http://www.iht.com/articles/2007/09/07/news/air.php
A scale model of China's new regional airliner, due for its first flight next March. (Eugene Hoshiko/AP Photo) China hopes a homegrown regional jetliner can challenge Airbus and Boeing By Donald Greenlees and Nicola Clark Published: September 7, 2007 HONG KONG: At an aerospace industry show here this week, China's leading commercial aircraft maker found its stand flanked by the elaborate displays of the two giants of the business, Boeing and Airbus. But the China Aviation Industry Corporation 1, a minnow in aircraft manufacturing, drew a steady stream of visitors curious to take a look inside a mock-up of its most ambitious project: a regional jetliner for the domestic and international markets now being developed at a factory in Shanghai. The ARJ21, the designation given to the aircraft, has yet to go on its maiden test flight. That is due to come in March next year. The mock-up at the Asian Aerospace show in Hong Kong was of only the cockpit and part of the fuselage. Yet China's hopes of an internationally competitive homegrown aerospace industry are largely riding on the wings of the aircraft's success. For international aviation, the arrival of the jet is a modest event. For Chinese aviation, it is a debut as keenly anticipated as the launch of the Airbus A380 or the Boeing Dreamliner. It will be the first Chinese-designed, Chinese-made jet to seek U.S. certification with the goal of seizing part of the fast-growing global market for regional jetliners. "The ARJ21 will be fast, cover long distances and have between 50 and 110 seats, filling what is missing from the current regional market," Chen Jin, vice president of the company's commercial aircraft division, said in a presentation to industry representatives Wednesday. "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." China is seeking to tap into one of the fastest-growing segments of the domestic and foreign aircraft market as it pursues a long-term ambition to be a significant player in commercial aircraft manufacturing. 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 percent of global deliveries, or 1,660 aircraft. World demand is projected to be greatest for aircraft with capacity in the 100- to 149-seat range, making up 5,900 of the total. The Civil Aviation Administration of China is anxious to encourage domestic manufacturers of this type of 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. Air travel in China is centered very heavily on a few hubs. The 20 largest airports are estimated to fill 80 percent of passenger volumes. A large number of smaller airports serve fewer than 200 people a day. Smaller aircraft on point-to-point routes would take the pressure off overcrowded hubs and improve flight frequency and the efficiency of aircraft use. 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. It will be the first commercial jet aircraft fully designed in China, although the engines are being supplied by General Electric and the avionics are also foreign-sourced. The first plane is due to undergo flight testing by March, paving the way for domestic certification. "Right now we are perfectly on schedule for completing our program," said David Li, a marketing manager with the company. China has been making aircraft components for Boeing and Airbus for years, but earlier attempts at producing a homegrown commercial jet - a long-held dream - have been troubled. In the 1970s there was the Shanghai Y-10, a copy of Boeing's 707, which made it to the test-flight stage but was abandoned in the early 1980s amid a shortage of funds and a lack of interest among Chinese airlines in the plane. In 1985, the Chinese signed a co-production deal with McDonnell-Douglas of the United States to build several dozen MD-82 and MD-90 jets in China, but the agreement was terminated in 1988, amid a dispute over technology sharing, before any of the Chinese-built planes ever flew. The first delivery will be to Shandong Airlines, which has placed an initial order for 10 planes. Other firm customers are Shanghai Airlines and Shenzhen Financial Leasing. So far, there are orders and expression of interest for more than 60 aircraft. The Chinese government has given a significant boost to the prospects for domestic sales through some key interventions. In mid-2001, Beijing lifted an import and sales tax for aircraft of less than 25 tons from 5 percent to about 23 percent. The tax for aircraft over 25 tons is 5 percent. Recently, the aviation administration said it had decided on a pause on the licensing of new airlines to ease the breakneck speed of the industry's expansion, allowing time for infrastructure to catch up. But there was an exception for airlines operating locally-built aircraft or flying in the less-developed west and northwest, which would have their applications considered. Those sorts of decisions are a valuable fillip to local industry. The import-tax decision had a dramatic impact on the China sales of two of the leaders in the smaller regional aircraft market, Bombardier and the Brazilian company Embraer. "Our business basically stopped after the tax increase," said Guan Dong Yuan, managing director of Embraer in China. "We had to find another strategy to open the market. No doubt they were looking to protect their own industry. It was understandable." Embraer responded by establishing a joint venture in 2002 with the China Aviation Industry Corporation 1 to assemble a 50-seat jet in Harbin, using imported parts. Guan said as a result the company was able to offer the aircraft at the international price. Bombardier has also decided on a direct investment in local manufacturing. In June, it too announced it was teaming with China Aviation Industry. It agreed to invest $100 million in the further development of the ARJ21 aircraft with the aim of building a bigger-capacity version and helping the aircraft maker win foreign certification, particularly from the U.S. Federal Aviation Administration. It will receive a royalty for each ARJ21 sold. Foreign certification is the key to the real prize of export sales. Analysts said that China could not rely exclusively on demand from its domestic sales in order to recoup development costs. Jim Eckes, consultant at Indoswiss Aviation in Hong Kong, said that means going up against the big manufacturers without an established brand or reputation. "The marketing costs are going to be tremendous," Eckes said. "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." International Herald Tribune Nicola Clark reported from Paris. [Non-text portions of this message have been removed] Post message: [EMAIL PROTECTED] Subscribe : [EMAIL PROTECTED] Unsubscribe : [EMAIL PROTECTED] List owner : [EMAIL PROTECTED] Homepage : http://proletar.8m.com/ Yahoo! Groups Links <*> To visit your group on the web, go to: http://groups.yahoo.com/group/proletar/ <*> Your email settings: Individual Email | Traditional <*> To change settings online go to: http://groups.yahoo.com/group/proletar/join (Yahoo! ID required) <*> To change settings via email: mailto:[EMAIL PROTECTED] mailto:[EMAIL PROTECTED] <*> To unsubscribe from this group, send an email to: [EMAIL PROTECTED] <*> Your use of Yahoo! Groups is subject to: http://docs.yahoo.com/info/terms/
