The global commercial aerospace market is synonymous with The Boeing Co. (BA) and Airbus. We do have Canada’s Bombardier Inc. and Brazil’s Embraer S.A. (ERJ) as well. However, none of them are as big or strong enough to challenge the unquestionable dominance of Boeing and Airbus. In this duopolistic market, Commercial Aircraft Corporation of China, Ltd, alias Comac, announced it is all set to deliver its first airplane to its customers.
The Undaunted New Entrant
Comac is an initiative of the Chinese government to build indigenous commercial aircraft and lower dependence on Boeing and Airbus in the Chinese aviation market. To that end, a project called ARJ21 was launched in 2002 with a target date of 2007 to deliver the first airliner. However, the delivery date was pushed back due to technical reasons and the first ARJ21 is finally ready for delivery to a Chinese carrier, Chengdu Airlines.
Variants and Future Plans
Comac is presently working on two variants of the narrow-body, single-aisle planes – ARJ21-700 and C919.
The ARJ21-700 model, which has a capacity of 78 to 90 passengers depending on its configuration, with a range of 1,300 miles to 2,300 nautical miles (2,225 to 3,700 kms), has secured orders for 252 airplanes.
The C919 is a larger single-aisle jet which can carry 168 passengers and can fly for 2,500 to 3,200 nautical miles (4,000 to 5,100 kms). The plane is scheduled to be ready in 2018 and is expected to challenge the dominance of Boeing and Airbus. Comac has secured orders for 400 airplanes for this model.
Comac also has plans to build a wide-body airplane having signed a memorandum of understanding with Russian counterparts for working on such a project long term.
Commercial Airline Market
Per a study from Boeing, the commercial aerospace market holds enormous potential. The company forecasts demand for 35,280 airplanes for the 2013–2032 period, valued at a staggering $4.8 trillion. 70% of the new deliveries will be in the single-aisle category, with demand escalating worldwide, particularly in China and the booming Asia-Pacific region.
Comac is trying to break into this market, tapping both domestic demand and also demand from other developing Asian economies. Once it achieves this, Comac will set its goals higher, making wide-body variants and also encroaching other markets.
Can Comac Pull it Off?
The commercial airplane market is large enough to accommodate new entrants like Comac, but do they have the so called Chinese gun power to blow away existing, not to say, well established market players? Let’s see how this fledgling aircraft manufacturer fares in the global arena.
Boeing needs no introduction with its well-regarded portfolio of commercial aircraft. The company exited first quarter 2014 with a backlog of 5,100 airplanes valued at $374 billion. In comparison, Comac’s total backlog of 652 airplanes pales into insignificance. Comac undeniably has a lot of catching up to do.
The prices of Comac’s C919 single-aisle airplanes are expected to be cheaper than the comparable models offered by Boeing and Airbus. Even then, we do not expect cheaper prices to translate into bulk orders for Comac. The safety and security of the airplanes play a major issue here.
Though China has progressed by leaps and bounds in all kinds of industrial sectors, the common notion of associating the country with mass volume and average quality is something that they need to break. Boeing and Airbus on the other hand have proven technology and a stellar safety track record.
In addition, Comac will have to make inroads into the customer base of these two majors where brand loyalty is the keyword. Customer satisfaction and their willingness to wait patiently for years for a new airplane will make it very difficult for Comac to win ground or rather a piece of the sky.
Technical know-how and their ability to develop more fuel efficient airplanes will certainty give Boeing and Airbus an edge over new competition.
Will a Willful China Have Its Way?
Historically, industrial products from China have dominated the global market. However, we believe jet planes are not childish toys. So, the Chinese dream of dominance in the airplane manufacturing market is still a far cry. Comac will have to prove the quality and safety of its airplanes to gain the trust of the global aviation market and displace the likes of Boeing and Airbus.
For now, it seems like a distant story. But, as the Chinese saying goes, "if the will is strong there will be a way." And we cannot write off Comac at all though for now it has to be satisfied with a very small portion of the pie.
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