Are the Chinese Looking to Compete with Boeing and Airbus?

Airbus and Boeing currently have a stranglehold on aviation manufacturing. Their track record allows for their aircraft to have a prestige that a new company cannot match. Additionally, being certified by the Federal Aviation Administration (FAA) insures that they manufacture a safe aircraft and allows them to operate all around the world. This market is very profitable, and China wishes to have a stake in the market. The Civil Aviation Administration of China (CAAC) is the regulating body for aviation in China. The Commercial Aircraft Corporation of China (COMAC) has an aircraft called the C919, that they believe will rival the A320 and the Boeing 737. This is no small feat, and the CAAC and COMAC have run into unexpected delays in certification by the FAA. “’It is not smooth sailing right now between the CAAC and FAA on when they come together,’ says Chahrour. ‘It is a resources issue for the FAA,’ he adds” (Perrett & Pyadushkin, 2014). This is primarily because in aviation the unknown is dangerous.

           

            The certification process for the C919, I believe will be a long one. This is due to the FAA wanting to see a proven track record by the CAAC and the C919 before recognizing the regulating body of China as being effective at maintaining a high level of safety, as well as, the C919 meeting that standard as an aircraft. Being allowed to fly in the United States is an incredible advantage that provides the company a large increase in the relevancy of their aircraft in the aviation industry. Their company will not be able to rival the A320 or the B737 if they cannot fly in the United States. However, if the CAAC is proven to promote a high level of safety, and the C919 is proven to be safe while operating in China and other countries. I believe that they will receive FAA-certification.

            If the C919 were to receive FAA certification, it would largely affect the current airline industry. The US carriers would feel this effect on numerous fronts. Having a Chinese manufactured aircraft would have an impact on areas such as public perception and aircraft purchases. First, Chinese manufacturing has a stigma by the American populace. Chinese manufacturing is viewed as something that is mass-produced and of cheap quality. This stems from all of the little trinkets people accumulate being made in China. Also, the Chinese are not viewed to have safe working environments and techniques. This would cause issue will Americans not wanting to fly on the Chinese aircraft due to the feeling of it being unsafe. So, regardless if the C919 is built in a manner that rivaled the safety of the B737 or A320, it will be difficult to overcome this stigma and prove to the American public that this aircraft is not cheap or poorly constructed. Furthermore, the aircraft can be manufactured at a much lower cost than the B737 and A320. “A report published by China National Radio in June estimates the plane will cost about $50 million.   This price is significantly lesser than prices of Boeing’s 737 series of planes and the Airbus A320 (with average list prices of $75 million and $90 million, respectively).” (Johnson, 2015). This reduced price would allow the airlines to purchase more aircraft, and have larger profit margins. If the FAA finds the C919 to be safe and the maintenance cost is comparable to the B737 and the A320, there would be a large demand for these aircraft by the US carriers. However, this cheaper price point is a double edge sword. This is due to the stigma that cheaper products tend to be of inferior quality compared to high priced products. This stigma coupled with the already negative views pertaining to Chinese manufacturing could increase the image of the aircraft being unsafe and of poor quality compared to the trusted B737 and A320.

            The Chinese government owns COMAC. COMAC is the Chinese government’s way of getting into the international aviation industry and all the perks that are attributed to it. COMAC has sold hundreds of their C919s and will be a staple in aviation for the Chinese government. While COMAC has sold many of their C919s, the majority of their sales have gone to the Chinese government, and have generally not been recognized by the rest of the aviation industry. This goes back to the C919 not being FAA-certified and overall untested. COMAC also have a program for manufacturing their ARJ21, which is a regional jet. “The C919 program originally relied on timely ARJ21 certification—by the Civil Aviation Administration of China (CAAC) with FAA supervision—to pioneer U.S. acceptance of Chinese type certificates.” (Perrett & Pyadushkin, 2014). However, this plan fell through when it became necessary to push the C919 development along. The ARJ21 program is still being developed, but COMAC is putting the bulk of their effort, and resources into the C919 program.

           

            If the C919 were to receive FAA certification, and begin to gain a foothold in the aviation industry along with Boeing and Airbus, I believe other companies would enter the market. This is because Boeing and Airbus currently have a stranglehold on the industry. If they begin to lose their grip in the market, there will be other companies who will take advantage of the new opportunity, and join the market in competition. However, if the C919 receives FAA certification and Boeing and Airbus keep COMAC from gaining a place in the industry, then other companies will see that there is no room in the market for additional competition. This in turn, would ensure that the other companies would not enter the market.

            Currently, there has been no public response to the C919 by Airbus or Boeing. However, both companies have provided recent improvements to their A320s and B737s. This is not a response in my opinion to the C919, but as a normal step in aviation to continue to stay relevant and ahead of the rest of the industry. The aviation industry is constantly evolving and if the manufacturers do not continue to improve, they will eventually become irrelevant. While this may not be directly due to the roll out of the C919, I am certain that if the C919 receives FAA certification there will be a public response to the event by both Airbus and Boeing.

References

Johnson, P. (2015, December 17). Competition For Boeing As COMAC's C919 Is The New Kid On The Block. Retrieved from http://www.forbes.com/sites/pierrjohnson/2015/12/17/competition-for-boeing-as-comacs-c919-is-the-new-kid-on-the-block/#3f3f0de86c1a

Perrett, B., & Pyadushkin, M. (2014). Russia, China Plan Joint Widebody Effort. Retrieved from http://www.flightlogistics.com/widebody/