Is China the next challenger to Airbus and Boeing?

China revealed an ambitious plan by announcing the project of 190-seater passenger aircraft titled C919, to be manufactured by Commercial Aircraft Corporation of China (COMAC), a state-owned enterprise. Test flights are scheduled around 2014, and deliveries will start in 2016. Having critical components from western suppliers, this aircraft will be comparable to Airbus A320 and Boeing 737. This would be more of a regional/short-haul passenger aircraft than of a continental carrier. However, considering the claim by COMAC that the project is running smoothly, it would be expected that further research and development must be on the way to develop bigger aircrafts than this one.

What is more alarming for Airbus and Boeing is the ensuing externalities that are plaguing the airline industry in recent years. Recession has slowed down the growth and lowered profitability for the airline industry. Increasing fuel costs are a major concern for Airbus and Boeing customers, who will find profits plunge to $4 billion this year from $18 billion in 2010 (reduction in profit by $12 billion!), according to a published report by International Air Transport Association (IATA), June, 2011. In order to offset this plunging profit due to the rise in fuel costs, major airlines have increased fares seven times since the start of the year (according to a recent report by FoxNews). Behind all these figures, Airbus has announced the making of A320neo, which is a redesigned version of A320, meant to be 15 percent more fuel efficient than its predecessor. Airbus has always been upholding this “fuel efficient” aspect to keep its top position in the industry.

Now here is the shocking news. Chinese C919, engineered with western technology and made in China, will cost 20% cheaper than its major competitors. It has already secured orders of 100 aircrafts from various Chinese domestic airlines. Orders for 100 aircrafts seems small at this moment, considering the fact that China will need about 4,000+ aircrafts (in the 120+ seat range) just for their domestic airlines by the year 2029. Once the adoption of home-made aircrafts takes place, and safety records are set at global standards, probably one will see the influx of orders from major global airlines for this Chinese brand. Where Japan and South Korea aborted attempts to develop their own passenger aircraft industry in the past, China has ventured into flourishing herself as the first Asian country to pose a major challenge to the traditional big players in the world. We need to wait and see how big players would react to this challenge.


About 1mmarketing

Working as Associate Professor, School of Business, United International University, Bangladesh; a North-American graduate, with doctoral studies from UUM, Malaysia; cherishing a wide-view of the world, with multiple interests in culture, people, traveling, and specifically marketing science. I have a colorful and diversified background with a blend of corporate experience, research, consulting, training, public speaking and teaching. I love to write about marketing issues that affect our lives, and talk about its direction that would promote the greatest human welfare.
This entry was posted in Nation Branding, Strategic Marketing and tagged , , , . Bookmark the permalink.

One Response to Is China the next challenger to Airbus and Boeing?

  1. Abdullah Al Mahmud says:

    wow….its a huge movement from china. the global companies are going to face a difficult problem. the fuel efficient option will raise a big order from the developing & under developed countries.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s