A Chinese competitor to Airbus and Boeing?

With rollout of the of the new COMAC 919 having yet to receive FAA certification, the question has been raised, “will it ever?”  Maybe… possibly… I don’t know.  But never is a strong word.  It’s quite ever for some to say that products ‘Made in China’ items are cheap, unreliable, and just garbage as a whole, what are we talking about? Developed and produced, or assembled?  Most of Apple products, our HD TV’s, watches, hell you name it- all “assembled” in China, but with our U.S. intellectual technology and ingenuity.  Ever drive a Chinese “produced” car? You wouldn’t want to.  Even though they have cloned BMW’s, Range Rovers, and many others, no one is trading in their U.S. or German made car keys for a Chinese knock off.  That’s what I think the overall public option will be regarding the C919.  Now back to “assembled” in China- Airbus began a joint venture with a Chinese consortium of Tianjin Free Trade Zone (TJFTZ) and China Aviation Industry Corporation (AVIC) back in 2008 to create an A320 final assembly line. (Airbus in China, 2015)  So for all intensive purposes, those A320’s can already be stamped, “Made in China”.  Unfortunately until we can rein in our corporate taxes, reduce regulatory costs and undue burden, reduce labor costs (not Chinese sweat shop low), our products will continue to be (assembled) and ever more- “Made in China”. 

According to Airbus’ market forecast (Airbus in China, 2015), China is poised to become the world’s leading country for passenger air traffic, and it already is a major geographical region for the company. With over 1,150 of the company’s aircraft in operation with Chinese airlines as of mid-2015, this represents 50 percent of the market share. That logistics alone makes sense as to why they created ‘Airbus China’. Even still, I’m certain the Peoples Republic of China will sell (force) that C919 Airbus/Boeing knock off to all their Chinese Airline entities regardless of their net profit.  

Should the day come that the C919 receives FAA certification, I don’t think it will have much of an impact on U.S. carriers at all.  IF, COMAC can actually produce the C919 for considerably (and I mean considerably) less than that a B737 or A320, a low cost airline may be tempted to purchase it in order to make their numbers work, but I don’t foresee any major carrier replace their time tested reliable aircraft.  Of those whom chose to fill their fleet with the Chinese made 919’s…I think the U.S. general public will cast their vote with their tickets, and not fly with those carriers.

According to the English COMAC site, “Commercial Aircraft Corporation of China, Ltd. (COMAC, 2015) is a state-owned limited liability company, which is formed with the approval of the State Council and jointly invested by State-owned Assets Supervision and Administration Commission (SASAC) of the State Council, Shanghai Guo Sheng (Group) Co., Ltd., Aviation Industry Corporation of China (AVIC), Aluminum Corporation of China Limited (CHALCO), Baosteel Group Corporation, and Sinochem Corporation.” (COMAC, 2015) What does that mean? It means that Chinese State owned companies invested in State owned COMAC, to sell to State owned airlines.  The notion that some 500 or so C919’s have already been “ordered” by Chinese carriers, does not represent the true value and worth of that aircraft.  It could be interpreted incorrectly, as though this aircraft is a “must have’.  No…The Chinese government simply “told” the airlines they will be buying them. COMAC also has a “advanced regional” jet, the ARJ21, developed to service the hub-spoke routes in China.  The COMAC website claims the same with their C919 as with this ARJ21- “designed and manufactured in China with our own independent intellectual property rights.” (COMAC, 2015) That’s HILARIOUS.

Other companies (past and present) have tried to upset incumbents with little luck. Japans’ Mitsubishi and Russian UAC have been trying to break into the regional market where Bombardier and Embraer dominate. (SCMP, 2015)

Regardless of the success or impending failure of COMACs 919, I don’t think they will actually be competitive with Boeing and/or Airbus.  It is also reported that due to the actual quantity of components that will still have to be imported to build a C919, the net profitability will likely not be that impressive, and not make it significantly less expensive than a B737 or A320.

Airbus and Boeing have not been too vocal about the C919 roll out.  (Boeing, Airbus Quiet so far, 2014) I believe the Airbus CEO publically congratulated COMAC on their milestone achievement to the press.  Yet both Boeing and Airbus have responded in terms of increasing their respective aircraft production numbers.  Boeing is set to bump their B737 numbers to 52 aircraft per month, up from 42, while Airbus is aiming to increase A320 production from 42 to 46 aircraft per month.   

Reference:

Airbus in China | Airbus, a leading aircraft manufacturer. (2015). Retrieved from http://www.airbus.com/company/worldwide-presence/airbus-in-china/

Boeing, Airbus Group Could Possibly Take On Comac C919 Market. (2015, May 14). Retrieved from http://www.bidnessetc.com/42768-boeing-airbus-group-could-possibly-take-on-comac-c919-market/

Boeing, Airbus Quiet So Far at Zhuhai Air Show. (2014). Retrieved from http://247wallst.com/aerospace-defense/2014/11/11/boeing-airbus-quiet-so-far-at-zhuhai-air-show/

Company Profile Commercial Aircraft Corporation of China, Ltd. (2015). Retrieved from http://english.comac.cc/aboutus/introduction/

China-Russia tie-up on widebody jet may get started before home-grown plane makes maiden flight. (2015, September 16). Retrieved from http://www.scmp.com/business/china-business/article/1858850/china-russia-tie-widebody-jet-may-get-started-home-grown