Enter the dragon

More successful has been the partnering of Chinese companies to produce components for a number of Western aircraft programs, ranging from the Cessna 162 Skycatcher right up to the Airbus A380.

However in the early 2000s, the country has announced in its 10th five year plan a vision to become a major force in aircraft manufacturing, which led to the rollout last year of the AVIC Commercial Aircraft Company (ACAC) ARJ 21 Flying Phoenix 78-90 seater regional jet and more recently revealing models of its proposed 150 seat Commercial Aircraft Company of China (Comac) C919.

While the country has long been involved in the global supply chain for a number of major projects, the government has made no secret of its desire to build its own aircraft. As with all such projects, it has been a building process, involving a number of international partners over the years.

This has included a number of technology transfer agreements involving both former Soviet states and also Western companies. During the 1990s, the country struck a deal with McDonnell Douglas to assemble MD-90s for local airlines under the Trunkliner name, while more recently the Harbin Embraer Company has been assembling ERJ-145s since 2003 and Airbus China now assembles A320s in Tianjin.

There are also a number of aircraft which never progressed off the drawing board, such as the 100 seater Airbus/AVIC AE-100 project which was dropped during in favour of developing the A318. This was in part due to disagreements over the size of the aircraft, with AVIC understood to have been keen to develop a range of AE-100s from 90 to 140 seats, which would have competed with the A319.

Jets aside, China has long been producing turboprop aircraft, such as the 19 seat Yunshuji Y-12 and more latterly the 50 seat MA60. Both aircraft have seen some export sales, although this has largely been to state-owned carriers of countries with which China enjoys a strong diplomatic relationship, such as Zimbabwe. However, poor engineering and parts support has hampered their performance.

However, none of these programs have amounted to major commercial successes. Only a few Trunkliners were built, while Harbin Embraer has recently slowed output on the ERJ-145 line. Similarly, the turboprops produced have had limited success, largely due to poor support for global clients by the manufacturers.

“I can’t say enough good things of the potential of Chinese aviation, but the experience so far whether it’s the AE100 or the ARJ 21 or even going back to the Y-10 (a 1980s era copy of the Boeing 707), it’s all been horrible,” said Richard Aboulafia, vice president of analysis for the Washington DC based Teal Group.

Aboulafia says that the Chinese government has made a key mistake in choosing to pursue local airliners rather than accepting a greater role in the global supply chain, as other countries have done. “They’ve looked around the world and decided that Japan, Italy and Britain were wrong and Indonesia was right,” he said, noting that the establishment of IPTN (now Indonesian Aerospace) was for many years a major drain on the Indonesian economy with no commercial results.

“This is a ‘show me’ story. In theory it’s a great market, great geography, great resources and talent. The reality has been disappointing and the strategy looks awful,” he added.

At the centre of the two current projects are state backed companies Commercial Aircraft Corporation of China (Comac) and China Aviation Industry Corporation (AVIC). AVIC is a merger of a number of smaller state-owned companies including Shanghai Aircraft Corporation (which is a supplier for Bombardier and Cessna) with a broad range of businesses all connected to aviation. It is also the primary shareholder in AVIC Commercial Aircraft (ACAC), which is responsible for producing the ARJ 21.

Comac has been formed for the C919 program, and is owned in part by AVIC and a number of other Chinese state owned enterprises. Comac is seen as the vehicle for developing modern commercial airliners, and may challenge Boeing and Airbus either with the C919 and has at times even talked about the possibility of producing very large aircraft, although this appears to be far off.

“This is a ‘show me’ story. In theory it’s a great market, great geography, great resources and talent. The reality has been disappointing and the strategy looks awful.”

While the country has built up a number of local suppliers, both programs have had some major Western involvement, with a number of blue-chip aerospace companies including General Electric, Parker Hannifin, Honeywell and Safran signing on as suppliers, albeit not as risk-sharing partners. In most cases, these companies have had existing joint ventures with local state owned companies which appear to be the catalyst for their involvement in the projects.

Nevertheless, most suppliers realise that there are a number of risks, the biggest one being enforcing their intellectual property rights when the central government has repeatedly encouraged its companies to copy Western designs.

While the two programs have attracted serious attention, some analysts claim that the strategy being undertaken by the central government will ultimately lead to the development of sub-par aircraft with limited commercial success. Nevertheless, others believe that they are mere stepping stones to developing aircraft in the future which will seriously challenge Western manufacturers – although when that is likely to occur is not abundantly clear.

ARJ21

Following aborted attempts during the 1970s, China’s first attempt at its own indigenous jet airliner, the ACAC ARJ 21 Xiangfeng (Flying Phoenix) rolled out in December 2007, and later made its first flight in September 2008. The first customer delivery is expected in late 2010 to launch customer Kunpeng Airlines.

