Page last updated at 17:47 GMT, Tuesday, 2 February 2010

Chinese planes challenge Boeing and Airbus

By Juliana Liu
Asia Business Report, BBC World, Singapore air show

Comac aircraft model at the Singapore air show
Comac is preparing to deliver aircraft to customers from 2016

The biggest potential threat to the dominance of Western aircraft makers has been unveiled at the Singapore Air Show.

China's answer to Boeing and Airbus is showing a slender, blue-and-white model of the Comac C919 aircraft for the first time outside the mainland. Its introduction was low-key, a move consistent with how Chinese firms prefer to operate overseas.

The aircraft, designed and built entirely in China, will compete directly against industry stalwarts A320 and Boeing 737 after completing flight trials in four years. It should be available commercially by 2016.

"That's our plan," an official from the Commercial Aircraft Corporation of China, or Comac, tells BBC News.

"But it will be tough to stick to it. These days, delivery dates are often pushed back."

Next year delivery

The C919 is part of China's stated goal of developing a homegrown aerospace industry, which may someday challenge Airbus and Boeing's hold on the global market for commercial aviation.

Mark Howes, president of Honeywell Aerospace Asia Pacific
[Chinese aircraft makers] will add a whole new level of economic activity to our industry
Mark Howes, president of Honeywell Aerospace Asia Pacific

Comac is likely to build more than 2,000 C919s in the next two decades, with a view to grab a 10% share of the global market for narrow body aircraft.

It has been a meteoric rise for Comac, established just a year and a half ago.

Headquartered in Shanghai, the company is fully backed by the central government, as well as by the local government and a number of state-owned firms such as Chinalco and Baosteel.

Comac has already sold more than 240 of its ARJ-21 twin-engine regional jets to Chinese airlines, as well as to a Laotian carrier and to a unit of General Electric. The plane is scheduled for delivery to customers next year.

Biggest market

Experts believe it will take China 10 to 20 years to establish itself in commercial aviation.

That prospect has attracted scores of Western suppliers such as Rockwell Collins, General Electric and Honeywell.

"There is a great deal of excitement in the region," Mark Howes, president of Honeywell Aerospace Asia Pacific, tells the BBC in an interview at the air show. "We're all negotiating and pursuing these deals."

Honeywell is hoping to sell its mechanical and electronic systems for inclusion in the C919.

The US manufacturer has already clinched contracts for its flight controls and inertial navigation systems for use in the ARJ-21.

"They will add a whole new level of economic activity to our industry," Mr Howes adds.

Chinese customers

One day, China will be Honeywell's biggest market in Asia, Mr Howes says.

Boeing aircraft model at the Singapore air show
The China market has been amazing in the last year
Boeing Commercial Airplanes marketing chief Randy Tinseth

So he is now based in Shanghai, having moved there two years ago to be closer to his Chinese customers.

Looking ahead, the company hopes to supply parts to the aircraft unit of the Aviation Industry Corporation of China, or Avic.

The group is in the process of developing the MA700, a four engine turboprop regional airliner.

But China's goal of becoming an aerospace giant may be hurt by a US embargo on military technology transfers.

This could affect dual-use parts, also found in commercial engines.

Sanction threat

Like other US manufacturers doing business in China, Honeywell is keeping a close eye on a growing row between Beijing and Washington, over the latter's arms sales to Taiwan.

China has threatened to sanction US firms selling arms to Taiwan, which it considered a renegade province.

"For everyone here, it's an issue of how it goes between governments," Mr Howes says.

"Certainly, we'll be watching it very closely."

The stakes are much higher for Boeing, which makes the Harpoon missiles that Taiwan will be purchasing as part of the US deal.

When asked by BBC News, the aerospace giant declined to comment on possible sanctions.

Boeing and other Western manufacturers have made fortunes doing business with China.

"The China market has been amazing in the last year," says Boeing Commercial Airplanes marketing chief Randy Tinseth.

As the country develops its own industry, China will want to make billions of its own.



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