Analysts: New Chinese airliner isn’t a market threat, for now

The rollout this week of China’s first single-aisle airliner has implications for commercial airplane manufacturers Airbus and Boeing and key suppliers, including Wichita’s Spirit AeroSystems.

But industry analysts were divided Wednesday over when China’s first entry into large, commercial airplanes will have an effect on the world’s dominant manufacturers of airliners.

On Monday, the Chinese manufacturer Commercial Aircraft Corp. of China, known as COMAC, unveiled the C919 at a rollout ceremony in Shanghai. The jetliner, which will seat up to 168 passengers, has 517 orders from 21 customers – mostly from Chinese airlines but also from GE Capital Aviation Services, COMAC representatives said.

Richard Aboulafia, vice president for analysis at the Teal Group, doesn’t think the C919 is going to be the airplane that changes the fortunes of Airbus and Boeing in “the world’s biggest market” for commercial airplanes.

“If they were doing anything but what they’re doing, Boeing and Airbus should be very scared,” he said.

Aboulafia said he thinks as long as companies such as COMAC are government controlled, they will be hard-pressed to innovate and develop an airplane that will be a serious competitor to Boeing and Airbus, even in China.

He thinks Airbus’ and Boeing’s moves to put facilities in China – most recently, Boeing announced it would establish a 737 completion and delivery center there – will help maintain and grow their market dominance in the country.

“They’re getting the competitor hooked on Western products,” Aboulafia said. “It’s a pretty good strategy.”

In a September report, Aboulafia noted that China’s attempts to bring to market a regional jetliner called the ARJ21 were still meeting problems 12 years after launching the jet program.

“The new schedule calls for it to enter service next February,” Aboulafia wrote in the report. “The original plan … was for it to enter service in 2007. It’s the heaviest jetliner (on a per-seat basis) designed in many decades, which is not surprising since it’s basically a shrunken DC-9.”

Aboulafia said while the ARJ21 may provide a “learning experience” for manufacture and development of the C919, he still thinks that COMAC will struggle to bring it to full production. He also thinks that China should have started its foray into commercial jetliner manufacturing by first making parts for foreign commercial airplane makers, rather than jumping into building full-size airliners.

“As long as Boeing and Airbus continue to innovate, they don’t need to be afraid of somebody intent to copy them,” Aboulafia said Wednesday.

Vinay Bhaskara, senior business analyst for Airways News, said while China is “still a step behind the West” in commercial airplane development, he thinks in the next 20 to 25 years it could successfully bring to market a commercial jetliner that could appeal to airlines across the globe.

The Chinese “government will effectively twist the arms of (Chinese) airlines” to purchase the C919, Bhaskara said Wednesday. Outside of China, the airplane will have little appeal to airlines because of concerns about quality, performance, operational reliability and maintenance support, he said.

But in the “next development cycle” Bhaskara thinks COMAC and China will recognize the need to focus on what it does best, and outsource the airplane work that foreign companies can do better than it, in essence “copy” the supply chains of Airbus and Boeing, he said.

“If you’re COMAC, you can choose to get really, really good at building the end product, making it a reliable, viable option for the world’s airlines,” Bhaskara said.

This story was originally published November 4, 2015 at 6:43 PM with the headline "Analysts: New Chinese airliner isn’t a market threat, for now."