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China Is Still a Step Behind the West Despite C919 Rollout

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China Is Still a Step Behind the West Despite C919 Rollout

China Is Still a Step Behind the West Despite C919 Rollout
November 03
12:15 2015

MIAMI —Chinese aircraft manufacturer COMAC rolled out its first C919 jet in Shanghai yesterday, marking its first attempt at competing with Airbus and Boeing in the large narrowbody market. The C919, which will seat roughly 155 passengers in a two-class configuration, will have its first flight in the second quarter of 2016. Entry into service (EIS) is planned for the end of 2018.

The C919 currently has 517 orders from 21 airlines, including 20 apiece from China’s four largest carriers (Air China, China Eastern, China Southern, and Hainan Airlines). However, only two orders have been placed by non-Chinese customers: 20 for American lessor GECAS and 10 for Thai low-cost carrier City Airways. But COMAC is banking on the massive Chinese market, projected at 6,020 new airplanes over the next 20 years, to power sales of the C919.

China is still finding its way in the civil aviation market

China hasn’t made a ton of progress in civil aviation, and it still far behind the curve compared to Russia, let alone the United States or Europe. For example, COMAC wanted to compete in the small mainline jet market with its ARJ-21 family, which spanned two variants seating roughly 80 and 100 passengers apiece. The ARJ-21 was almost a carbon copy of the McDonnell Douglas MD-80 and was launched in 2002 with an aim towards EIS in 2007. But COMAC quickly ran into problems due to lacking technical execution and the ARJ-21 was delayed again and again. The ARJ21 managed to hold its first flight in 2008, roughly 3 years behind schedule, but various challenges ranging from wing failure to avionics pushed EIS back even further. At present the ARJ-21 is scheduled to EIS in early 2016 with Chengdu Airlines, and more than eight years late, it will be obsolete the day it enters service.

The ARJ-21 is indicative of the challenges China faces in civil aviation. Even as the Chinese have stretched their muscles with regards to high value manufacturing in other industries, they have lagged behind the west in commercial aviation. China has built its civil aviation industry from scratch, largely relying on technological lessons learned from final assembly lines (FALs) established in China by Western players like McDonnell Douglas, Embraer, and Airbus. It is no accident that the ARJ-21 closely resembled the MD-80 and that the C919 looks similar to the A320. But Airbus and more recently Boeing, who just announced a completion center for the 737 in China, have made the Faustian bargain to open themselves up to the risk of illegal technology transfer, IP theft, and cyber attacks in return for access to the massive and lucrative Chinese aircraft market.

The C919 represents strong incremental progress

The C919 despite its flaws, does represent the next step in the evolution of China’s commercial aircraft industry. It is the first Chinese aircraft to offer technology similar to the Western products on the market, as it will be powered by the CFM LEAP engines that will also power the Boeing 737 MAX and some Airbus A320neos. But while its fuel efficiency will likely be on par with the 737 MAX and A320neo, the C919 is still a cut below the Western products in terms of overall technical excellence, to say nothing of the likely struggles with operational reliability and aftermarket support. Still the C919, especially if COMAC can make it across the finish line with out further delays, is good incremental progress for the Chinese. While the C919 isn’t necessarily going to enter the market like the A320 did in 1989, there’s no reason it can’t find as much success as the Sukhoi SuperJet was prior to recent geopolitical events in Russia and the Ukraine.

On the whole, our current belief is that China is one additional development cycle (i.e. 20-25 years) away from seriously competing with Airbus/Boeing for orders from mainstream global airlines. One way for China to shorten that time horizon is to leverage the technical know-how of financially troubled manufacturers and nations. Bombardier is frequently mentioned in this context, but COMAC’s next effort, the C929/C939 widebody is already set to be developed in collaboration with the Russians. The C929/C939 is certain to incorporate lessons learned from both the ARJ-21 and C919, and will likely be a better managed program with fewer speed bumps. Now competitiveness in the widebody sphere isn’t necessarily given, and the jet’s spiritual predecessor, the Ilyushin IL-96, hardly inspires confidence. But the next Chinese narrowbody developed after the C919 can be expected to be a serious threat to whatever Airbus and Boeing leverage to replace the 737 MAX and A320neo.

 

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Vinay Bhaskara

Vinay Bhaskara

Senior Business Analyst, Big Airline Enthusiast, Avid Airport Connoisseur, Frequent Flyer, Globetrotter. I Miss Northwest Airlines Every Day. vinay@airwaysmag.com @TheABVinay

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