Delayed take-off: China cautious on large aircraft programme

Reuters

By Siva Govindasamy and Fang Yan

SINGAPORE/BEIJING, Oct 3 (Reuters) - China's largestdomestically produced aircraft may not enter service until earlynext decade, a delay that gives dominant rivals Boeing Co and Airbus time to launch their upgraded single-aisleplanes first.

The Comac C919, which will compete with the Airbus A320 andBoeing 737 family of aircraft, was scheduled for its firstflight next year, but that has now been delayed until 2015,which pushes the first delivery to around 2017 or 2018, localmedia have reported.

Officials from The Commercial Aircraft Corp of China Ltd(Comac) told Reuters there was a new timeline, but declined togive details. Sources from the state-owned firm and its Westernsuppliers of systems said the Chinese company is still gettingto grips with the complex project.

China is keen to develop a successful commercial aircraft toprove it can match the United States and Europe, and to helptransform its economy into one that has high-tech industriessuch as aerospace. But it has been held back by inexperience, ashortage of local aerospace design and engineering talent, and alack of home-grown companies with the technology to help drivethe project.

Aerospace industry executives and Comac's competitors expectthe company to eventually threaten the Airbus/Boeing duopoly,with the C919 competing in the 150-200-seat single-aisleaircraft category that accounts for 64 percent of global fleets.

But a delay means the C919 will arrive several years afterthe upgraded and re-engined A320neo and Boeing 737 Max enter themarket. While a C919 may cost less to buy, the fuel efficienciesand lower maintenance costs of the Airbus and Boeing planesshould make them cheaper to operate.

"The C919 will not be as technologically advanced as theA320 and 737, but that's not China's aim for now. It wants tolearn how to build a viable and safe aircraft, and become morecompetitive in the long-term. It's learning from what Airbus didto Boeing in the 1970s," said a person at a Western supplier whomeets senior Comac officials regularly.

Luo Ronghuai, a vice-president at Comac, said the C919programme could suffer "setbacks", and noted that experiencedcompanies including Airbus, Boeing and Bombardier alldelayed the first flight of their recent jets.

"We have an internal plan, but it is too early to announceit," Luo said at the Aviation Expo show in Beijing last week,when asked about the timeline and the reasons for the delays."We want the best products and technologies from our suppliers,and that has caused some delay. We've used new technologies. Assuch, it's hard to say whether there will be some setbacks."

INTERNATIONAL STANDARDS

Comac has received commitments to buy 380 of the C919planes, mostly from Chinese airlines and leasing companiesbacked by banks such as Bank of China, AgriculturalBank of China, Industrial and Commercial Bank ofChina, China Construction Bank and Bankof Communications.

The company is deliberately proceeding cautiously in thedevelopment stage so the C919 can meet rigorous internationaltesting and certification standards, said people familiar withComac's strategy.

It is working with Western aviation suppliers includingengine manufacturer CFM, a joint venture between GE Aviation and French firm Snecma ; Honeywell ;United Technologies subsidiary Goodrich; RockwellCollins ; Liebherr; Zodiac Aerospace; Meggitt,Eaton ; and Parker Aerospace, those people said.

The suppliers are sending components to be integrated on toa C919 "iron bird", a ground-based engineering test-bed meant tocheck systems and flight controls and identify any abnormalitiesearly in the development phase. Once these tests are completednext year, that should add some clarity on the timeline for theplane's entry into service.

Comac has hired dozens of young Chinese aerospaceengineering graduates - many of whom attended U.S. or Europeanuniversities - and is trying to attract Western aerospaceprofessionals, said those familiar with the firm's strategy.

"Comac simply doesn't have the expertise or the number ofengineers and designers that Boeing or Airbus have. It is reallytrying to overcome that challenge," said an executive of one ofthe suppliers who has visited Comac's Shanghai offices.

The company is also learning from the problems faced by itsARJ-21 regional jet programme. The first ARJ-21 was rolled outin December 2007 and had its first flight a year later, but thecertification process has taken more than five years. The planeis now scheduled to be delivered late next year.

Officials from the U.S. Federal Aviation Administration(FAA) are conducting a parallel certification of the ARJ-21, andthat internationally recognised certification will go a long waytowards helping the aircraft be accepted more widely and sold tomore airlines globally. The C919 is likely to have a parallelFAA certification, too, but Luo said it will not take as long asthe ARJ-21.

Last week, Comac predicted industry sales of 4,346 regionalaircraft and 21,200 single-aisle aircraft globally over the next20 years. It did not say how many of these would be ARJ-21s andC919s. Airbus last month nudged up its forecast for globaldemand for short- and medium-haul jets - like the A320 andBoeing 737 - to 20,242 over the next 20 years.

With Chinese passenger traffic expected to grow at 7 percenta year over that period, Comac projects China could takedelivery of 3,602 single aisle-aircraft.

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