The Chinese government has officially approved the launch of China Commercial Aircrafts, which will manufacture large passenger planes. The plan is to have jets designed and built in China rolling off an assembly line by 2020.

Asian airlines are expected to buy nearly 10,000 new planes by 2025, with more than 2,200 of those going to Chinese airlines.

China has acquired the needed technical expertise by cooperating with Boeing and Airbus. China Aviation Industries Corporation (AVIC-I) produces components for Boeing’s 747 and 787 wide-bodies and operates a final assembly line for the Airbus A320.

China has already received more than 100 0rders for the 70-passenger regional jet ARJ21 and will set up a sales subsidiary for the ARJ21 in the United States.

True, Chinese aircraft must meet the Department of Transportation’s stringent safety criteria before they’ll be allowed to fly in the United States, and there is some question as to how long it will take China to meet these standards although every manufacturer in the world has had to go through this process and, although lengthy, it can be done.

The biggest problem remaining is the issue of consumer perception.

Chinese airlines are still well below world standard in running their airlines, mo matter who the manufacturer. Worldwide there would be resistance, initially at least, from passengers who simply would not wish to fly on an aircraft built in China in exactly the same way such resistance exists against aircraft built in Russia.
Source: Wired

China’s air traffic continued to soar in 2007. There were 387.6 million passenger trips, up 16.8% from the previous year.

The General Administration of Civil Aviation said that international passenger traffic jumped by 17.5% to 38.3 million in 2007, while trips on domestic flights rose by 16.7% to 349.3 million.

Rises in oil prices and the rapid expansion of the shipping industry led to a slowing of growth in cargo and mail last year, which registered a 14.3% rise to 8.6 million tons, compared to 2006’s 19% rise.

The report said international journeys have become more attractive for Chinese travellers because of the appreciation of the yuan.

The spectacular growth in air travel has fueled a similar boom in airport construction to meet the demand, with around 100 new airports planned by 2020 at a cost of $60 billion.
Source: Hemscott

China’s self-developed commuter aircraft, the Modern Ark 60 (MA60), has received new purchasing or leasing orders of 20 aircraft to make its total orders to 116.

The China Aviation Industry Corporation I (AVIC1) said its subsidiary, Xi’an Aircraft Industry, has signed contracts with Yunnan Ying’an Airlines and AVIC1 Leasing Company for the purchase and leasing of the 20 MA60 twin turbo-prop commuters.

Of the 20 planes, ten are purchasing and leasing contracts while the other half are orders of intent. The first ten planes will start to be delivered in May 2008.

MA60 is the most successful civil aviation aircraft developed by China so far. It has a maximum take-off weight of 21,800 kg and a seating capacity of up to 60 passengers.

The XAC said the plane’s reliability, comfort, economy and maintainability reach the standards of similar advanced commuter aircraft in the world.
Source: China View

The Financial Times has a story from DealReporter which brings a new twist to the idea of China Air taking a share in Eastern Airlines after it was considered a done deal with Singapore Airlines.

China’s legislative anti-trust adviser Xiaoye Wang told DealReporter that if China National Aviation Corporation (which is the company that owns China Air) buys into China Eastern Airlines, it would be considered as monopolistic behavior.

She suggested that China’s Ministry of Commerce (MOC), the current regulatory body that is in charge of anti-trust review, would not approve CNAC’s offer for CEA.

Her summary is that China has just three major airlines, including CNAC’s listed subsidiary Air China, China Eastern and China Southern Airlines.

If CNAC bought into China Eastern it would therefore significantly reduce the number of players and could have a negative impact on ticket prices.

When asked to comment on whether it would still be considered as monopolistic behavior if CNAC acquired just a minority stake in CEA, Wang said an anti-trust review would assess not just the stake size, but would also focus on the acquirer’s control over the target. She described CNAC’s proposed acquisition of a nearly 30% stake in CEA as significant.

This has, as far as is known, has never come up before as an argument but, if valid, throws a serious spanner in the moves being made by CNAC on behalf of Air China.

Bradley S. Lui, a partner at the law firm Morrison & Foerster said that at present neither China’s M&A regulations nor Article 20 of the Anti-trust Law provided definitions for the meaning of control, decisive influence, or the notification threshold of notification. However, the 2005 draft of China’s Anti-trust Law indicated that acquisitions of a 20% stake could trigger the notification.

No doubt it will all eventually be sorted out.
Source: Financial Times

According to the China National Aero-Technology Import & Export Corporation two Xinzhou-60 passenger planes will soon fly to Bolivia and operate under a local air carrier.

Huang Bin, a vice president of the company, said the Xinzhou-60 aircraft will be the first batch of China-made planes in commercial flights in South America.

The turboprop can accommodate 52 to 60 passengers. This model, known outside China as the MA60, has a maximum range of 1,600 km.

China exported seven Xinzhou-60s in 2007. So far 12 such planes have been delivered to Zimbabwe, Laos, Zambia, Congo and Angola.

The plane is manufactured by Xi’an Aircraft Industry (Group) Co., Ltd.
Source: Jongo News