Aircraft

Boeing and Airbus both staked their claim to a controlling interest in the Chinese airliner market, with the European airframer predicting at least a 50% slice by 2013.

Boeing’s John Bruns, VP China operations, says China is an “exciting proposition”, and offers greater opportunity for OEMs than “just selling airplanes”. He says: “Liberalisation is creating a more competitive environment and airline strategies are assisting with this growth by responding to the customer’s desire to save time by flying point-to-point.”

China will need more than 2,900 new aircraft to satisfy the growth of the industry, Bruns says, and this will inevitably lead to more investment on the mainland. “We currently have 170 direct Boeing employees in China and 3,000 people working in Boeing joint ventures. We have also trained approximately 34,000 aviation professionals so far. As China develops a safe and efficient air transportation system, we are confident that we can build on our 60% share of the Chinese fleet.”

Boeing says China is now its largest foreign supplier of parts, with $2.5 billion of live contracts for aircraft products. “China now has a role in all current Boeing models. We are also increasing our presence on the ground with a new MRO joint venture with Shanghai Airlines and Shanghai Airport Authority.”

Bruns says that air cargo is another growth area, with its TAECO joint venture with Hong Kong Aircraft Engineering Company on mainland China having already converted 16 747-800 into freighters with another 32 on order. “These are significant engineering projects and each take up to three months to complete,” he says.

But Airbus is determined its American rival doesn’t get everything its own way. Airbus China’s president Laurence Barron says that despite Boeing having a “13 year head start” on the European conglomerate, he was confident his company would “close the gap” on its American competitor.

“We are increasing our share of the Chinese market all the time. We delivered 76 aircraft last year, which represents 18% of all our airliners produced. One in five of all our new aircraft are now going to China. I agree with Boeing that China will need around 2,000 single aisle aircraft in the next 20 years. We’ve only been in the Chinese market for 10 years and now have 36% of the fleet currently in service and are confident that by 2013 we will be supplying 50% of the market here.”

Barron says a major component of Airbus’ philosophy of supplying the growing airline industry in China is the establishment of joint ventures for training, manufacture and MRO, as well as first tier supply partnerships with Chinese manufacturers.

It was for this reason, says Barron, that Airbus has decided to locate a final assembly line (FAL) in mainland China for its A320 single aisle, adding to its Toulouse and Hamburg facilities. “Our presence here is growing all the time. We are increasing our industrial procurement in China from $60 million this year to $400 million by 2015. Over half our worldwide fleet have Chinese built parts in them and the addition of our FAL facility will produce 48 aircraft each year for the domestic market.”

Barron also says phase three of the A320 wing programme is underway and deliveries of the entire wing structure will soon be ramped up to four shipsets per month. Airbus also has a joint venture with AVIC 1 and AVIC 2 for design of the A350XWB and 5% of that aircraft will be manufactured in China.

Airbus used the Congress to announce the carrier allocation for its allocation of 150 A320 aircraft orders, which was signed with the CAAC last year. This includes ten airlines, three of which were private equity start-ups, and one leasing company.