Japan is anxious to expand its interests in civil aviation.


Honest communications and mutual respect, are cited by one major airframe manufacturer, as fundamental policies when negotiating international collaborative ventures. There is, unfortunately, little evidence of either in the long running and increasingly convoluted negotiations to develop a new 100-seat passenger aircraft in Asia.

Aerospace is one the few remaining industrial sectors in which the Asian region has failed to emerge as a major international player. The need for massive investments in design and development, marketing and after-sales support, together with little likelihood of a quick return, has traditionally been a deterrent to many Asian countries.

This may be about to change, with China, Japan and South Korea all now signaling their intents to break into what is an already overcrowded market. All three Asian nations are looking to Western manufacturers for key technology and marketing support to produce an entry-level 100-seat airliner.

The prospects for an Asian Airbus-type consortium, however, are not encouraging.


Japan has long harboured ambitions to play a bigger role in the civil-aerospace industry, having poured billions of dollars into the licence assembly and development of military aircraft over the past 40 years. With the end of the Cold War, and the downturn in defence spending, Japan's aircraft factories are looking for substitute commercial programmes to sustain production and employment.

The country's three principal manufacturers, Fuji, Kawasaki and Mitsubishi Heavy Industries (MHI), are already major suppliers of airframe components and sub-assemblies to Boeing, and to a lesser extent, McDonnell Douglas (MDC) and Airbus Industrie. It is therefore only a natural progression for Japan to want to build its own aircraft, argue some observers.

Sceptics, however, point to the Nihon YS-11 turboprop, Japan's first attempt in the early 1960s at cracking the commercial-aircraft market, as a prime example of what can go wrong. The YS-11 did not have the benefit of a proper marketing and sales organisation behind it. By the close of production in 1974, only 182 aircraft had been built, and losses on the project totaled $600 million.

Japan's Ministry of International Trade and Industry (MITI), as a result, has made funding for the YS-11's designated successor, the YS-X, contingent on an international partner being found.

Japan Aircraft Development (JADC), representing the country's three big "heavies", at first concentrated on enlisting a European partner, such as ATR or Saab. The YS-X study, however, was later expanded from a 75- to 100-seat programme, therefore attracting the interest of larger airframe manufacturers. By August 1994, Boeing had emerged as the JADC's preferred partner, and a small Japanese design team was dispatched to Seattle to join the company's New Small Airplane (NSA) study.


JADC by early 1995 had settled on a 90- to 110-seat twinjet design, with a fuselage cross-section large enough to accommodate a five-abreast configuration. System commonality with the Boeing 737 series would be optimised to provide cross-crew qualification and, more importantly, keep development costs to within '100 billion ($1.15 billion).

Japan had hoped to conclude a preliminary agreement with Boeing in March to proceed with the project in 1996. This was then pushed back to late June, and is now likely to be delayed until at least August say industry sources. Others, however, predict the YS-X in its present form will never get off the drawing board.

Several factors have combined to put the YS-X's future in doubt, the most serious of which has been the launch, in March, of the 108-seat Boeing 737-600. Boeing officials had previously suggested in private that the company was unlikely to back development of two similar-size aircraft types.

A senior Boeing source claims that Japan's hesitation and delay in committing to the YS-X, taken with the requirement of Scandinavian Airlines System (SAS) for a new 100-seat aircraft, left the company with no other choice but to launch the shortened 737-600 derivative.

The source explains: "We told JADC the train was about to leave the station, but they didn't listen. SAS then came along, and we're not about to ignore a market opportunity like that. The Japanese were not ready, and as a result the 737-600 passed them by."

JADC's inert response has been blamed mainly on MHI's "risk-averse" approach to the YS-X programme, and concern over its future sales prospects. MHI president Yotaro Iida, in particular, is understood to have expressed reservations about the programme's commercial viability


At the same time, Boeing's competitors are claiming that the YS-X is being used as little more than a sales tactic for existing aircraft and, like the stalled JADC/Boeing YXX/7J7, it will never be launched. The propfan-powered YXX/7J7 programme was dropped after the fall in oil prices, but it still exists on paper at JADC, where it is commonly described as the "sleeping beauty". Two JADC engineers continue to work on the project, hoping one day to revive the project, or elements of it.

Boeing publicly refutes any such suggestion, arguing that it is committed to working with Japanese industry. Company officials privately concede, however, that there is an element to the NSA study being used as sales bait. According to one source: "Only two people in the whole of Boeing really know what the true position is on the NSA."


