Airplane manufacture is a game for big players or governments. The amount of investment needed is mind-boggling.

Now expectations are growing that China will restructure its sprawling state-owned aircraft makers, Avic I and Avic II. This action is urgently needed to make them more competitive and to pool their resources to develop large commercial jets.

Beijing has yet to publicly comment on government plans for the companies and any restructuring would require a consensus among their bureaucratic overseers, which will be difficult to achieve.

Merging companies mostly means that some individuals lose power and status. Getting them to agree is like pulling teeth.

Local media, however, reported this week that an announcement is likely by March outlining some form of consolidation.

The official China Daily said the move was aimed at ’strengthening the country’s aviation manufacturing capabilities’ and ‘pooling resources to carry out the large commercial airplane project.’

The two groups were created less than a decade ago through the splitting of China’s former aircraft manufacturing monopoly. They both compete and co-operate across a range of aviation-related businesses.

If successful, reorganisation would help Beijing to meet its ambitious target, announced last March, to launch production of large commercial aircraft by 2020.

However, while Avic I recently unveiled the ARJ-21, a locally assembled regional jet with up to 100 seats — and both it and Avic II build 50-seat turboprops — analysts say it is unclear whether individually they have the capacity to develop a competitive large jet.

Restructuring could also prove bureaucratically fraught. The two groups do not have a clear shareholding structure and come under the split authority of China’s state-owned Assets Supervision and Administration Commission and its Commission of Science, Technology and Industry for National Defence. It is a bureaucratic mess which will need toough decisions to get sorted.
Source: Financial Times

According to Boeing, China’s domestic air travel market will grow nearly fivefold in the next 20 years.

The annual growth rate is 8.1%. China is already the the largest commercial aircraft market outside the US.

The future is astounding. Randy Tinseth, vice-president of marketing at Boeing Commercial Airplanes. said China will need about 3,400 new airplanes, worth $340 billion, over the next two decades, and the country’s fleet will nearly quadruple to 4,460 by 2026.

Tinseth also said air cargo will continue to lead the world and Chinese airlines are expected to add 300 freighters during the period, quadrupling its fleet.

Not everyone is in total agreement as to the figures although no one argues about massive growth. For example, Boeing thinks China will need only 340 regional jets by 2026 while China Aviation Industry Corp I (AVIC I) has forecast the country will need up to 900 feeder-line aircraft by 2025. And hopes that the majority will be the 70 to 100-seat ARJ21 and 50-seat MA60.

This area is not for Boeing. Randy Tinseth said, ‘The regional jet market is a relatively small segment in the global aviation market and there are many competitors. It is just a market we choose not to serve.’

It could, perhaps, have been put more elegantly but it gets its point across. Boeing will not be in competition with China’s ARJ21.
Source: Air Travel

A most amazing article by Bradley Perrett in Aviation Week shines a new and very well-informed new light on the ARJ21, China’s new aircraft. Well worth clicking on the link Source below to read the full text. Bradley Perrett gets a gold star, a go-home-early mark and a Chocolate Freddo. What follows is very much a precis.

The ARJ21 regional jet is shaping up as China’s equivalent of the Airbus A300 — a project that in its time seemed merely interesting but later was recognized as the origin of a major product range.

The ARJ21-700, which is very much a niche aircraft designed for hot and high airports but this is not the key point about this project.

Above all, the ARJ21 program is important as the occasion in which Chinese industry is learning to develop a commercial aircraft to full Western standards and with its own intellectual property rights, to coordinate with many subcontractors, to gain certification from the U.S. FAA, to establish an international marketing operation, and — crucially — to prove that it will support aircraft in service.

‘Cross the river by feeling the stones,’ said former leader Deng Xiaoping.

The ARJ21 project is a line of big stones that will lead Chinese industry far across the river.

Rollout is scheduled for late this year, with 14 months of flight testing to begin in March. Chinese type certification should follow in July 2009 and first delivery three months later.

Three production aircraft are to be completed in 2009, 14 in 2010 and 30 in 2011. So the backlog of 71 orders, all from Chinese customers, implies that the plant will be busy until late 2011.

