What C919 means to China jet industry and domestic airlines

May 05, 2017 16:54
China's C919 passenger jet takes off from the Pudong International Airport in Shanghai on its maiden flight on Friday. Photo: Reuters

Following the maiden flight of C919, China’s first home-built passenger jet, in Shanghai on Friday, the nation is en route to become a major player in the global aviation market.

But it will take years to reach that destination, and the aircraft maker is likely to focus first on domestic customers.

The global jet market has been dominated by Boeing and Airbus. China has been working on its home-grown passenger jet for years.

In 2006, the State Council, China's cabinet, listed jumbo jets as one of 16 major technology projects the country would undertake in the next 15 years. Research and development for home-grown jets then started to accelerate.

China first gave the world a glimpse of C919 in an aircraft show in Zhuhai in 2010. That early, orders for 100 of the passenger plane were secured from six customers.

Orders continued to pile up since then. Twenty-three customers have placed orders for 570 C919s, according to the latest information from the state-owned Commercial Aircraft Corporation of China (COMAC).

Air China (601111.CN), China Eastern Airlines (600115.CN) and China Southern Airlines (600029.CN) together placed US$20 billion worth of orders for new aircraft last year alone.

Suppose domestic jets can win 50 percent of the China market, that would represent a huge potential for the country's aircraft industry.

Meanwhile, low-cost home-built aircraft would also help Chinese airlines save costs and boost earnings.

In the next 20 years, 2,000 C919 units are expected to be sold to Chinese carriers as well as buyers from emerging countries, enabling COMAC to compete with Airbus and Boeing.

China's high-speed railway has been an important market theme, and there is no reason why the home-grown jet story cannot become another powerful trading concept.

Some relevant stocks have already posted strong gains lately, including Changzheng Engineering (603698.CN), Spring Airlines (601021.CN) and Shanghai International Airport (600009.CN).

This article appeared in the Hong Kong Economic Journal on May 5

Translation by Julie Zhu

[Chinese version 中文版]

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HKEJ columnist