Aviation titans Boeing and Airbus dominated the news coming from this year’s recently concluded Paris Air Show.
However, should China have its way, both companies may someday soon be seeing competition rising out of the East.
China Aviation Industry Corp. (AVIC I), with a nod from the country’s Cabinet earlier this year, is in the process of building a large commercial jet, expected to be complete in 2020.
That’s not to say that it is going to be an easy road to become a top tier competitor. As Ned Barnett of Barnett Marketing Communications points out, China has been manufacturing copies of Soviet/Russian aircraft and has no history of safe quality in commercial aviation construction, making them a liability risk.
“Even cheap planes cost $100 million and up, and liability insurance, spares and maintenance costs over the life of the plane can double that,” Barnett said. “China will not only have to create a new airplane, it will have to create an infrastructure.”
However, according to Aaron Altman, University of Dayton Assistant Professor of Mechanical and Aerospace Engineering, the up and coming market is on China’s side. He describes it as a “huge market that everyone wants to get into.”
Altman said with current resources, 2020 looks good for the commercial jet. If China goes with outside sources as well to boost their technical skills, it could be sooner.
But to its credit, China has built up a manufacturing base in its own right—Brazil’s Embraer SA has a Chinese factory; China has been a parts supplier for Boeing and Airbus and has become a hotspot of Maintenance, Repair, and Overhaul (MRO) operations; and the country has been developing a mid-size jet, the ARJ-21, that is set to fly in 2008.
Moreover, Bombardier recently announced it is investing $100 million in the development of the ARJ21-900, with AVIC I investing $400 million in hopes of becoming a Tier 1 structural supplier.
According to Altman, companies like Boeing pass some of the design on to subcontractors. Those subcontractors produce stuffed subassemblies, where modules are built with things like electronics already added in to the frame, creating a plug-and-play method of building the airframe.
“Boeing has set a new standard in use of the term ‘integration specialist’ by transferring most of the assembly, risk, cost and even more design of their stuffed subassemblies to their subcontractors,” Altman said. “However, one must ask what is to prevent another company from starting up and using the same global network of subcontractors capable of creating these stuffed subassemblies and becoming an ‘integration specialist’ like Boeing?”
China can take advantage of the partnerships with, and practices of, larger aircraft makers and contractors to bolster its own aviation ambitions—it won’t exactly be starting from scratch.
Even so, it will be difficult for the country to establish itself as a global presence.
“Bottom line—none of that partnering or “knowledge transfer” will create a track record of maintenance success (which is judged in terms of tens of thousands of flight hours), spares/availability success, safety success and customer acceptance,” commented Barnett.
“If China uses its own airliners domestically and if China generates a well-documented safety and maintenance track record comparable to the West—those actions will eventually help China to penetrate other Asian markets. But that also assumes that Boeing and Airbus stand still, and they won’t,” Barnett said.
Depending on the market and customer acceptance, the success of the Chinese commercial jet remains up in the air.
“They’ll have a first-generation ready to go… in about 13 years. Third generation is at least another 15 years—more likely 25 years— from now and it will only be then, almost 40 years from now, before they’re likely to be a world-class competitive threat to Boeing,” suggested Barnett. “By that time, Boeing and Airbus will have gone through three more generations themselves, so who knows if the Chinese will ever really catch up.
“Of course, with the competition, long lead-time and margins at stake, even a small penetration in the marketplace will impact Boeing and Airbus—but I’m skeptical that China will ever be able to become a major presence in a market that’s already chocked with high-quality products,” he noted.