However, the aircraft is far from truly indigenous. The striking resemblance to the DC-9 reflects that the aircraft was produced using the same jigs and tooling as for the Trunkliner program, while the Antonov Design Bureau is understood to have designed the supercritical wing and also provided advice on the aircraft’s structure.

The ARJ21 also involves 19 Western suppliers, including GE (engines), Honeywell (primary flight controls), Liebherr Aerospace (landing gear) and Rockwell Collins (avionics).

So far, ACAC has only rolled out the 78 seat ARJ 21-700, although it plans to build the stretched 90 seat ARJ 21-900, with both models powered by two rear mounted GE CF34-10A engines. The company has also announced plans to build freighter and business jet versions of the ARJ21.

While the rollout of the aircraft in 2007 hailed it as a major turning point for the Chinese aviation industry, few Western analysts believe that it will achieve any level of commercial success due to a number of issues facing it.

The biggest concern is over the weight of the aircraft. The ARJ 21-700’s operating empty weight is a heavy 24.9 tonnes, making it significantly heavier than the competing E-170 and CRJ-700s. “The ARJ is clearly going to have higher operating costs than the competition in the same category,” aerospace analyst Scott Hamilton of Leeham Company told Australian Aviation.

Aboulafia says that the weight issue is thanks to the aircraft’s DC-9/MD-90 heritage. “You’re taking that Trunkliner and downsizing it to 78 seats. You’re going to get terrible numbers no matter how you shrink it.”

Another challenge will be establishing a market for regional jets. Given its lack of infrastructure and relatively low income levels, few believe that there will be a credible home market for the aircraft, while its weight issues are likely to mean that export orders will be few and far between.

Still, ACAC holds orders for approximately 242 ARJ21s, with the greatest commitment from Kunpeng Airlines which has ordered 100. Most of the other orders are in low numbers to local airlines and lessors, while GECAS has ordered five plus 25 options and Lao Airlines ordered two. So far, all orders have been for the -700 variant.

With the ARJ 21 now in low rate production and more effort now going into developing the larger C919 it appears that the enthusiasm for the regional jet has declined. “A few years ago we had actually been hearing confident prognostications about selling this plane on the world market outside of Laos,” said Aboulafia. “But that all of a sudden has been overtaken by the C919.”

“In some respects I think the C919 would be a proof of concept plane that is the first step to go to the next generation of airplanes.”

Hamilton notes that the ARJ 21 now appears to be more about building capability than competing seriously. “In no way do I believe that the ARJ 21 is going to be a commercial success, but having said that I don’t think that’s the point of the airplane. I think this is an ongoing proof-of-concept airplane from which the Chinese can learn to develop the next generation airplane,” he said.

C919

The most recent and ambitious program to date is Comac’s C919 program, which was recently revealed to the world in model form at the Asian Aerospace exposition in September.

The 156 seat C919 shows much more promise than the ARJ 21, potentially as a replacement for some early model A320s and 737s with carriers across China, while it may also able to tap into the export market as an alternative to the same aircraft. Nevertheless, Comac has not yet announced a launch customer for the aircraft.

While it is still a paper airplane, Comac says that it has been busy in developing the aircraft, and has scheduled its first flight for 2014. Entry into service is expected two years later.

So far, Comac has released little data on the aircraft, making comparisons against other narrowbodies difficult. However, the aircraft will feature a wingspan of 35.4m and a body width of 3.96m. The aircraft’s engines will each produce 30,000 pounds of thrust while it will have a payload of 20.3 tons, 3.8 tons more than an A320.

Interestingly, Comac claims that the C919 will burn 12-15 per cent less fuel than the 737 and A320, with a direct operating costs 10 per cent lower, despite being externally larger than an A320.

Sources indicate that the aircraft’s fuselage will most likely be made from advanced alloys, while fairings, control surfaces and the tail may be made from composites. Comac has not revealed if the wing is likely to be made from composite or metal.

Despite the promised decrease in fuel burn, preliminary data indicates that the C919 will have less range than the A320, with the standard model ranging out at 2200nm (4075km), while a longer range variant will have a range of 3000nm (5500km).

As with the ARJ 21, a number of foreign suppliers are likely to be involved in the C919 program. Most interestingly, Taiwan based Aerospace Industrial Development Corporation is understood to have been involved in discussions with Comac to possibly built flaps, slats, leading edge flaps and belly fairings for the C919.

But the biggest foreign involvement is likely to be in engines, the supplier of which is expected to be named by the end of this year. Indications that the major manufacturers are prepared to offer their latest developments to power the C919. CFM International announced in early October that it was likely to accelerate the development of its LEAP-X engine, which is designed to replace the CFM56, and would be offering it to Comac.

Similarly, Pratt & Whitney has confirmed that it will offer its PW1000G geared turbofan engine. “We are interested in the C919 and have initiated discussions with Comac,” a P&W spokesman told Air Transport Intelligence in early October. “We believe that the PW1000G offers a new airplane such as the C919 considerable market value.”

