As Airbus starts firming up the so-called Asian Express joint venture with China, Taiwanese firms are having to face up to the fact that politics have conspired to exclude them from any participation.

The European consortium saw its foothold in China considerably strengthened after a state visit by French president Jacques Chirac to Beijing in mid-May. This culminated in the signing of a framework agreement laying out the cooperation principles on the new family of 95-125 seater jets, designated the AE316/317.

The agreement envisages the incorporation of a joint venture by year-end, says Juan de Uriarte, SVP marketing Airbus Industrie Asia (AIA). The shareholding will see Aviation Industries of China take a 46 per cent stake, AIA (in which Alenia has a 38 per cent stake) 39 per cent and Singapore Technologies (STPL) 15 per cent.

But there will be no Taiwanese involvement. Wang Chih-kang, Taiwan's economics minister, says he will block a request by the Taiwan Aerospace Corporation and the Aerospace Industry Development Corporation to take a 5 per cent stake.

The two firms wanted to build tail sections for the regional jet, but even though the 5 per cent offered to them was a third of STPL's stake, Wang says local involvement would violate Taipei's ban on investment in PRC state-run enterprises. He also says the US$110 million investment would have been far above the ministry's US$50 million ceiling on investments in China.

Details of the project are still fluid but de Uriarte expects development costs to reach US$2 billion. One issue that has been settled, however, is that 'the final assembly line and most of the manufacturing is going to be done in China', says de Uriarte. Work is continuing on the feasibility study, but de Uriarte expects to enter the 18-month pre-development phase in early 1998 and is aiming for an in-service date of mid-2003.

The AE316 will offer a passenger capacity from 95 to 105 seats and the AE317 will have 115 to 125 seats, depending on layout. The aircraft will have a range of 3,300km to 5,100km.

De Uriarte says Airbus is targeting the 'core of the 70-150 seat market' which should account for some 3,000 aircraft over the next 20 years. The manufacturer conservatively expects to capture a 30 per cent market share.

Perhaps most significant of all is Airbus' estimate of the expected geographical demand for the aircraft. Although 7 per cent of the market is expected to come from within China, the North American market is expected to account for a massive 43 per cent. Executives in Toulouse will hope the annual soul-searching in Washington over extending China's most favoured nation status is a thing of the past when they start trying to sell the aircraft in to the US.


Source: Airline Business