Saturday, November 7, 2015

My thoughts on COMAC C919

Most recently, COMAC (Commercial Aircraft Corp. of China) rolled out the first C919 off the assembly line to eagerly awaiting media. The question as we go forward is how successful will C919 be or how successful can it be? It has already pushed back it maiden flight from 2014 to 2016 (which is not too uncommon in aerospace industry) and first delivery to 2018.

AVIC1 has had a long history of supplying parts to both Boeing and Airbus airliners. China's large domestic market has even resulted in final assembly lines inside the country for A320 (and also A330 and B737 going forward). Even so, building a successful modern airliner require building up and maintaining a complicated supplier network, production systems, assembly lines, marketing network and after sales service centers. On top of this, the process of getting FAA certification for airliner is a tremendous undertaking. China had very little experience before it started ARJ-21, which resulted in significant delays while trying to get CAAC certification. Now 8 years after the initial planned service entry, the first ARJ-21 is finally about to enter service later this year without FAA certification. China certainly learnt a lot from ARJ-21 project from all I have read and is unlikely to have the sam delays getting CAAC certification in the C919 project. However, the thorny issue of have FAA recognizing CAAC certification still needs to be resolved before both aircraft can be sold to the wider markets. If they cannot be resolved, then C919 simply would not be able to land in large part of the world which requires on FAA or EASA certification. So until then, C919 is restricted to the domestic and surrounding markets. Based on COMAC's ARJ-21 delays, it's reasonable to assume that most airlines would prefer to wait until closer to certification before making decision on purchasing C919.

From all of this, I think it's quite clear the tremendous undertaking to go straight into C919 without even achieving a successful production cycle in the less competitive regional airliner segment which is currently dominated by Bombardier and Embraer. Up to now, C919 has been able to get large amount of orders (about 500) based purely on the size of its domestic market. As seen in the Russian project of MS-21 and Superjet-100, it is far easier to get export deals in the regional jet segment than the A320/B737 segment. Even an experienced aircraft maker like Bombardier has struggled with breaking into this segment and is loosing a lot of money and facing long delays in the CSeries project. Bombardier made the entry into this segment trying to take advantage of the generation gap between A320/B737 and next generation of regional jet by utilizing the next generation engine to achieve about 15% improvement in operation cost over A320. However, Airbus quickly countered CSeries and C919/MS-21 threat by coming out with the A320NEO upgrade by offering the same new engine options, new sharklets and some other smaller upgrades. That has more of less crushed CSeries sales prospects and given it a lead over the improve B737MAX upgrades. At this point, both C919 and MS-21 are going up against the two entrenched players with significant resource advantage. Unlike the CSeries, C919 (and MS-21) can at least secure large quantities of domestic orders and also have significant government support. COMAC does not have the marketing, production, certification and sales experience that Airbus and Boeing do. It is always hard to knock off established players without advantage in product quality. Both airbus and Boeing have significant backlogs, so C919 maybe able to get more orders in both domestic and export market if it is able to have fewer future delays and obtaining FAA certification. I think if it can get FAA certification and several hundreds export orders, this would be considered a successful project. After all, Airbus's first project A300 only achieved 500+ sales.

More importantly, I think China sees this a significant initiative in lifting its civilian aviation industry. I've talking many times in the past about how China's shipbuilding industry allows it to quickly and cheaply build up China's naval force. China's aerospace industry simply doesn't have close to the same production capacity as Lockheed Martin and Boeing. I read that COMAC aims to lift C919 annual production rate eventually to 150 aircraft a year. Even though that's rather small compared to A320 production of 60 a month, it would still be a huge undertaking for COMAC and AVIC1. That kind of huge leap in production quality and capability would be transferable to military aviation projects. In the end, I think China is willing to loose money on both ARJ-21 and C919 project for these reasons.

After C919, COMAC and Russia UAC is said to be joining forces in the C929 project. It seems like the technology used in this project may be behind that of B787 and A350. Both of which represent the cutting edge of modern civil aviation. So, it's hard for me to see how they could compete for much outside of domestic project. In choosing to partner up with UAC, COMAC is signaling it does not think it's capable of developing a commercially viable C929 project on its own. All of which leads to me think it would be best for China followers to temper expectations on the C919 project.


Unknown said...

Any thoughts on Japan's MRJ project?

Porkster! said...

MRJ is in the same class as ARJ21, but probably more technologically advanced than ARJ21

Cee said...

"In choosing to partner up with UAC, COMAC is signaling it does not think it's capable of developing a commercially viable C929 project on its own"

I don't think it matters whether China can "do it alone" or have to partner with Russia. Either way China wins since if China can do it alone, it shows that their technology is maturing, but if Russia is involved then it brings both countries closer together. Personally, even if China can do thngs on its own, I'd still prefer them to have the Russians involved if only for the fact that it helps make a potential China-Russia alliance all the stronger.

Porkster! said...

I agree with you. However Russia- China alliance is unreliable and based purely on self-interest, unlike the long standing sino-Pakistan Alliance. Russia doesn't trust China enough to sell the Su-35. I think China would want to keep Russia at arm's length as well. If Comac cooperate with UAC on such a prestigious project it will mostly be a commercial decision rather than a political one, i.e. Comac would want more investment in this project to limit financial exposure.

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Lu'luatun Nashihah said...

I should try that maybe. Lol

Joseph said...

Hi Feng,

Quoting you :- "In choosing to partner up with UAC, COMAC is signaling it does not think it's capable of developing a commercially viable C929 project on its own"

- Apart of certain shortcoming like not having an appropriate engine fixed unto the 300 - 400 passengers airliner (Comac 9929), this segment captures much less orders and thus if a plane is not competitive enough,, she will lose moneys - big time, E.g. Russia/ USSR Il- 86/ Il- 96 twin- aisle wide-body airliner which the latter(Il-96) merely sold only 29 planes from 1993 till now (per wikipedia)

If this were to happen it may bankrupt AVIC 1 even where AVIC 1 is state-owned. A joint-venture with Russia minimize the risk as well as China able to learn more from previous USSR plane-making process. Russia had the technology, China the market - " win-win" .

Cheers !!

The West jealously guarded the certification process as not to threaten the duo-ploy - Boeing & Airbus

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