Newly formed company AVIC Commercial Aircraft Engines has expressed its desire to develop a powerplant for the C919. However, development of any such engine is likely to be some time away and not meet the development schedule for the aircraft.

Given that Airbus and Boeing have put off developing replacements for the A320 and 737 until approximately 2020-2024 at the earliest, some pundits believe that the C919 powered by the new generation of engines could be a viable alternative to the current generation narrowbody aircraft. Still, few are going as far as to claim that it will dominate sales, even if it is able to gain a large slice of the lucrative Chinese market.

“Let’s assume for a moment that the C919 enters into service in 2016 as advertised and it has a new generation engine on it, but it still has an old generation airframe,” said Hamilton. “All Airbus and Boeing have to do to find a hole in that is to reengine the A320 Family and 737 Family and then they will be on par with the advertised goals of the C919.

“And because Airbus and Boeing do indeed have more advanced R&D for airframe development than the Chinese do, by 2020-2024 they will be talking about the replacement aircraft where there will be a convergence of engine technologies, biofuels, airframe technology and so forth and at that point they could have a 40 per cent improvement rather than a 16 per cent improvement. All of a sudden the C919 is left in the dust,” he said.

Aboulafia also remains doubtful that the aircraft will make a significant impact when it debuts in 2014, commenting that it appears to be based on a 2005 model A320. “You get a design that has your own national tube with Western systems and equipment that were absolutely cutting edge ten years ago.”

As such, Hamilton says that the C919, while potentially impressive, the C919 may again be another stepping stone to a new aircraft program in the future. “In a sense, I think that also falls into the category that it won’t matter much to the Chinese if it’s a commercial success. If indeed it becomes an airplane that sells indigenously in good numbers, either voluntarily or involuntarily, it too in some respects I think would be a proof of concept plane that is the first step to go to the next generation of airplanes.”

A question of credibility

A key driver of China’s aerospace ambitions – including the ARJ 21 and C919 programs – is still the communist ideology, which could face some challenges in a modern globalised world.

“The strategy needs to change,” said Aboulafia. “They’re on a government directed, top down five year plan approach which has been inherited from the Mao administration. That’s a bafflingly awful strategy”

However, he does not dismiss China’s abilities completely, noting that there are several advantages which it can offer the global aerospace supply chain although it would have to take its focus off building national jets. “According to the US government, last year was the first year that Mexico overtook China as the largest aerospace parts exporter to the US. Mexico is what China could be – it’s a country that wants to participate in the global supply chain and doesn’t want its flag on the side of an aircraft.”

A major question will be over how ACAC and Comac are planning to sell their aircraft, particularly if their performance cannot match those of aircraft from the big four international manufacturers. While some believe that the government may follow Russia’s lead and impose ‘buy local’ rules on its airlines, to do so would risky for an administration which has benefited from being a part of the global trading community.

“I don’t think the Chinese government would impose a policy on the Chinese airlines which would preclude Airbus or Boeing selling aircraft to those airlines,” said Hamilton. “It’s my assessment that you’re always going to have a Chinese government wanting to buy from Airbus and Boeing for political reasons, let alone operational reasons, simply because the Chinese government uses aircraft purchases as a political lever.”

Aboulafia also notes that it would require China to break the WTO Agreement on Civil Aircraft Trade, which would be possible given the country is currently only holding observer status on the agreement. However, to do so would raise the ire of Europe and the US, possibly resulting in retaliatory action which could harm its industry.

Aboulafia also questions the motivation behind the programs and the companies producing them. “If they’re responsible to government, what’s to say that all these programs aren’t to impress potential investors under a privatisation scheme?”

As such, the biggest challenge for the Chinese industry will be gaining some credibility on the world stage. While Western engines and systems mixed with low production costs could deliver some major benefits, few airlines are expected to rush to order the C919 and ARJ 21.

“I would still guess at that stage through that customer acceptance will still be out in front of them because, when you build these machines the issue is rarely can you build it,” said Boeing Company CEO Jim McNerney in early September. “The issue is, will the company stand behind it for 25 years, and will the company have the wherewithal to evolve derivatives, the next fleet of airplanes, and all the services that come with selling these things?”

Another issue for Western suppliers will be managing intellectual property issues, which has been a major headache for overseas companies in other industries when dealing with China. Still, this appears not to have deterred the engine manufacturers from offering their latest generation engines for the C919.

Those issues aside, Hamilton notes that with the long term orientation of the Chinese that its time may yet come. “I think it has potential,” he said. “If the Chinese government is really establishing this as a national goal, I think the Chinese industry has the potential to become a major player in the world. Whether it is 20, 30 or 50 years down the road, I don’t know.

“If they put their minds to it they will get there. If they don’t get there through their own research and development, they will steal it.”