Slow-starting C919 advances but loses advantages

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After a slow and disappointing start compared with expectations that had been set in advance of the Zhuhai Air Show in November 2010, Commercial Aircraft Corporation of China's (Comac) C919 has picked up steam.

Prior to Zhuhai, Chinese authorities forecast "hundreds" of orders would be announced for China's first indigenously built mainline jet since the reverse-engineered Boeing 707 copy that never entered commercial service. Instead, a disappointing 55 firm orders and 50 options were announced.

Since then, there are about 250 orders and options now on the books. According to Flightglobal's Ascend Online database, 160 of these are firm orders from nine Chinese customers, including four lessors. China's "big three" airlines, Air China, China Eastern and China Southern, ordered a disappointing five aircraft each. Hainan ordered 20. Some of the announced orders have yet to be firmed up as contracts.


Source: Flightglobal's Ascend online database

The first C919 is supposed to be delivered in May 2016, but given China's performance on the Comac ARJ21 regional jet - which is years late and still undelivered following design and certification issues - it is widely believed in aviation circles that the C919 will be at least two years late. This would be a major setback for the programme.


Source: Flightglobal's Ascend online database

While few believe that the C919 will be a ground-breaking aircraft by any performance standard, at the time of the programme launch it was also the launch customer for the new CFM International Leap-1C engine and this was its chief selling point. The C919 was advertised to be 15% more fuel efficient than the Airbus A320 and Boeing 737NG. With an advertised entry-into-service (EIS) of 2016, the aircraft theoretically would give Chinese airlines a major fuel burn advantage over the Airbus and Boeing aircraft at a much lower capital cost. Comac hasn't announced a list price but previously said it would be lower than the 2009 $50 million list prices offered by Airbus and Boeing for the A320 and 737NG.

Since then, Airbus and Boeing have bumped list prices twice and launched the A320neo and 737 Max families. Their re-engined product will match or exceed the advertised specific fuel consumption (SFC) claims of Comac, completely negating the operating economics assumed for the C919.

Regardless of the list prices published by Airbus and Boeing, discounts of up to 60% are not unknown for blue-chip airlines. Delta Air Lines is widely believed to have obtained a purchase price in the very low $30 million range for its 100-strong order of the Boeing 737-900ER and Southwest Airlines, the first customer to place a firm order for the 737 Max, is thought to have a contract price in the $35 million range (exclusive of the standard escalation clauses). These prices will make it challenging but hardly impossible for Comac to undercut the capital costs vis-à-vis Airbus and Boeing. The Chinese government is underwriting the C919 development in a manner that ought to spark outrage from Airbus and Boeing before the World Trade Organization, but neither has made a serious issue out of this (Airbus has posed "questions" in the past but has not filed a complaint).

Additionally, Airbus set the EIS date for the A320neo at October 2015, seven months ahead of the C919. Boeing has an EIS of the fourth quarter of 2017 for the 737 Max and a desire to advance this date. The Q4 2017 EIS is nearly a year-and-a-half after the C919's advertised EIS but, if skeptics are correct, before a delayed C919 EIS of 2018.

The moves by Airbus and Boeing to re-engine their aircraft, the advertised EIS dates and the deep discounts Airbus and Boeing routinely offer key customers, combine to make the new Comac programme more challenging than it already is.