Airbus and Boeing, said Peter Harbison, executive director of the Centre for Asia Pacific Aviation (CAPA) in Sydney. Both manufacturers are keen to consolidate their positions in the China market. This may well have been on the mind of Airbus China President Laurence Barron when he told state media in early May that his firm was in talks to play a role in CAAC.
Harbison also expects China to establish a number of aircraft joint ventures, particularly with engine makers, in order to increase manufacturing capabilities.
Cooperation is the name of the game when it comes to manufacturing large aircraft, as the sheer complexity of marrying scores of separate technologies requires assistance from virtually all corners of the globe. Therein lies yet another challenge for China’s new aircraft firm.
“If you look at the breakdown of a modern jetliner, you’ll find that pieces of the structure and the engine and everything else come from all over the world,” said Herdman of AAPA.
Assuming China does fulfill what one analyst describes as the “massive task” of developing an aircraft that meets the certification criteria of domestic and international aviation authorities, it then has to sell the plane.
In order to target the low-cost carrier market, for example, China would have to provide planes with the maximum number of seats, while other airlines may want combination planes, where cargo space can take up 50% of the aircraft.
“Every customer will have an exclusive set of requirements, and it is at this stage that aircraft manufacturers’ creativity will be tested,” Frost & Sullivan’s Chan said.
Finally, there’s the competition. Airbus and Boeing’s ascent to the summit of the global aircraft industry has been built on a reputation for reliability across the board. By contrast, a Chinese jumbo jet will have to shake off the negative connotations of its made-in-China tag.
“[The aircraft] will have to be better than the opposition, not merely as good, in order to gain acceptance,” said Harbison of CAPA. “There will be political resistance from the home countries of existing manufacturers.”
While China is hunched over the drawing board, Boeing and Airbus will not be standing still. By the time the Chinese aircraft is ready, its international competitors will have raised the industry bar even higher.
Helping hand
China’s one saving grace may be its vast domestic market and the lengths the government is willing to go to protect its new creation.
“If the [Chinese authorities] instruct all the domestic airlines to buy a quantity of Chinese airplanes in proportion to their size, then it’s not the end of the world as long it’s a reasonably good piece of equipment, which it looks like it will be,” said Craig Jenks, president of Airline/Aircraft Projects, a consultancy in New York.
“It will not be state-of-the-art, but it will be reasonably good.”
Nonetheless, analysts are quick to point out that, with demand for aircraft outstripping supply, China does have a chance of becoming a global player, although the size of its role is still anybody’s guess.
“It’s still too early to say whether China is aiming to be a niche player or a global powerhouse. But we view this event as an opportunity to provide variety in the market,” said Frost & Sullivan’s Chan.