The Business Times

Firms flock to China's fast-growing aviation market

Published Tue, Nov 11, 2014 · 03:36 AM
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[ZHUHAI, China] Global aviation firms flocked to China on Tuesday to show off their wares as economic development and an expanding middle class promise a bonanza in one of the world's fastest-growing aircraft markets.

Chinese defence companies and the People's Liberation Army's air force are also putting the latest weaponry on parade at the country's premier Zhuhai airshow this week, including the new J-31 stealth fighter and its biggest-ever military transport plane, the Y-20.

For foreign companies, the airshow offers a chance to tap a market in which air travel grew by an annual 11 per cent last year to 350 million passengers - a gold mine for plane makers such as Airbus and Boeing.

"This is a tremendous market," Briand Greer, president of aerospace for Asia-Pacific at US conglomerate Honeywell, told AFP.

"Think about just that impact of 500 million more people flying," he said, referring to the estimated number of people China expects to shift from rural areas to cities.

Just days before the show, Europe's Airbus announced a US$10 billion deal for China Aircraft Leasing Co to buy 100 planes from its A320 family.

Crowds gathered to take photos with the double-decker A380 superjumbo, which Airbus is showing off at the show.

The company says China is poised to become one of the world's largest aviation markets, with Chinese deliveries already representing 25 per cent of its global production.

Rival Boeing of the US forecasts China will need 6,020 new airplanes valued at US$870 billion over the next 20 years.

But China wants part of the multi-billion dollar market to go to its homegrown passenger planes.

Commercial Aircraft Corp of China (COMAC) is developing a 158-168 seat narrow-body plane, the C919, and the 78-90 seat ARJ21 regional jet, which is scheduled to fly at the show.

It is also seeking suppliers to build the wide-body C929 passenger plane over the next decade, expanding its ambitions and rivalry with Boeing and Airbus.

Despite the optimism, industry officials see problems in the short-term: a slowdown in the economy, strict controls on airspace and a corruption crackdown.

China's economic growth - which has a direct correlation with air traffic - eased to 7.3 per cent in July-September, the lowest since the depths of the global crisis in early 2009.

Massive flight delays across the country in July, blamed on military exercises, cast the spotlight on another problem - controls on airspace that leave only 20 per cent of China's skies open to civil flights.

"It's so important for China to fix their air traffic management issues because it's starting to have economic impact," said Greer of Honeywell.

A crackdown on corruption launched by China's leader Xi Jinping after he came to power in late 2012 has also hit the aviation market. Government officials stopped flying higher classes, prompting two Chinese airlines to cut or remove first-class seats.

The graft crackdown has also affected the small but growing market for private jets in China, where owning an aircraft is often viewed as a needless luxury.


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