There it is, as President Xi Jinping
calls it, the “dream of a nation.” The Comac C919 is a passenger plane
that’s domestically made in China. And it’s touted as China’s answer to
aviation giants Airbus and Boeing. The C919, a homemade plane,
has started commercial production. But can Comac break the Boeing-Airbus duopoly,
and will it attract buyers outside of China? While Comac declined to be interviewed at the
2024 Singapore Airshow, the presence of the Chinese state-backed firm at the event was enough
to steal the limelight from Airbus and Boeing. Executives from the two companies,
however, had muted reactions to Comac, with Airbus’s Christian Scherer telling
CNBC that it wasn’t going to rock the boat, while Boeing’s Dave Schulte
had a similar reaction. In terms of the C919 activity across the region, it’s a similar-sized airplane that
both Boeing and Airbus produce. It will be up to each
of the manufacturers to prove the value to the airlines,
prove the products. In addition to the C919, Comac has another
plane on the production line: The ARJ21, which is mainly used in the
Chinese domestic market, though it’s also operated
by an Indonesian carrier. Brendan Sobie is an aviation
analyst and consultant, who’s worked in the industry for over 20 years. The ARJ21 is not certified by the U.S., or the EU, and a lot of the countries in the
region, including Singapore and Brunei. They were able to get the plane
certified in Indonesia and Malaysia. Before a newly developed aircraft model
can begin commercial operations, it must be validated by aviation authorities such as
the U.S. Federal Aviation Administration, or the European Union Aviation Safety Agency, to show that the plane is airworthy,
or safe to be operated. This is a process known as a “type” certification. The C919 was type certified by the Civil
Aviation Administration of China in late 2022. It’s a very long process. Adam Cowburn is the managing director
of Alton Aviation Consultancy, an independent consulting firm
focused on the aviation sector. If you look at other players that have tried to
penetrate into the commercial market, say Embraer. For them, that was a five, six-decade
process to get to where they are today. Comac is on decade two of that same process. They’ll likely to be able to do it in much
shorter time, but there’s still years to come before we see a large widescale
adoption of the C919 outside of China. The state-owned Commercial Aircraft
Corporation of China, or Comac, may have been established in 2008, but China’s
dreams for a homegrown plane go back further. In as early as the 1970s, it was reported
that the country had “reversed engineered” a Boeing 707 jetliner But the Chinese
clone, dubbed the ”Y10,” didn’t lift off. In 2002, they began development of the ARJ21, which today can accommodate
between 78 and 97 seats. Comac took over the ARJ21 project
when the company was created in 2008, while work on a second aircraft,
the C919, commenced the same year. The single-aisle C919 was positioned to compete
with two popular narrow-body passenger jets, the Airbus A320 Neo and the Boeing 737 family. Fifteen years and tens of
billions of dollars later, the C919 made its first commercial
flight with China Eastern Airlines. Today, the bulk of the C919 orders, which
can be outfitted with up to 192 seats, are from domestic carriers and Chinese
companies that lease aircraft to airlines. China is one of the world’s biggest air passenger
markets, alongside the United States and India. By 2042, China is expected to account
for 20% of the world’s airplane demand. That’s more than 8,500 new commercial
airplanes in the next two decades. You look at the size of the China market, one can
say: "Well, maybe they don’t need anybody else." But I think it’s not that simple. Almost a year after the C919 made
its maiden commercial flight, there have been almost 1,100 orders of the Chinese
homegrown jet, mainly from Chinese companies. But is that enough to make Comac an attractive prospect for international
carriers outside of China? GallopAir, a new Brunei-based airline, is the
first carrier outside of China to order the C919. You used to be a pilot? Yeah! So you have flown the Airbus and... And Boeing. And also passenger and freighters. So have you flown a Comac C919 yet? I haven’t. I’m looking forward to have my
license in Airbus: A, Boeing: B and Comac: C. GallopAir is owned by Chinese businessman
Yang Qiang and is backed by Chinese investors. I spoke with its CEO, Cham Chi. Our shareholder, the Tianju
Investment Group, in China. As a customer and operator
of China’s Comac products, we can get financial support from China’s
import-export bank, and also central banks. The aircraft is from China, China’s RMB’s interest
now is lower than the U.S. dollar interest. Around 2017-2018, we were the first
private buyer to order 25 ARJ at that time. Have you received any ARJ-21s? Nope, we haven’t received.
