China-made narrow-body aircraft may threaten markets of Boeing, Airbus

Traction in China

Analysts believe that COMAC’s C919 will find an easy market in China as it is a state-owned enterprise and many Chinese carriers are also state owned. “As in India, there is a huge demand for aircraft in the Chinese market. This becomes a natural market for the COMAC C919,” a pilot, who declined to be identified as his company policy does not allow him to speak to the media, said.

The pilot may have a point. In September 2021, Boeing had forecast that China will require 8,740 new aircraft by 2040 to meet its expanding commercial air travel demand. The Boeing report said that China will need nearly 6,500 new single-aisle airplanes over the next 20 years, while the widebody fleet, including passenger and cargo models, will mean 1,850 new planes.

Ishka Advisory, a global aviation data, intelligence and advisory business, said that for years Airbus and Boeing have mainly competed with each other in the mainstream narrow-body space. Now, thanks to having achieved CAAC type certification for the C919, COMAC is on the verge of becoming a contender.

“This is a major milestone for China and, depending on when production certification might be achieved, could evolve into an interesting challenge for the incumbent Original Equipment Manufacturers with their popular ‘neo (Airbus narrow-body aircraft) and MAX (Boeing narrow-body aircraft)’ offerings for China, the world’s second largest market,” the Ishka Advisory notes.

Satyendra Pandey, Managing Partner, Aviation Advisory firm, AT-TV,  agrees, underlining that while COMAC poses a challenge to both Boeing and Airbus in the long term, for now it is limited to the China market.

However, despite this optimism the list of reasons why the future does not seem to be so bright for the Chinese manufacturer is long.

To start with, the aircraft will have to prove itself in commercial flights. “That is to say some million-odd hours of flight without any hiccups,” says Pandey. He adds that there is also the issue of liquidity on the aircraft. “Given the geo-political dynamics, it is unlikely that there will be takers for this aircraft other than in China. There, too, it is debatable whether it is the economics of the aircraft that will attract airlines towards it.”

When contacted for comment on what this development will mean for Airbus and Boeing in the global market, a spokesperson for Airbus said, “Congratulations to COMAC on obtaining type certification of the C919." Boeing did not comment. Moneycontrol has reached out to COMAC for comment on the new aircraft but has not heard from the company so far. This piece will be updated once we get a response

Boeing, Airbus well entrenched

However, those from the industry maintain that COMAC is unlikely to provide any competition to either Boeing or Airbus. An analyst points out that Embraer, Bombardier, Mitsubishi and Sukhoi, all of which compete in the Regional Jet category, survive only because they don’t take on Airbus or Boeing head on.

“Even then a strategic partnership such as Bombardier–Airbus was necessary to bring the full force of Airbus’s marketing to back the (Bombardier) C-series aircraft (since renamed the A220 family).

Likewise, Embraer and Boeing also had a dalliance with a view to positioning the former’s E-Jets using Boeing’s marketing outreach to target the 100-130-passenger market just below the 737 family.

Under these circumstances a C919 directly competing with Airbus or Boeing will not see success in reaching global markets despite the use of western engines,” the analyst says.

Why India won’t bite

With India also requiring narrow-body aircraft, could the C919 offer a third alternative to Indian carriers looking to expand their fleet?

Nripendra Singh, Global Director, Aerospace and Defence, Frost and Sullivan, is of the view that the C919 will not be accepted in the Indian market due to three to four of what he calls “fundamental determinants”, including the fact that the new aircraft is yet to be certified by any global aviation regulator apart from the Chinese.

“For an Indian airline to accept a new variety of aircraft it is necessary to also look at the issue of supply chain and of maintenance of the new machine in case it is grounded. COMAC does not have the supply chain for spares ready as yet,” he says.

Added to this is the issue of Indian carriers finding pilots who are certified to fly the new variety of aircraft.

Another reason cited by Singh is the issue of pricing of the new aircraft. He points out that when the aircraft was being conceptualised, COMAC said it would be around $50 million or half of what an airline pays for a similar model of aircraft produced by Boeing or Airbus. But now even the C919’s price has shot up to about $ 100 million, Singh says, citing various reports. He is of the view that the C919 has just been assembled in China with all the important parts, such as avionics and engines, being procured from abroad.

Others cite more reasons the C919 will find the going tough. A senior commander and trainer with an Indian airline says that with Indian and global airlines’ focus on inducting hybrid-wing technology aircraft, the C919 is unlikely to find much traction.

“The eyes of major airlines in India and globally are to move towards blended-wing design technology and the use of sustainable aviation fuel. The C919 will not help any Indian or international carrier achieve that objective as the aircraft is based on existing designs,” the Commander adds.

Long wait ahead for global certification

Another reason cited by analysts and pilots for the C919 not finding a market in India or elsewhere is that it is likely to take a decade or more of domestic or regional flying before the Chinese government can convince the European Aviation Safety Agency (EASA) or the US Federal Aviation Authority (FAA) about the airworthiness of this aircraft.

Globally, airlines only allow aircraft certified by EASA, FAA etc to fly in their colours.

There are other issues as well. For an airline to induct a new aircraft in its fleet, many aspects are considered, including price, fuel efficiency, availability of spares and a proven track record of flying safely in markets globally.

“I anticipate a track record would have to be built by COMAC, demonstrating the C919s performance in service, and also developing a strong customer and product support network that would give Indian airlines the confidence they need to be able to operate the aircraft efficiently,” says Eddy Pieniazek, Head, Ishka Advisory.

Then there is the issue of whether international lessors of aircraft, who have the comfort of Boeing and Airbus products tried and tested over time, will move to COMAC. “None but Chinese lessors would punt on the C919, which will limit its reach into more markets even if it's priced cheaper,” argued an airline executive, who has been involved in negotiations for his airline to lease aircraft.

In India, a majority of fleets have planes that have been leased rather than airlines paying several millions of dollars to acquire an aircraft. It is estimated that almost 80 percent of domestic Indian carriers’ fleets are leased against the global average of about 53 per cent.

But despite what the critics say, COMAC claims that it has found buyers. Bloomberg reported on September 30 this year that COMAC has said it already has 815 orders from 28 Chinese customers for the C919. However, the majority of these orders aren’t confirmed and many are from aircraft lessors yet to place the jet with an airline.