C919 gains but loses advantages

Here is an article we did for FlightGlobal Pro.

After a slow and disappointing start compared with expectations that had been set in advance of the Zhuhai Air Show in November 2010, Commercial Aircraft Corporation of China’s (Comac) C919 has picked up steam.

Prior to Zhuhai, Chinese authorities forecast “hundreds” of orders would be announced for China’s first indigenously built mainline jet since the reverse-engineered Boeing 707 copy that never entered commercial service. Instead, a disappointing 55 firm orders and 50 options were announced.

Since then, there are about 250 orders and options now on the books. According to Flightglobal’s Ascend Online database, 160 of these are firm orders from nine Chinese customers, including four lessors. China’s “big three” airlines, Air China, China Eastern and China Southern, ordered a disappointing five aircraft each. Hainan ordered 20. Some of the announced orders have yet to be firmed up as contracts.

 

Source: Flightglobal’s Ascend online database

The first C919 is supposed to be delivered in May 2016, but given China’s performance on the Comac ARJ21 regional jet – which is years late and still undelivered following design and certification issues – it is widely believed in aviation circles that the C919 will be at least two years late. This would be a major setback for the programme.

 

Source: Flightglobal’s Ascend online database

While few believe that the C919 will be a ground-breaking aircraft by any performance standard, at the time of the programme launch it was also the launch customer for the new CFM International Leap-1C engine and this was its chief selling point. The C919 was advertised to be 15% more fuel efficient than the Airbus A320 and Boeing 737NG. With an advertised entry-into-service (EIS) of 2016, the aircraft theoretically would give Chinese airlines a major fuel burn advantage over the Airbus and Boeing aircraft at a much lower capital cost. Comac hasn’t announced a list price but previously said it would be lower than the 2009 $50 million list prices offered by Airbus and Boeing for the A320 and 737NG.

Since then, Airbus and Boeing have bumped list prices twice and launched the A320neo and 737 Max families. Their re-engined product will match or exceed the advertised specific fuel consumption (SFC) claims of Comac, completely negating the operating economics assumed for the C919.

Regardless of the list prices published by Airbus and Boeing, discounts of up to 60% are not unknown for blue-chip airlines. Delta Air Lines is widely believed to have obtained a purchase price in the very low $30 million range for its 100-strong order of the Boeing 737-900ER and Southwest Airlines, the first customer to place a firm order for the 737 Max, is thought to have a contract price in the $35 million range (exclusive of the standard escalation clauses). These prices will make it challenging but hardly impossible for Comac to undercut the capital costs vis-à-vis Airbus and Boeing. The Chinese government is underwriting the C919 development in a manner that ought to spark outrage from Airbus and Boeing before the World Trade Organization, but neither has made a serious issue out of this (Airbus has posed “questions” in the past but has not filed a complaint).

Additionally, Airbus set the EIS date for the A320neo at October 2015, seven months ahead of the C919. Boeing has an EIS of the fourth quarter of 2017 for the 737 Max and a desire to advance this date. The Q4 2017 EIS is nearly a year-and-a-half after the C919′s advertised EIS but, if skeptics are correct, before a delayed C919 EIS of 2018.

The moves by Airbus and Boeing to re-engine their aircraft, the advertised EIS dates and the deep discounts Airbus and Boeing routinely offer key customers, combine to make the new Comac programme more challenging than it already is.

17 comments on “C919 gains but loses advantages

  1. Seems like the Chinese government has applied some pressure to Chinese airlines to order the C-919. Why else would sales C-919 spike when Airbus is offering the A-320NEO and Boeing offering the B-737MAX at lower prices, and earlier deliveries?

  2. No sane operator will buy the C919 before it enters service.
    Operators are extremely careful when it comes to new Boeing, Airbus or BBD aircraft.
    But a new aircraft of a new manufacturer which has never certified an aircraft?

    The question is: when does this venture become so uneconomical that even the Chinese government cuts funding? The ARJ21 is a huge loss, basically obsolete the day it was conceived (it never beats an CRJ900 or E190). No international sales are to expect, national sales only with steep discounts. But the C919 is more expensive, although it is largely modeled following the A320.

    • “Operators are extremely careful when it comes to new Boeing, Airbus or BBD aircraft”?
      what about the 1000 ordered 787′s (radical new tech), 1000′s of ordered revamped 737/320′s

      operators are not that extremely careful. But you’re right – the only lifeline of the comac projects is Chinese government funding.
      Now that even the Chinese economy shows signs of slowing down to “just” single digit growth, how long will that lifeline last?

      • Boeing and Airbus both have a long track record of developing new airplanes. Up until the 787, Boeing had an exemplary record of on time development. Hence the “risk” was considered rather low that the program would fail, and that “risk” remains low to this day. The same can not be said of COMAC who has never built a new airplane, ever.

        You are talking apples and bananas. Whilst they are both fruits, they are very very different.

      • That was a bit like “you never get fired for buying IBM” which backfired in a bombastic way.
        But imho that error won’t be made a second time. Too much hurt and thus the death of the “imminent” Boeing NSA.

  3. “Prior to Zhuhai, Chinese authorities forecast “hundreds” of orders would be announced for China’s first indigenously built mainline jet since the reverse-engineered Boeing 707 copy that never entered commercial service.”

    We have to drag in a feel good sixties 707 adventure & ignore “our” more recent embarrasing underestimation of Chinese Aerospace with e.g. the J20.

