POSITION & HOLD
an editorial opinion

China speeds up bizav growth




Chengdu J20 stealth fighter, claimed as an all-Chinese design, made its 1st flight in Jan 2011, but a reliable engine could be 5 to 10 years in development.

Several variants are planned, including a corporate model and one identified only as "special." About 100 C919s are on order. Ultimately, China hopes to produce 150 C919s a year, filling 33% of domestic demand for aircraft in its class and 10% of the international market.

If the ARJ21 and C919 meet their current delivery targets, it will be a major advance for the Chinese aircraft industry, which has yet to produce a successful airplane for civilian use. Yet in one sense the most interesting thing about these projects will be what they have not accomplished.

Neither could compete successfully in the open market. The ARJ21 is a long way from being the state of the art among regional airliners. With less composite in its airframe, it is both heavier and less fuel-efficient than aircraft such as Embraer's E-Jet line. And Airbus and Boeing are hawking new single-aisle designs that promise even greater fuel savings.

The Boeing 737 MAX concept was announced in Apr 2011. With a new engine—the CFMI Leap-1B—and other design changes, the 737 MAX will cut fuel costs 11% below those of current 737 NGs, according to Boeing Commercial Airplanes VP Marketing Randy Tinseth. The company has received more than 1000 commitments for the new model, including 415 firm orders.

Airbus is offering the A320neo. "Neo" stands for "new engine options." It will be powered by the CFMI Leap-X or the Pratt & Whitney PW1100G (buyer's choice). "A320neo's fuel costs can be 15% lower than the current A320's," says Airbus China Dir Airline Marketing Luo Chong. The A320neo has racked up some 1300 sales so far.

The C919 will compete with aircraft such as the newer Boeing 737s and the Airbus A319. It will be heavier and less fuel-efficient than either. Like the ARJ21, it will survive in the market largely because Beijing wants Chinese airlines to buy them.

By Dec 2011, the ARJ21-700 had received 277 orders, with 20 options. Nearly all were from Chinese companies. The C919 had earned 235 orders by early Mar 2012, with options for 60 more. All are domestic. But sales are not the point—if the 2 models break even, they will have done more than enough.

Beijing's real goal is technology transfer. Both aircraft are a good deal less Chinese than they might be. Many of their critical parts come from abroad.

Look at the ARJ21. Its supercritical wing was designed by Antonov in Ukraine. Its engines are GE CF34-10As. Avionics are from Rockwell Collins, while Honeywell is producing the FBW system. The GE engines will be assembled and tested at a Shenyang factory of the government-owned Aviation Industry Corp of China (AVIC).

Much of the C919's hardware also consists of imports from the West—Leap-X1C engines from CFMI, Michelin tires, and a cockpit shared with Bombardier's CSeries under a codevelopment agreement inked in Mar 2012. As a subcontractor to CFMI, Nexcelle will provide the engine nacelle, thrust reverser and exhaust system.

Safran's Labinal subsidiary and COMAC have partnered with Shanghai Saifei Aviation Ewis Manufacturing to produce wiring systems for the aircraft. C919 avionics are from a joint venture between GE and AVIC, with GE providing the technology. Germany's Liebherr Aerospace will supply the air management system and landing gear as a joint venture with AVIC Advanced Manufacturing Corporation.

Hamilton Sundstrand is teaming with AVIC Electrome­chanical Systems to provide the plane's electrical power system. Even the inflight entertainment system will be produced by a joint venture between France-based Thalès and China Electronics Technology Avionics in Chengdu.

Interestingly, Rockwell Collins announced in April that it had signed a joint venture with AVIC's China Leihua Electronic Technology Research Institute to provide "the latest surveillance products" for the C919. This suggests that the "special" variant of the aircraft may be a military model. If so, it would be the most direct transfer of US technology to the People's Liberation Army that we know of.

According to Rockwell Collins VP & Managing Dir Asia Pacific T C Chan, this "represents a significant milestone for our involvement with the C919 program and is indicative of our continuing commitment to help grow the Chinese aviation industry."

Bizjet firms moving in

Avicopter AC313 medium-lift helicopter carries up to 27 passengers, with a range of 560 miles. It is China's only helo capable of operating on the Qinghai-Tibet Plateau.

Like their airline-oriented brethren, corporate jet firms are building new ties with China. They have much the same goal—to make sales while domestic competition has yet to appear.

This March, Cessna announced that it had signed 2 agreements with AVIC and Chengdu municipal government to enter formal discussions for a joint venture that would build the company's midsize bizjets in China and might introduce new products for the corporate aircraft market.

"China's market potential is tremendous and therefore represents an exciting opportunity for Cessna," according to Cessna Pres & CEO Scott Ernest.

In May, Cessna signed a strategic agreement to hammer out the details of a future joint venture with China Aviation Industry General Aircraft Company and the Shijiazhuang municipal government. The new combine will carry out final assembly, sales and customer support for the Caravan. However, manufacturing up to final assembly will continue to take place in Kansas.

Another deal, between Cessna and AVIC Aviation Techniques, will establish a joint venture later this year to build the Citation Sovereign and Latitude in Chengdu. Bombardier, Dassault, Embraer, Gulfstream and Hawker Beechcraft had all been approached to make the deal. Gulfstream did not respond, while Bombardier confirmed having offered to move Challenger 850 construction to Chengdu. In all, it was an interesting move for a Chinese company best known for building fighter aircraft.

Embraer is waiting for government approval to begin construction of Legacy 600/650s at a factory owned by AVIC subsidiary Harbin Embraer Aircraft Industry Co. The 2 companies set up the factory to build ERJ145s, but that project ended in May 2011. "All indications are that we will get approval in the 1st half of the year," reports Edwards. "It will be about 18 months after that before we see the 1st airplane."

Gulfstream has not yet decided to build aircraft in China. Instead, it is focusing on support. At the recent ABACE, Gulfstream Pres Larry Flynn cited the planned opening later this year of Gulfstream Beijing—a joint-venture service center operated with Deer Jet and Grand China Aviation Technik. Gulfstream already has a parts warehouse near Beijing and will be the 1st bizjet manufacturer to offer factory service in China.

Despite its stated disinterest in a joint venture, Bombardier has long cultivated suppliers in China. It has been buying DHC8-Q400 aircraft doors and fuselage sections from Shenyang Aircraft and is now shifting Q400 mid-fuselage construction from its Belfast factory to Shenyang. The Chinese manufacturer will also supply components for the CSeries.

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