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China’s first domestically produced commercial aircraft, the C919 narrowbody jet manufactured by the state-run Commercial Aircraft Corporation of China (COMAC), was delivered to the first customer China Eastern Airlines last week. The aircraft signifies a key milestone in China’s aviation capabilities as the C919 will rival the popular aircraft – 737 Max by Boeing and A320neo by Airbus.
According to China’s state media, the first single-aisle model which will seat 164 passengers, was formally handed over to China Eastern Airlines during a ceremony at Pudong International airport, Shanghai. The plane was certified for safe operation in September.
Although China’s homegrown alternative is commercially viable, the target of producing approximately 25 C919s yearly by 2030 pales in comparison to the production rates of larger Western rivals. Airbus, for example, adjusted its post-pandemic forecast to around 700 aircraft deliveries in 2022.
Xinhua reported that China Eastern will deploy the C919 between Shanghai and Beijing, beginning early next year. The remaining four aircraft ordered from COMAC are expected to arrive over the next two years.
COMAC announced last month at an airshow that it had secured orders for 300 C919s but did not specify whether the orders were fully confirmed and provided no information on the value of the deals or delivery dates.
However, as the orders are fulfilled, the number of known deals for the C919 will exceed 1,100, according to figures from previous COMAC statements.
AviChina’s role in C919
The 20th National Congress of the Communist Party of China which ended in late October emphasized on greater focus on high-end manufacturing, including military forces and self-sufficiency in arms. The country’s largest aviation firm, AviChina Industry and Technology Co Ltd, which has been sanctioned by the US, holds a minority stake in COMAC.
While the stake might be small (~12%), AviChina seems to have a large influence on the operations of COMAC, as a majority of the latter’s leadership, employees, technology, and facilities came from AviChina. This essentially means the C919’s success hinges on research and development contributed by AviChina.
“AviChina Industry & Technology H (2357 HK) offers unique exposure to China’s aerospace and defense sector and it will ride on China’s ambition to solidify its military strengths,” said Insight Provider Osbert Tang, who publishes on Smartkarma. “We think the key drivers are increase in civil and defense demand, commercialisation of C919 aircraft, localisation of helicopters and potential for corporate restructuring.”
The US-China Dilemma for Boeing
China’s push for domestic aircraft manufacturing comes amid recent trade and technology disputes with the United States and the increased focus of Beijing on self-sufficiency.
Boeing, based in the United States, is having a difficult time following two fatal crashes that prompted authorities to ground all 737 Max models in 2019. Boeing has faced a lot of flak globally including from countries like Brazil, Indonesia, Ethiopia and Mexico. The 737 Max is yet to fly again in China, which has not placed any orders with the company since 2017.
Generally, China’s orders from Boeing and Airbus are evenly split. However, earlier this year, Beijing agreed to purchase 300 jets worth $37 bn from the European company Airbus. Last month, Airbus began producing A321 models at a facility in Tianjin, a city in northeastern China.
“As a top US exporter with a 50-year relationship with China’s aviation industry, it is disappointing that geopolitical differences continue to constrain US aircraft exports,” Boeing said in a statement previously. “We continue to urge a productive dialogue between the governments given the mutual economic benefits of a thriving aviation industry.”
