Page 2 of
2 China's commercial aviation in
take-off mode By Eugene
Kogan
it will play out. It appears
that the US and European aviation industries take
the long-term challenge seriously, not least
because the country will be able to draw on the
support of the large demand from its domestic
airlines.
Steven Udvar-Hazy, chairman and
chief executive of International Lease Finance
Corporation, said in early March 2007 that both
China and Russia could develop aircraft capable of
competing with the Boeing 737 and Airbus 320
families within 15 years, with government backing
and the technology gained from both companies.
John Bruns, Boeing’s vice-president for China,
stated in clear terms: "It would be naive of us to
think that our two companies [Airbus and Boeing]
are going to dominate this
industry forever." However,
Bruns’s statement runs counter to the opinions of
some European and US aviation industry officials
who continue to believe that the Chinese aviation
industry is still lagging behind. These officials
maintain that they will only believe the Chinese
business jet market has arrived when they see it.
Engines on the way Alongside the
manufacture of the first indigenous large
aircraft, AVIC I aims to deliver engines with
greater thrust than the two main Western engines:
the CFM56 of the French company Snecma and the
V2500 of Canadian firm Pratt and Whitney.
According to Chakar Chahrour, General Electric's
general manager for Asia-Pacific commercial
operations and sales: "Within 20 years China will
be building its own engines." For the time being,
the manufacture of indigenous engines remains the
weakest link in the chain.
In early August
2007, it was reported that Xian Aircraft Industry
Corporation, a manufacturer of the MA60, plans to
develop a 70-seat regional craft, designated the
MA700. The aircraft will increase the company's
capability to compete with 70-seaters from
Europe's ATR and Canada’s Bombardier.
ACAC
has another plan for breaking into Western
markets, which relies on Bombardier. In June 2007,
AVIC I and Bombardier disclosed at the Paris Air
Show that the Canadian company is to partner with
ACAC on the ARJ21-900, a 105-seat stretched
version of the ARJ21-700, and is investing $100
million in the project. AVIC I, meanwhile, has
agreed to invest $400 million into its aircraft
enterprises to prepare them to work on the planned
Bombardier CSeries of 110-130-seat carriers.
AVIC II, on the other hand, is made up of
the following civil manufacturers: Harbin Aircraft
Industry Group, Hongdu Aviation Industry, Shaanxi
Aircraft, and Shijianzhuang Aircraft Industries.
In addition to civil aircraft it also manufactures
helicopters.
AVIC II president Zhang
Hongbiao said the group intends to make a major
push into general aviation, with plans to merge
its subsidiaries Harbin Aircraft Industry Group
and Shijiazhuang Aircraft Industries. He added
"Hongdu Aviation Industry will also be brought
in." Following the latest split of the civil and
military businesses within AVIC I, Zhang Hongbiao
also said: "We want to separate the civil and
military" aspects of Shaanxi Aircraft.
He
added, however, that "it does not mean we will
combine the civil [business] of Shaanxi Aircraft
and Harbin Aircraft", according to a Flight
International report last September. Thus, it
remains unclear what kind of organizational
structure the commercial sector of AVIC II will
establish.
Even though AVIC II is the
smaller of China’s state-owned aviation groups, it
participates in building the Brazil Embraer ERJ
145 under license as an important element in its
commercial future. Harbin Embraer, a joint venture
of AVIC II’s Harbin Aircraft Industry Group, Hafei
Aviation Industry and Embraer, launched a licensed
production program for ERJ 145s in China in
February 2004. According to AVIC II vice president
Liang Zhenhe, the ERJ 145 has been worth between
$800 million and $900 million for the company.
During the 2006 China Air Show, mentioned
above, AVIC II suggested that the civil
helicopters inventory would increase from about
140 at year-end 2005 to 2,763 by 2026. Liang
Zhenhe also noted that demand will be driven by
security services, the energy industry and
environmental monitoring agencies. The 2008
Beijing Olympic Games and 2010 International Expo
in Shanghai will also be contributing factors. The
proposed boom in helicopter production may also be
accompanied by the opening of more maintenance
facilities and increased pilot training. Whether
helicopters will be largely produced by the
Chinese enterprises or by Western companies such
as Eurocopter and Sikorsky remains to be seen.
Shaanxi Aircraft and the Antonov design
bureau are establishing a Beijing Engineering
Center with 50 engineers, about half from Shaanxi
Aircraft. The center is to work on the Shaanxi Y-8
derivative of the An-12 and the Y-5 derivative of
the An-2 transport aircraft, as well as new 30-ton
and 60-ton cargo aircraft.
To conclude, it
is important to remember that the final structure
of the Chinese aviation industry has not yet been
put in place and everything remains in flux. At
the same time, the Chinese aviation industry is
developing rapidly, and changes within the
industry structure demonstrate the determination
of the government to build a first-rate enterprise
capable of competing with both Airbus and Boeing.
The goal of building an indigenous
commercial carrier is no longer a hypothetical but
a reality. The difficult question that China’s
industry executives will have to face is whether
they can develop an aircraft that is good enough
to win out against the best that Airbus and Boeing
can deliver. Timely delivery of the aircraft, its
reliability and - as a result - the trust of the
public to fly in such a carrier, together with
first-rate customer service support are the key
areas that need to be thought through carefully
and monitored from start to finish.
Dr Eugene Kogan is a guest
researcher at the Research Institute of the German
Council on Foreign Relations in Berlin. He is a
defense industry analyst with expertise on Russia,
Eastern Europe, Israel and China.
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