YS-X/NSA discussions are now focused on possibly repositioning the aircraft as a follow on to the 737-600 in around the year 2005. This would require delaying the YS-X intended entry-into-service date by up to five years. Japanese industry in the meantime would take on a larger role as a 737-600/700/800 sub-contractor (Flight International, 17-23 May, P12).

"There is no place for a new 100-seater in our long-term company planning," says a Boeing manager, "but we're prepared to make some accommodations." While this includes technology and marketing support it is unlikely to extend to any Boeing financial commitment.

The SAS launch has also effectively ruled out the possibility of using the 737's wing for the YS-X. JADC is instead now looking at developing a new all-composite-material wing. This will almost certainly drive up development costs, and threaten the programme's primary objective of producing a low-price aircraft for around $15-16 million a copy.

Another option under consideration is to marginally shrink the aircraft to an 80- to 90-seater, and so reduce any overlap with the 737-600. While this might limit the aircraft's market appeal in the USA, it would make use of the 62kN (14,000lb)-thrust General Electric CF34-8C engine an option.

Ishikawajima-Harima Heavy Industries (IHI) recently took a 30% stake in the CF34 growth variant (Flight International, 10-16 May, P16), and MITI is keen to use a powerplant for the YS-X in which Japanese industry is a active participant. Others on offer include the BMW Rolls-Royce BR.715, CFM56 Lite and Pratt & Whitney/MTU Mid Thrust Engine Family turbofan.


Delaying the programme would allow more time to overcome the other major obstacle to US-Japanese co-operation, the issue of a second, or even third, Asian partner. Boeing's long-term intention has been to involve other countries in the programme, especially China.

China in 1994 signed a preliminary government-to-government agreement with South Korea to develop jointly a 100-seat regional aircraft, designated the KCX, by the year 2000. The two Asian partners, like Japan, are looking for a Western partner to provide key technology and marketing, in exchange for a minority stake in the programme.

Aviation Industries of China (AVIC) has already held talks on co-operation with Boeing, and has a small team of designers seconded to Seattle. The decision to launch the 737-600, however, did not win Boeing any friends in Beijing. "The Chinese were absolutely furious," reports one Beijing-based observer.

China and South Korea, as a result, have since turned to Europe for help (Flight International, 26 April - 2 May, P4). AVIC and Korean consortium leader Samsung have signed preliminary-study agreements with both Daimler-Benz Aerospace and

Boeing, however, appears determined to try and salvage the situation, even at the threat of possibly alienating Japan. A Boeing executive warns: "We're not going to abandon Japanese industry, but the Chinese market in the long run will outweigh that of Japan."


Boeing's efforts are now being concentrated on getting AVIC and JADC to agree to talk to each other "without any predispositions". The company assumes that if China and Japan can agree to work together, South Korea in turn will follow suit, rather then be left behind.

Given the many deep-rooted historical and cultural barriers, which divide China and Japan, few observers share Boeing's apparent optimism that the two countries can find any common ground on which to co-operate as equals.

One analyst's summary of China and Japan's respective positions is as follows: "China would only be happy to co-operate with Japan, if the Japanese provided the money and the assembly line was in China. Japan, on the other hand, will only co-operate with China, as long as China provides the market and the assembly line is in Japan."

Japan feels that, given its technological edge, it is unrealistic for either China or South Korea to join the YS-X programme other than as subcontractors. Opposition to China's participation is understood to be particularly strong within MHI, which fears that Japanese technology and programme leadership will be lost.

China, at the same time, is demanding an equal partnership with Japan. It argues that Japan has no exclusive right to project leadership when the major Asian market for any new 100-seat aircraft will be in China. The situation is further complicated by South Korea's demand for final assembly.


The situation between Boeing, Japan and China is likely to come to a head sooner rather than later. MITI is already drawing up its next YS-X budget request for fiscal year 1996, but needs to have some form of demonstrable agreement in place by at least August, if it is to win parliamentary approval from Japan's Diet.

Boeing can not afford to have two competing 100-seat aircraft projects emerge in Asia and be forced to back one over the other. It is therefore pressing for Japan to first reach an accommodation with China, before it signs any agreement with JADC.

China and South Korea, in the meantime, are continuing to hold bilateral discussions on the joint KSX development and are expected to announce by September/October their selection of a Western partner.

Asia has no better opportunity than now to put itself on the map as an aircraft producer, but whether Governments and companies can be put commercial common sense before national pride, will be a factor in determining future success.

Source: Flight International