The target is end of this year. So you bought the ARJ21 first, and then you
decided: "Hey, C919 is launching right now, why don't we continue that relationship?" We changed the order contract
to 15 ARJs and 15 C919s. We’ll need to wait 2-3 years then they can deliver
to us, so as our start-up aircraft, it’s the ARJ. Here behind me we have the Comac ARJ21, which has already been operated
in airlines outside of China. TransNusa Airlines, based in Indonesia, was
the first international operator of the ARJ21. The Republic of Congo has
reportedly placed orders as well. What about TransNusa, Indonesia airline? Another China-backed airline. The airplane has been in
service but it’s very limited. The Comac C919 plane is supposedly
a striking symbol of China’s plans to advance its technological self-reliance,
as part of its “Made in China” strategy. However, not every part of
the plane uses homegrown tech. According to an American think tank,
nearly three-fifths of the C919’s top suppliers are from the U.S., while a third
are from European companies. Of the C919’s 80-odd primary suppliers,
only 14 are from China, of which seven are Chinese foreign joint ventures. Liebherr Aerospace, based in France, provides
the landing gear and air management systems. The C919’s engines are the same ones powering the
Airbus A320neo, supplied by CFM International, which is a joint venture between American
GE Aerospace and France‘s Safran. Inside the cockpit, the flight control systems are made by American conglomerate
Honeywell, among others. It’s a Chinese aircraft, but a lot of the parts, including the engines, and avionics and
other components are not from China. And of course, you look at Boeing and Airbus
aircraft, you could say the same thing. It’s not only about their own ramp-up capabilities It’s about the ramp-up capabilities of the same suppliers that are having the
same issues with Boeing and Airbus They’re not in a vacuum of their own supply chain. They’re in the same supply chain. Other airlines in countries such as Nigeria,
Thailand and Germany had expressed interest in the C919 planes but these carriers have
either folded or are yet to make a decision. How difficult is it to get
certification to fly outside of China? It’s obviously had its first phase within the
shorter Chinese ecosystem and domestic flying only, and likely move out into a market
where there’s a politically favorable environment to collaborate with China
and see the aircraft enter into service. Obviously, Indonesia, Brunei will
go through that validation process. Anytime there’s a new aircraft
programme, it takes time to build up. So you wouldn’t expect anything like
Boeing or Airbus numbers, anytime soon. Another hurdle that Comac will face is MRO,
or maintenance, repair and overhaul support. This refers to the after-sales support available
for aircraft to ensure safety standards are met. The big challenge for Comac and across
the board, it’s really the uncertainty, the fact that those things remain unknown:
entry into service, how much it costs to operate the aircraft on a per hour, per trip basis,
the level of spare support needed, putting all those pieces in place and
helping operators remove that uncertainty, particularly in an airline
industry with very low margins. In fact, GallopAir’s Cham told me that
Comac would consider creating MRO support in Brunei if the airline increased its
order to 30 aircraft, which it did. Maybe, for the first and second aircraft,
we’ll still need to fly to Shanghai for MRO. After three to five aircrafts have been
delivered, then we can start MRO in Brunei. Support is a major issue and
challenge in selling the airplane. The further from China you get,
the more complicated it gets. Southeast Asia, you have proximity to China and
makes it a little bit easier if you have a lot of companies in Southeast Asia who would be willing
to add to this capability with the right deal. It’s not only about just MRO capability. It’s about having the parts available
and having a reliable operation. The ability for Comac to draw customers away from Airbus and Boeing will also depend on the
delivery timelines and price of its planes. The C919 was priced at, if
I’m not wrong, $98 million. The list prices don’t mean very much. There’s always discounts. Comac
obviously prices very aggressively. If you look at the ARJ21, it’s no secret
the plane is basically given away. So, the 919, I mean, nobody knows the price yet. I think the big uncertainty that remains is what
the future production rate of the C919 will be. It’s a big question, having only delivered
four aircraft over the last several years. How do they get to their target of 150 aircraft per year, which is the most recently
publicly stated target for the C919. Industry analysts will want to
understand at what rate are they going to start to meaningfully chip away
at the market share of Boeing and Airbus And our models predict that
was still quite some time out. Despite the external challenges, Comac can still count on strong government
support and a sizable domestic market. China itself dominates one of
the largest commercial markets. Will Comac be able to satisfy this
demand, or will it still need other international airlines to, sort of, buy in? It’s not like the C919 is gonna
be the exclusive airplane for the domestic narrowbody operators in China. The aspiration, at least, is
to have international sales. Certainly, we see that now entering
into people’s consideration set, They're starting to say, particularly in Asia, smaller airlines:
"Why don’t we include Comac in our evaluation." Airlines want that third
option after Airbus and Boeing, particularly given Boeing’s issues recently. It’s still early to say whether it’s a really
serious or viable competitor in the long run.
