Paper airplanes: China’s ambitions to build commercial jetliners
No one can ever accuse China of thinking small. The Great Wall. The Three Gorges Dam. World’s largest manufacturer.
And when China decides to enter into a business traditionally dominated by the West, it usually aims for the top. It has built the world’s largest high-speed rail network, the world’s largest radio telescope, the world’s fastest supercomputer.
All undeniably quite impressive, and all worthy of praise. But success in one endeavor does not guarantee success in other areas. Some business sectors still have very high barriers to entry, let alone dominance, and sometimes even the most arduous effort will not pay off.
When it comes to breaking into the civil airliner business, China is learning this fact the hard way. When it decided, a little more than a decade ago, to enter into commercial aircraft manufacturing, Beijing knew that it was going up against one of the world’s greatest duopolies: the Boeing-Airbus stranglehold on the medium-to-large jetliner business. These two companies produce nearly every 100-seat-and-above passenger plane flown by nearly every airline in the world. Other companies that have tried to play in the “big boys club” of commercial aircraft production – Japan’s Mitsubishi, Russia’s Sukhoi, Indonesia’s IPTN – have all flopped, and in some cases quite spectacularly.
The ‘China Dream’ for the commercial aircraft sector
So why should China expect to succeed where others have failed so miserably? In the first place: size. China is the world’s second largest national air travel market – and it’s growing. China buys around 200 new passenger jets every year, about one-eighth the world’s total demand. Consequently, there is a huge domestic market to tap into and build upon.
In the second place: pride. The decision to enter the large commercial aircraft market was made at the very top, by the State Council of China and by the Central Committee of the Chinese Communist Party. The Commercial Aircraft Corporation of China Ltd. (COMAC) – the state-owned company created in 2008 to take charge of passenger jet development – is wrapped in self-described “aeronautical patriotism,” and it views its mission as equivalent to the nation’s development of nuclear weapons and the launch of the country’s first satellite.
COMAC currently has two passenger jets in the works. The first is the ARJ21, a medium-sized regional jet seating between 90 and 105 passengers, and designed for short-haul flights of less than three hours. Launched in 2002, during the Tenth Five-Year Plan (2001–2005), the ARJ21 was intended first and foremost to meet China’s burgeoning demand for internal air transport. Estimates are that the country will require up to 1,000 such regional jets over the next 20 years. The ARJ21 had its maiden flight in late 2008, and it delivered its first plane in February 2016. COMAC has already secured over 300 firm orders for the ARJ21, and it plans to build 850 ARJ21s over the next 20 years.
The second Chinese airliner currently in development is the C919 narrow-body jet, initiated in 2008. The C919 seats 150 to 200 passengers, which puts it roughly in the same category as the Boeing 737 and the Airbus A320. Over 500 of these airliners have been ordered, according to COMAC. The C919 was supposed to have its first flight in 2014, with deliveries starting this year. Other passenger jets are also envisioned; COMAC has already begun to plan for the production of two wide-body airliners, the 300-seat C929 and the 400-seat C939.
The ARJ21 and the C919 may look good on paper, but serious challenges confront China when it comes breaking into the passenger jet business. In the first place, both airliners are already heavily delayed, due to technical and other setbacks. The ARJ21, for example, was two-and-a-half years late in achieving first flight. In late 2010, the plane’s wing failed its predicted load rating during static tests; wing cracks as well as problems with the aircraft’s avionics and wiring also have been reported. Altogether, the ARJ21 is already at least eight years behind schedule.
The C919 looks to be in even more trouble. It has already cost China over $9 billion and has still not flown, missing its milestones for first flight and first deliveries by at least three years. In addition, the US Federal Aviation Administration (FAA) has refused to certify the C919’s airworthiness, making it highly unlikely that the aircraft will meet its 2016 deadline for starting deliveries. FAA certification is essential if the Chinese wish to sell the C919 to foreign airlines.
Who will buy?
Who will buy these aircraft, then? In fact, so far nearly all the orders for the ARJ21 and C919 have come from Chinese airlines, making it highly probable that Beijing has strong-armed these companies into buying these planes. The first airline to receive the ARJ21 was Chengdu Airlines, which is partly owned by COMAC. Another airline, Joy Air, was purportedly established specifically to purchase and operate Chinese-made commercial aircraft.
Very few foreign airlines seem interested in either airplane. The largest non-Chinese customer for these planes is GECAS, an Irish-American company that purchases and then leases passenger jets to airlines; even then, many of these orders are actually soft options to buy.
When it all comes down to it, is it all ego, then, that is driving China’s ambitions to manufacture large commercial aircraft? Noted aerospace expert Richard Aboulafia seems to think so – that, and an illiberal political system. “Well-run countries with nice, smart governments,” he argues, “don’t start national aircraft programs. [But] incompetent autocrats love them” [he lumps Putin and Turkey’s Erdogan into this mix]. Aboulafia adds that “government-managed, funded, and supported jetliners, historically, are not stellar performers. Every single civil aircraft produced by an authoritarian country [or by a socialist economic system] has been a miserable failure on the market.”
Even worse, commercial aircraft manufacturing is a risky use of limited resources. China, given its past successes in such sectors as textiles, consumer electronics, semiconductors, and automotive products, may believe that it can break into this potentially lucrative market. Those were considerably more open markets, however, where China’s comparative advantage was its cheap, semi-skilled labor and where quality was not a life-or-death issue. When it comes down to it, airline passengers will put up with a lot, but few might take a chance on a “made in China” commercial jet.
Richard A. Bitzinger is a Senior Fellow and Coordinator of the Military Transformations Program at the S.Rajaratnam School of International Studies, Nanyang Technological University, Singapore. The opinions expressed here are his own.