Once the -700 is in service, development will begin on the ARJ21-900, which will have more improvements than just a longer fuselage. The Chinese engineers want to reach out to feel a few more stones.

Boeing’s vice president for China, John Bruns, said, ‘Clearly, with the ARJ program the Chinese are taking a large step forward. It would be naive of us to think that our two companies, Airbus and Boeing, are going to dominate this industry forever.’

The likelihood of an eventual 150-seat ARJ21 derivative has risen over the past year as China has firmed up plans for its second commercial aircraft. Rather than follow up its regional jet with an aircraft in the next standard size category — a standard six-abreast narrow-body — the government has approved what state media are calling a jumbo with more than 150 seats and a takeoff weight of more than 100 metric tons.

That should be a small wide-body—the next line of stones across the river.

The article is superbly well written with great authority and has left one journalist green with envy.
Source: Aviation Week

The ARJ21, the designation given to China’s new mid-range jet airliner, is due to take its first test flight in March next year. The mock-up was seen at the Asian Aerospace show in Hong Kong but that was only the cockpit and part of the fuselage.

For Chinese aviation this test flight will be a major step. For this will be the first Chinese-designed, Chinese-made jet to seek U.S. certification. If it gets that, and this seems fairly certain, then it is probable that China will take a part, size undefined, of the fast-growing global market for regional jetliners.

Chen Jin, vice president of the company’s commercial aircraft division said, ‘The ARJ21 will be fast, cover long distances and have between 50 and 110 seats, filling what is missing from the current regional market.

‘It will be convenient as it will allow clients to travel across regions and vast distances. Do we really need all these hubs? Not when we have the ARJ21. I believe this model will also prove popular in North America.’

A recent industry forecast by the Canadian aircraft maker Bombardier Aerospace estimated that over the next 20 years, an additional 11,200 aircraft would need to be built to meet demand in the 20- to 149-seat market segment.

Of that, the Chinese market would account for 15% of global deliveries, or 1,660 aircraft.

Part of China’s strategy of making air travel more accessible to the population is to improve direct connections between cities, expand regional and low-cost services and increase the availability of air services in the country’s western regions.

The ARJ21 would potentially serve this niche in China well. The first of the aircraft to roll off the assembly line in October 2009 will be a 90-seat version with a standard range of 2,225 kilometers, or 1,380 miles. An extended range version will allow it to fly 3,700 kilometers nonstop.

Jim Eckes, consultant at Indoswiss Aviation in Hong Kong, said, ‘The marketing costs are going to be tremendous. They’ll have to spend at least another $500 million just to promote the plane. They’re going to have to be in touch with end-users every day.’

On the other hand the aircraft starts with a potential home market of 1,660 which means it is very much in a position of potential immense development.
Source: International Herald Tribune

Xi’an Aircraft International plans to raise at least RMB6 billion ($770 million) selling new shares to its parent and other investors to help finance development of China’s first domestically produced commercial aircraft.

The company, the country’s second-largest listed aerospace firm by revenue, will sell 660 million shares on the Shenzhen Stock Exchange. At least 55% of the shares will be bought by its parent, Xi’an Aircraft Industry (Group), which has agreed to pay RMB9.18 a share.

The sale will more than double the number of outstanding shares. The company currently has 626 million shares, 43% of which are held by its parent.

Proceeds from the share sale will help fund development of the Advanced Regional Jet 21, or ARJ21, a small feeder plane that will seat up to 90 passengers. As China’s first domestically designed and manufactured commercial aircraft, the plane’s main body was completed and displayed in Shanghai last month and is due to make its first test flight in March next year.

The jet is the first step in the nation’s program to build a 150-passenger airliner to compete with Boeing and Airbus for a share of the US$2.8 trillion coming up in international airplane orders over the next 20 years.

The company currently makes parts for Boeing and Airbus, including tail fins for 737-700s and wing parts for Airbus A320s. The company posted a net profit of RMB63 million on sales of RMB1.78 billion in 2006.
Source: Shanghai Daily