Aircraft makers bullish on China

China’s airlines will acquire over 100 aircraft every year for the next two decades, according to the latest industry forecasts. A report by the Centre for Asia Pacific Aviation said there were subtle differences between the estimates from China Aviation Industry Corporation I (AVIC I) and Boeing, but “significant differences in the composition of that total reflect widely divergent views on which sectors will drive market growth, and hence fleet purchase decisions”. AVIC I forecasts 705 regional aircraft will be acquired over the next 20 years, while Boeing predicts just 316 aircraft in that category. Embraer expects around 635 regional aircraft sales. China’s aviation market presents potentially tremendous opportunities for aircraft manufacturers, both in the smaller regional aircraft segment, through to medium and large aircraft. China is also a high-potential manufacturing base and Airbus, Boeing and Embraer are investing heavily in the development of component supply and assembly relationships with local aerospace firms, the report said. CAPA said China’s authorities are firm in their intention to liberalise international markets, which will boost passenger and freight traffic growth for many years. “But the biggest question mark remains over the potential impact of the low-cost carrier (LCC) model in China, and its impact on aircraft orders of the future,” said the CAPA report. It said while Beijing prefers the development of a domestic hub-and-spoke system, LCCs prefer to fly point-to-point. LCCs tend to favour single-aisle 150-seat aircraft over regional jets. The LCC issue could be the biggest single influence on fleet planning in coming years, if the concept gains acceptance in China, it said. The aggressive economics of this type of operation, with 150+ seater aircraft, may well displace the market relevance of smaller, shorter-range regional jets, it said. “As examples continually emerge of the way in which low-cost operations with large aircraft can be effective in smaller markets, so the case for regional jets – especially on longer routes – has yet to be proven for China,” it said.

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