Behind Airbus-Boeing truce lies a common rival: China
While the United States and Europe waged a 17-year trade battle over subsidies to Boeing and Airbus, China poured money into its commercial aircraft to defend myself against the Western aviation duopoly.
It took a common threat for the US and Europe to finally put an end to their dispute earlier this week, as both sides signed a five-year truce suspending tit-for-tat tariffs.
US President Joe Biden made it clear during his visit to Brussels on Tuesday: Washington and Brussels must "interact to challenge and counter China's non-market practices in this sector that provide China's companies an unfair advantage".
For days gone by four years, state-run manufacturer Commercial Aircraft Corporation of China (COMAC) has run test flights because of its 168-seat, narrow-bodied C919 airplane, a potential rival to Airbus's A320 and Boeing's B737.
COMAC expects to acquire airworthiness certification from Chinese air traffic regulators this season, coinciding with the 100th anniversary of the Chinese Communist Party.
The aircraft received between US$49 billion and US$72 billion in state subsidies, a lot more compared to the aid that Airbus and Boeing were given by their governments, according to Scott Kennedy, senior adviser at the guts for Strategic and International Studies in Washington.
"The very real problem is that China is manipulating the marketplace in playing Airbus and Boeing against one another and demanding technology transfers as a condition for orders," said Richard Aboulafia, aviation expert at Teal Group, a market analysis firm based in Virginia.
China's air traffic has recovered considerably faster than elsewhere on the planet as the country brought the coronavirus outbreak under relative control prior to others last year.
Boeing believes that the Chinese market will require 9,360 aircraft within the next twenty years, one-fifth of the world total.
It could be a major windfall for the A320 and the 737 MAX, though China has yet to authorise the return of the Boeing aircraft, which was grounded for 20 months in the US following two fatal crashes.
"DIPLOMATIC AND COMMERCIAL TOOL"
While China remains reliant on Airbus and Boeing aircraft for the present time, the country's ambitions to have its fleet are clear.
"The aeronautics industry is both an instrument of growth and a diplomatic and commercial tool which allows them to truly have a very comprehensive foreign policy in foreign markets," said Michel Merluzeau, analyst at AIR, a business consultancy.
"The Chinese have the technological and professional skills to create an airplane, there is no doubt about this," he told AFP.
"The Chinese are ambitious. They're affordable. They know it will require time," he said. "They don't really want to take on Airbus and Boeing in 2025."
The C919 was constructed with US and European help. Only 14 of the aircraft's 82 suppliers are Chinese, according to Kennedy.
The wings and fuselage are Chinese but manufacturers in the country have yet to understand the skills of creating engines or airplane electronic equipment.
"They prepare their industry to meet up domestic needs, it will be inferior products but at least it might be national," Aboulafia said.
The airplane is heavier compared to the US and European aircraft, so that it is less fuel efficient and thus more expensive to operate.
FROM DUOPOLY TO "TRIOPOLY"
But COMAC is racking up customers.
The company says it has 815 orders from 28 clients, most from Chinese airlines - though few are confirmed orders.
China Eastern Airlines was the first company to generate a firm order in March for five aircraft.
Huang Jun, professor at the institution of aeronautic science and engineering of Beihang University, said the C919 will never be a game changer.
But it might be cheaper than its rivals and create an "ABC pattern" in China, with Airbus, Boeing and COMAC operating in the country.
"We just hope we are able to join this market and occupy a particular market share," Huang said.
For Airbus leader Guillaume Faury, COMAC "will progressively turn into a decent player".
"So we will grow probably from a duopoly to a 'triopoly'" by the finish of the decade for single-aisle aircraft, he said.
Source: www.channelnewsasia.com
