China Eastern, the nation’s third-largest carrier, has won official approval to establish a regional airline called Happy Airlines. (The name sounds a bit daft but so did EasyJet and Virgin the first time you heard them.)

The Beijing News reported that China Eastern will invest RMB400 million ($55.8 million) and take 40% in the new company, which will cater to west China’s middle and low-end tourist market.

The rest of the airline will be owned by the state-owned China Aviation Industry Corporation I (AVIC I), manufacturer of China’s first home-made passenger airliner ARJ-21.

The new airline will be based in Xi’an Xianyang International Airport in the country’s northwest and expects to hire transport plane pilots from the air force.

The newspaper said there are a handful of Chinese air companies running regional airlines, whose services are in huge demand but suffer from low profitability.

It further said, without elaboration, that China Eastern expects the new company to get beneficial treatment by the government. Beijing wants to boost the economy in the west to tackle unbalanced regional development. Note the illustration has nothing to do with the airline but this might be the image it wants to convey with its name.
Source: Economic Times

There is a clear understanding in Beijing that the best way for China to achieve its ambition in civil aviation — namely to build its own fleet of commercial craft — is to work in partnership with Airbus and Boeing, rather than flying solo or partnering with Russian companies.

Beijing has employed this strategy over the last 20 years or so, working with both Airbus and Boeing to produce components and sub-assemblies as a first step on the long road to manufacturing its own indigenous aircraft.

According to Boeing’s forecast, China will demand many more aircraft over the coming 20 years than Boeing had initially expected in 2006. Boeing predicts that between 2007 and 2026, China will purchase 3,400 new aircraft worth US$340 billion, while Rolls-Royce foresees a demand for 3,100 aircraft over the same period.

As a result, domestic demand on the Chinese aviation industry to excel and deliver domestically built aircraft will only increase. In conjunction with the development of commercial carriers and civil helicopters, skills in the Chinese aircraft maintenance, repair and overhaul (MRO) sector are rising rapidly.

AVIC I’s Shanghai Aircraft Manufacturing Factory operation, which is responsible for the final assembly of the ARJ21 civil craft, will become part of a listed company, AVIC I Commercial Aircraft Corporation (ACAC), whose shares will be sold in China and on foreign stock exchanges.

The operation of Xian Aircraft Industry Corporation will be reorganized as a listed business that will later become the core of a civil manufacturing group encompassing the civil facilities at the Chengdu Aircraft Industry Corporation and Shenyang Aircraft Industry Corporation.

The author of this long and detailed article is Dr Eugene Kogan who is a guest researcher at the Research Institute of the German Council on Foreign Relations in Berlin. He is a defense industry analyst with expertise on Russia, Eastern Europe, Israel and China.

The full article first appeared in The Jamestown Foundation and is used by Asia Times with permission. To read the quite extensive and very clearly written piece click on Source. It forecasts a seriously important growth period for the China aviation construction industry.
Source: Asia Times

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

Chinese Vice Premier Zeng Peiyan has called for more progress in the country’s research and development of jumbo aircraft.

He said the project to build jumbo jets would help China boost economic development, meet rising demand for air travel, make a great advancement in science and technology and strengthen national defense.

These remarks by Zeng Peiyan came during a discussion with a group of aeronautical experts at the Beijing University of Aeronautics and Astronautics.

He said that to build up an internationally competitive aeronautic industry, China should rely on independent innovation, train its own professionals and take in cutting-edge technology and products from foreign countries.

For the purposes of clarification a jumbo aircraft is generally considered an air-freighter with a take-off weight of more than 100 tons or an airliner with more than 150 seats.

Liu Daxiang, an expert with the China Aviation Industry Corporation I, the country’s leading aircraft maker, said earlier this year that the country will be capable of making jumbo jets by 2020.

Currently, only the United States, Russia, France, Germany, Britain and Spain have the ability to build jumbo aircraft, with Boeing and Airbus leading the way.
Source: China View

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