From the Atisgroup The aircraft industry in China has been dominated by Boeing and Airbus for the last decade or two but change is in the air. That change is in the form of Comac (Commercial Aircraft Corporation of China), as they are developing new aircraft models which are intended to directly compete with the Boeing and Airbus models currently being sold. The Comac model currently under development is the C919 which will serve as competition for the Airbus A320 and the Boeing 737 Next Generation. This will be the first large scale aircraft to be designed and built in China since the unsuccessful Shanghai Y-10 in the early 1980s.
These plans obviously have the attention of Boeing and Airbus who have a little time to figure out a plan as the Comac C919 is scheduled for its first flight in 2014 with the first deliveries scheduled for 2016. Boeing and Airbus have employed different tactics on how to keep the introduction of the C919 from hurting their business in China.
The most complicated aspect to deal with for both Boeing and Airbus is that aircraft sales in China involve a lot of government influence. Depending upon who you ask you will get different answers as to how much influence the government has when it comes to aircraft orders and purchasing in China. The consensus seems to be that the government will certainly “suggest” which aircraft the airlines should purchase but if the airline is one of the bigger ones they do have the ability to push back and make their own decisions.
So it seems that yes the government does have some involvement but it falls short of government officials directly orchestrating the ordering and purchasing of aircraft by the airlines. With that said it is likely that they will push the government sponsored C919 onto the airlines in the country to help push initial sales.
With a third competitor added to the mix in China it will likely result in more competitive pricing and other aspects that will benefit the companies purchasing aircraft in China. With the current and anticipated future growth in demand for aircraft in China it seems that there will be enough demand to spread amongst three aircraft manufacturers instead of two. If the country continues to grow as expected there will be plenty of business to make it worthwhile for all three companies. It is possible that Comac will initially sell the C919 at a rock bottom price to entice buyers initially.
This will likely hurt the other two in the short term but in the long run it shouldn’t have a huge impact. Comac will only be able to produce these at a very low price for a short time as they will eventually need to start making bigger profits. Only time will tell but it does seem as though the political and economic landscape in China will allow for the three manufacturers to all be in business.
