China develops passenger jet, but 40% of parts suppliers are overseas
COMAC's narrow-body aircraft faces steep hurdles in export market
China's C919 passenger jet will take on rival narrow-body planes from Boeing and Airbus. © Reuters
YUSUKE HINATA and TAKASHI KAWAKAMI, Nikkei staff writersOctober 2, 2021 04:11 JST
ZHUHAI, China -- A Chinese-made passenger jet set to compete with American and European rivals counts roughly 40% of its core component suppliers as overseas companies, exposing the risks posed by U.S. trade frictions to a plane that has been under development for more than a decade.
The C919 jetliner, being manufactured by the Commercial Aircraft Corp of China, or COMAC, is due to be delivered to the first customer by the end of the year. However, with that deadline looming, the plane was a no-show at the Airshow China in Zhuhai on Thursday. COMAC instead exhibited a life-size model of the cabin.
"Boeing and Airbus alone will not be enough to meet demand," a COMAC sales executive said at the event. "The new option we'll provide will be in the interest of the airlines."
The narrow-body jet will compete with bestselling models of its size: the Boeing 737 and the Airbus A320. Although state-owned COMAC has not performed demonstration flights or unveiled an actual plane at the Zhuhai air show, it is widely believed that the C919 is approaching the conclusion of its development, which began in 2008.
But potential turbulence lays ahead for the C919's business prospects. Out of the 39 lead suppliers for the plane, more than 40% hail from the U.S. or other countries outside China, according to documents from China-based brokerage Avic Securities and other sources. The remaining suppliers include joint venture firms backed by foreign companies.
Chinese companies are supplying the fuselage and the wings. But a host of Western suppliers are providing the brains and heart of the plane -- the communication and flight control systems, among other core components.
The share of parts sourced from non-Chinese companies appears to rise even higher when tallied in terms of value. This underscores the extent that China's domestically developed passenger jet is dependent on foreign contribution.
The engine poses a major challenge for domestic development. Currently, the C919 is due to be equipped with an engine manufactured by CFM International, a joint venture between General Electric and France's Safran Aircraft Engines.
COMAC is considering adopting the CJ1000 jet engine being developed by Aero Engine Corporation of China, a maker of military aircraft engines. But many observers believe that such an engine will not be commercially available in the near term.
"It will enter the market around 2030," according to Zheshang Securities.
Relying on the foreign-built engines presents its own risks. News emerged in February 2020 that then-President Donald Trump's administration was considering halting shipments of CFM jet engines to China. The crisis seemed to pass after Trump expressed support for selling to China, but the scare underscored that engines, much like smartphone chips, face major geopolitical risks.
Type certification -- which signifies that an aircraft design is airworthy -- poses another challenge.
Regulators in the U.S. and Europe set de facto standards that many other countries follow. Chinese regulators have their own approval process, but they have little global influence, and Chinese planes are usually able to fly commercially only within China. That limits opportunities for exports that would promote larger-scale production and accelerate the industry's growth.
Aircraft makers are desperate to secure certifications other countries will accept. COMAC at first sought European certification for the C919, but there has been little movement on that front.
The technical hurdles are high enough, but China's aviation industry faces other headwinds -- particularly the easing of years of friction between the U.S. and Europe over aviation. During a June summit, Washington and Brussels reached a truce on a dispute over aircraft subsidies, amid shared concern over China's push into aerospace and defense.
This leaves Beijing with less room to exploit that rift to win aircraft certifications or forge cross-border industry partnerships. Cultivating the domestic aviation market is its only real option for now.
A government meeting in January in Shanghai, COMAC's headquarters, revealed that the C919 will receive certification for pilots and ground crews by the end of the year. China Eastern Airlines, one of the country's top three carriers, officially signed a purchasing contract in March.
The national government has put forward the goal of lifting the ratio of Chinese-manufactured passenger planes in service on major air routes to over 10% by 2025. The C919 will play a major role in promoting the homegrown industry.
China's size in terms of both land mass and population make for strong domestic demand that the country's aviation industry can leverage for growth. But if Beijing goes too far in protecting its aircraft makers, it could risk a backlash from the U.S. and Europe that would further complicate efforts to expand abroad
COMAC's narrow-body aircraft faces steep hurdles in export market
asia.nikkei.com
When the launch of China's first single-aisle C919 aircraft program was announced in 2008, entry into service was scheduled for 2016. However, even five years after the expected date, the aircraft is still far from being certified. Similar terms were announced for the Russian program of the promising medium-haul MS-21: launch in 2007, entry to the market in 2016. But so far, Irkut has not handed over a single vehicle to customers. The outgoing year was another one in which neither Chinese nor Russian aircraft manufacturers again managed to get closer to the start of real deliveries and break the undivided dominance of Airbus and Boeing in the narrow-body segment. Western sanctions and export restrictions add further hurdles to both programs.
Back in early December, COMAC stuck to the promised deadline for obtaining the type certificate for the C919 by the end of this year. But then Yang Zhenmei, head of the Civil Aviation Administration of China (CAAC), said the test program was way behind schedule. Only 1694 out of 3272 points were completed, i.e., slightly more than half of the tasks set by the test program.
In terms of flight tests, the situation is even more deplorable: only 34 out of 276 tasks have been worked out. For example, critical tests at low temperatures remain incomplete. There were plans to send one aircraft to Canada at the beginning of the year, but they were not carried out due to restrictions caused by the pandemic.
Currently, three of the six C919 prototypes are involved in tests in China.
COMAC acknowledged that ongoing delays in the C919 certification program are pushing back the entry into service until at least 2022. In September, the manufacturer still intended to deliver the first aircraft to launch customer China Eastern Airlines before the end of this year. For political reasons, the CAAS may issue a mini-type certificate with strict restrictions before the end of the year - such an idea has already been voiced. However, this will also take a lot of time.
In addition to the usual difficulties for the certification stage, which are difficult to overcome by the Chinese company due to lack of experience, the strict rules for exporting aircraft parts and components from the United States to China have become a huge obstacle. In January 2021, the US Department of Defense listed COMAC as a company with links to the military sector, which significantly complicates logistics for US program providers. The Biden administration surprised the aviation industry by continuing the policies of Donald Trump on economic sanctions.
Although these actions did not have an immediate and irreversible effect on Western manufacturers working with China, they did create a presumption of prohibition for such companies. Many industry analysts have linked the lack of progress on the C919 program to the sanctions, especially after the aircraft never showed up at the Zhuhai Airshow in Zhuhai in September 2021. Chinese officials cited a tight certification testing schedule that prevented the aircraft from being withdrawn for the show, but such claims raised public doubts, as testing has never been an obstacle to Western manufacturers participating in the events. “It is more likely that the C919 certification process has slowed down due to the consequences of US sanctions, including those extended to COMAC. Because of this, most Western suppliers are having difficulty obtaining permits for the export of spare parts to China,” said Agency Partners analyst Sash Tusa. T
he C919 program is indeed heavily dependent on a number of first-tier Western suppliers, including CFM International, the LEAP-1C engine manufacturer, as well as B/E Aerospace, Honeywell, Moog and Parker Hannifin. Replacing them with local producers is a serious challenge. AVIC's engine division has been developing the ACAE CJ-1000A engine as a local alternative to LEAP since 2012, but it will be years before Chinese engines are available in sufficient quality and quantity.
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