China eyes the airline market

China unveils jetliner in bid to compete with Boeing and Airbus

Report from Paul Traynor, Associated Press:

 Comac C919

A state-owned manufacturer has unveiled the first plane produced by a Chinese initiative to compete in the market for large passenger jetliners.

China is one of the biggest aviation markets but relies on Boeing and Airbus aircraft. The multibillion-dollar effort to create the homegrown C919 jetliner is aimed at clawing back some of the commercial benefits that flow to foreign suppliers.

The Commercial Aircraft Corp. of China (COMAC) showed off the first of the twin-engine planes in a ceremony attended by some 4,000 government officials and other guests at a hangar near Shanghai's Pudong International Airport.

"It's a major push for the country, as they want to be known as a major player" in airplane manufacturing, said Mavis Toh, Asia air transport editor for Flightglobal magazine.

The C919 is one of several initiatives launched by the ruling Communist Party to transform China from the world's low-cost factory into a creator of profitable technology in aviation, clean energy and other fields.

The C919, which can seat up to 168 passengers, is meant to compete in the market for single-aisle jets dominated by Airbus Industrie's A320 and Boeing Co.'s 737.

Its manufacturer, known as COMAC, says it has received orders from 21 customers for a total of 517 aircraft, mostly from Chinese carriers but also from GE Capital Aviation Services.

A separate state-owned company also has developed a smaller regional jet, the ARJ-21, to compete in the market dominated by Brazil's Embraer and Canada's Bombardier. The first two ARJ-21s were delivered last year to a Chinese airline:

Most of the C919's critical systems including engines and avionics are being supplied by Western companies or foreign-Chinese joint ventures:

Boeing forecasts China's total demand for civilian jetliners over the next two decades at 5,580 planes worth a total of US$780 billion.

China's major airlines are state-owned, which gives the Communist Party a captive pool of potential customers that can be ordered to buy the C919.

"China offers a terrific market, superb engineering talent and reasonably low costs. Developing a national aircraft industry makes a lot of sense," said Richard Aboulafia, vice president for analysis of Teal Group Corp., an industry consultant, in a report in July.

However, the C919 is hampered by official requirements that its manufacturer favour components produced in China, unlike competitors who source parts globally, according to Aboulafia.

"This means Western suppliers need to give away technology to play on this jet," said Aboulafia. "It also means that this aircraft is designed by people whose hands have been tied."

Development of the C919 began in 2008. Plans called for a first flight in 2014 and for it to enter service in 2016, but those targets were pushed back due to production delays. The C919 now is due to fly next year and enter service in about 2019.

One of the biggest components, the core processing and display system, is being supplied by a joint venture between GE Aviation Systems and AVIC, a state-owned Chinese military contractor.