China wants to rival Boeing, Airbus with its C919 'big plane'
BEIJING For now, China's big entry into the standard passenger jet business is little more than a 20-foot-long model plane on display here at Beijing Expo air show.
But the model of the planned C919, single-aisle jetliner designed to seat up to 190 passengers represents something much larger.
It's what's called the "big plane" project here. It symbolizes the country's stepped-up efforts to get into the commercial passenger jet business in a big way and challenge U.S. plane-making giant Boeing and European rival Airbus, which dominate the global jetliner market. And it will be a showcase for China's ambition to be more than a low-tech producer of consumer goods for the world.
"To develop the large-scale airliner is a strategic decision of the Chinese government and one of the major programs for building up an innovation-oriented country," Chinese Vice Premier Zhang Dejiang said last month, according to the Xinhua state news agency.
The model of the C919 was unveiled in August. Work on a prototype began only last month. A maiden flight isn't scheduled until 2014, and the jet won't be available commercially until 2016. Even then, it's aimed at China's domestic market rather than for U.S. or other countries' airlines.
But the Chinese manufacturer already says the twin-engine, narrow-body design of the C919 is superior to the planes it would compete against: the Boeing 737, the best-selling jetliner in the world, and its competitor, the Airbus A320.
The plane "is more advanced compared to the current operating aircraft of the same size," Chen Jin, sales chief of the Commercial Aircraft Corp. of China, which will make the planes, told China's English-language China Daily newspaper. "It will use between 12% and 15% less fuel, and help reduce carbon emissions."
The manufacturer also says it can bring the C919 in at a price lower than the $50 million range that Boeing and Airbus charge for each of their planes.
Such boasts could indeed make the C919 a rival of Boeing and Airbus if met. But U.S. and international aircraft industry analysts question whether they can be. Despite state backing and a strong travel market, the Chinese manufacturer faces many technical and commercial challenges.
"I don't think Boeing or Airbus will feel at all threatened by this," says Derek Sadubin, CEO of the Centre for Asia Pacific Aviation, an independent think tank in Sydney.
Confidence, despite hurdles
For the Commercial Aircraft Corp. of China, or COMAC, to achieve the fuel efficiency needed to make its new plane attractive to airlines seeking lower operating costs is a difficult proposition.
The plane's designer, Wu Guanghui, told China Daily that COMAC is turning to new, lightweight carbon composites in place of steel for the plane's construction to gain the 12% to 15% in fuel efficiency.
Boeing, which is the pioneer in composite design, has had difficulty in bringing its first composite plane, the 787 Dreamliner, to market. Boeing promises the Dreamliner will deliver 20% operating savings compared with conventionally built aircraft. But its test flights have been repeatedly canceled, with the latest delay coming from a structural flaw.
Likewise, Boeing and Airbus have delayed plans to build more fuel-efficient, narrow-body planes to replace the 737 and A320 because they say that composites alone won't contribute enough fuel-efficiency savings to justify the billions of dollars of design costs.
Despite no track record in making big planes or composites, the Chinese are confident they can do it.
"China is doubling its composite material output every year," says Cheng Zhong, a mechanical engineer at a state-owned company making composites for China's aerospace sector, as he admired the C919 model at the Beijing air exposition. "I believe we have the capacity to make the required composites."
To achieve the cost savings that COMAC says will bring the C919 in at a lower price, the manufacturer will have to count on success with composites. After the design investment is made, materials are the biggest cost of constructing a plane, says Richard Aboulafia, an aircraft manufacturing analyst at The Teal Group in Fairfax, Va.
Aboulafia says COMAC probably cannot buy materials much more cheaply than Boeing or Airbus. And lower Chinese labor costs won't make its plane appreciably less expensive than the two. Labor represents just 10% of construction costs, he says.
Price also isn't the sole factor for airlines in buying a plane. Aboulafia says a plane's quality, reliability, maintenance and readily available replacement parts, as well as the pilot and mechanic training that manufacturers provide, are equally important for airlines.
Aboulafia also warns that building commercial aircraft has never been a consistently profitable business. Boeing and Airbus risk several billions of dollars every time they try to develop a new type of aircraft and have suffered many cost overruns and program delays. So far, COMAC has made only smaller planes.
The only way that COMAC can deliver significantly lower prices, he says, is if the Chinese government is willing to subsidize big losses on the plane to establish the country's position in the global industry.
'Dynamic market' a plus
One big thing that the "big plane" project has going for it commercially is China's booming travel market, which would be the first competitive battleground for COMAC's ambition of being a global competitor. Boeing and Airbus already are here providing planes to Chinese airlines. Another thing going for COMAC is that global demand for the C919 class of narrow-body jets remains strong.
Boeing currently forecasts that the Chinese market will need close to 3,770 jetliners in the C919's class of planes for domestic routes in the next 20 years. At current prices, that's about $400 billion worth of airplanes. Globally, Boeing places the 20-year demand for planes such as the C919, 737 and A230 at nearly 19,500, valued at $1.4 trillion.
"China is the most dynamic market for commercial airplanes, and the second largest worldwide after North America," says Wang Yukui, director of communications for Boeing's China unit.
Domestic air traffic grew 20% in the first half of 2009 vs. the first half of 2008 despite a worldwide economic slump, according to China's Civil Aviation Administration.
Because the Chinese government is invested in the C919, analyst Sadubin says Chinese airlines would be inclined to buy them. But analyst Aboulafia says that isn't a given.
"China's airline industry has really become a private-sector industry, and it has been ignoring the government in its decisions for some time now," he says. "Just because the C919 will be made in China doesn't mean all the Chinese carriers will stop buying 737s and A320s to buy only C919s. Those airlines will do what is best for their own business plans. Besides, it will be decades, if ever, before the Chinese will be able to produce anything close to the numbers of planes that the Chinese market will demand."
Boeing's take on new rival
For now, Boeing and Airbus don't appear worried by China's "big plane" project, though they are careful not to be dismissive of it.
Boeing "recognizes and respects the ambition and desire of other countries to enter (the business) with large aircraft," Wang says. "When China wants to do things, they have the talent and desire to succeed."
Laurence Barron, Airbus China president, warns, however, that the market is fraught with unexpected difficulties and delays. Achieving its goal of being a global aviation player could take the Chinese manufacturer more than a decade, he was quoted as saying in China's International Aviation magazine.
Joe Tymczyszyn, executive director of the U.S.-China Aviation Cooperation Program, which comprises aviation companies and government organizations, says the U.S. shouldn't fear the competition.
China's foray into the larger passenger jet market could be a "win-win" for the Chinese and for U.S. aviation firms, Tymczyszyn says. U.S. firms currently supply up to 45% of the dollar content in COMAC's smaller passenger jet, and he says they'll compete to supply the new jet, too.
The Chinese aren't alone among emerging economies wanting to expand into the jetliner business. Russia and Brazil have new jets coming out, too.
National pride
At the air expo here, where the model of the C919 was a big draw, the prospect of Chinese airliners evoked a sense of excitement and even a little economic nationalism.
"The Chinese people can do this," enthused Mao Caihong, 35. "I am very excited by this plane. If China can keep on developing, we can build high-level, comfortable and safe planes."
Cheng Zhong, the mechanical engineer, was more to the financial point in his assessment.
"Airplanes cost China billions of dollars every year," he said. "Since we have the capability to make them, why let foreigners earn all the money?"
