FARNBOROUGH: BOC reveals details of Comac negotiations

Farnborough
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Customers for the in-development Comac C919 narrowbody have not put down a deposit for the aircraft, and will finalise the financial details and delivery schedule only after the first flight has taken place.

Robert Martin, chief executive of leasing company BOC Aviation which has ordered 20 C919s, says that this is an "innovative approach" that could have benefits for the customers.

"It is as a firm an order as it is with any other manufacturer, but their approach is different. The problem is that the market has tried to judge them by western rules, but there are differences. This is a national programme in china, and huge amounts of state resources have been put into it to make it a success. They want it to work and they have huge pockets to make sure that it works," says Martin.

The first milestone for the customers, who are mostly leasing companies owned by Chinese banks and the three state-owned airlines, will be the first flight. This has been scheduled for 2014 but is widely expected to slip by at least several months.

"Once we have the first flight, the customers assess the aircraft based on its performance and begin the final negotiations. This is different from the traditional process of signing for an aircraft five to seven years from delivery without having seen it. There is nothing right or wrong about it - it is simply a different approach," says Martin.

"And because we have not put in a deposit, there is no risk. For any new aircraft programme, even Boeing and Airbus, there is a minimal first deposit and the real deposits don't start until two years into the programme. This is a slight variation from that."

BOC Aviation, which has both the Airbus A320 and Boeing 737 on its order books, has also begun a "fact-finding" study into the re-engined variants of both aircraft types. It has not begun negotiations with either airframer, however.

"There is no doubt that, at some point, we will begin moving down that road. We have to look beyond 2014, and the delivery candidates for aircraft in that time frame. We have not begun negotiations, we take a very disciplined approach. We have only taken a fact finding approach that should give us more information about the aircraft," says Martin.