Airlines and aircraft manufacturers are holding their collective breath while they wait for the Civil Aviation Administration of China to release its five year plan, as signs emerge of internal opposition to further orders for Boeing aircraft in an attempt to boost sales of Chinese-built MD-90s.

The plan, prepared after reviewing fleet needs submitted by individual airlines, should offer a clear signal on where China is heading on aircraft orders, both quantities and types.

The CAAC is late releasing the full plan, but leaked parts of it offer signals on Beijing's thinking. First, its ban on new aircraft orders has all but ended. The ban will officially persist so that Beijing has the final word on orders, but new orders will be approved to meet a forecast of 14.4 per cent annual traffic growth over the next five years. One CAAC official says this will mean about 180 new orders through the year 2000, mostly for aircraft in the 150 to 200-seat class.

Second, the CAAC reportedly will stress the need for China's airlines to lease more aircraft, rather than buy them, because of capital constraints. The CAAC's intention to apply this restriction particularly to longhaul and widebody aircraft has caused a scramble among operating lessors.

The first test of this restraint on widebodies could come in September, when China's foreign trade minister, Wu Yi, leads a delegation to the US. Boeing and McDonnell Douglas both hope on that occasion to sign final contracts on a number of long-awaited orders.

One reason for the CAAC's delay in releasing its final plan appears to be a dispute with Chinese carriers over the choice of Boeing aircraft over McDonnell Douglas aircraft built under the Trunkliner programme in Shanghai.

That dispute recently surfaced with a complaint from Shenzhen Airlines that the CAAC was trying to force it to take five Shanghai-built MD-90s. The carrier is trying to maintain a streamlined fleet and is due to take delivery of its sixth B737-300 in November, but is being hampered in its fleet planning by the edict from Beijing. 'We prefer Boeings,' admits a Shenzhen Airlines official.

Zhou Baokui, deputy director at the CAAC's planning department, denies there was any policy forcing airlines to order Trunkliner MD-90s. But another CAAC official, who spoke on condition that he remained anonymous, confirmed that a 'powerful group' within the CAAC is delaying Boeing orders and looking for alternatives.

It is unclear whether this group is anti-Boeing or, more feasibly, simply trying to promote sales for the Shanghai-built MD-90s. The latter view would mesh with the CAAC's broader concern about the capital drain caused by overseas aircraft orders.

T Ballantyne/D Knibb

Source: Airline Business