    - Governments was the life line for Airbus in the early seventies, merging a dozen old weakened OEMS.
    - Government was the life line of the 707 and Boeing into the sixties. (after 700 KC135s, 200 B47s and 600 B52s within a decade, Boeing could build an airliners too).
    - Government is the lifeline of Comac this decade.

    Comac sold 250 within 2 yrs. It adapted the new LEAP engines long before Boeing and Airbus did. The government that supports Comac also finances most Airbus and Boeing aircraft deals these days & makes sure pretty much anything we buy these days is (partly) build in China.

    We just love to think everything will be ok as it always was. But is it realistic? Boeing and Airbus say the duopoly will be gone in a decade.

    • The Chinese government does NOT finance “most Airbus and Boeing aircraft deals these days”. In fact, Chinese banks have financed very few outside of China. They ARE expanding, but by no stretch of the imagination is this “most”. Most deals are financed by western banks, in particular French and American banks.

      Comac is a POTENTIAL threat to Airbus and Boeing. Is the duopoly over? Not at this point. COULD it be over in 2018? Or 2014 with the BBD CSeries? Yes, certainly it could. It just depends on how good the CSeries and the C919 actually turn out. If they flop, the duopoly is the current industry default.

  4. The Chinese banks increasing finance aircraft deals. European and US banks are withdrawing.

    Until recently the common feel good story was that NSA would leapfrog the C919 series (& NEO) shortly after it entered service. http://www.relooney.info/0_New_10421.pdf

    Things have changed & I’m not sure Boeing has the better NB product for the next 15 yrs. The Max could flop too..

    The C919 seems to have the better BPR engines, cargo capability, new materials, spacier cabin and will be quieter, inside and outside vs the C919. One of the reason Boeing decided the NSA wa the road ahead until last summer.

    IMO Boeing could be forced to launch the NSA around 2018. EIS 2022-23, with Airbus following a few yrs later.

    http://www.comac.cc/

  5. keesje, Boeing has already said they will launch the NSA, but have not said when that will happen. It may very well be in the 2018-2019 time period.

    But, I doubt the C-919 will be a serious competitor to either the B-737NG/MAX or the A-320/NEO for many years. The C-919 is said to have a projected life of some 90,000 hours (which may mean about 50,000 cycles), putting its life expectancy well short of the B-737, but about the same as the A-32X. The C-919, as it is today is thought to be significantly heavier than the A-32X/NEO, which puts it much, much heavier than the B-737NG/MAX. The standard version of the C-919 has a range of 2200 nm, while the extended range version will have about a 3000 nm range. There are no numbers on range for the short C-919 (competing against the B-73G/7MAX and A-319/NEO), or the dedicated cargo version (“F” model?), or the longer version. The standard, longer, and ER versions will seat between 156 and 190 pax and compete directly against the A-320/NEO/-321/NEO and B-737-800/-8MAX/-900ER/-9MAX.

    In my opinion the C-919 will hurt the A-32X series much more than it will hurt the B-737 series, simply because COMAC is learning a lot from the Chinese produced A-320. The Chinese have learned a lot from producing the A-320, and may have stolen some technology from Airbus by being able to build some airplanes for them.

    • For the A320 family Airbus seems to work towards extending service life to a final 90,000 cycles and 180,000 hours:
      http://www.flightglobal.com/news/articles/airbus-begins-tests-to-extend-service-life-of-a320-family-220962/

      I expect the chineese to learn faster than you would grant them and “borrowing knowledge” is a well established way of progress. Think about all the gains the US made by way of German research information and scientists ;-) IP concerns are a rather new objective in the US.

      • Uwe, that program was 4 years ago, and I don’t remember Airbus actually implamenting the phase 2 of the plan. Phase 1 was essentially a swap of hours for reducing the number of cycles, increasing an airplane that reached 60,000 flying hours and 48,000 cycles to 80,000 hours and reducing the cycles to 37,500. The 4 year old story said the only additional inspection that was needed to extend to 120,000 hours would be an inspection of the horizontial stabilizer and the equipment needed to trim the airplane (electric motor and jack screw). Well, it takes more than that, wing spars and engine struts must be inspected, landing gear replaced, engines replaced, hydraulic and electrical systems inspected, and perhaps most inportant the pressurized fuselage inspected and strenghtened. The A-320 series was designed to be a 60,000 airplane (the B-737 is a 100,000 hour airplane and some 75,000 cycles). Now they say it can fly (safely I presume) to 3 X that number of hours and cycles? B-747s, DC-10s, L-1011s, and A-300/-310s are scrapped everyday with aboput 120,000 hours, give or take 10,000-20,000 hours, and they have far fewer cycles than any A-32X or B-737.

        Yes, we exploited WWII German technology and research. But none of it really helped Germany much during the war, as we won.

  6. KC135TopBoom :
    Now they say it can fly (safely I presume) to 3 X that number of hours and cycles? B-747s, DC-10s, L-1011s, and A-300/-310s are scrapped everyday with aboput 120,000 hours, give or take 10,000-20,000 hours, and they have far fewer cycles than any A-32X or B-737.

    compare google search results between
    737 fatigue damage “Airworthiness Directive”
    and
    A320 fatigue damage “Airworthiness Directive” ;-)

    But you are certainly right in noting that not much has been published on that topic in the last years.

  7. “The C-919 is said to have a projected life of some 90,000 hours (which may mean about 50,000 cycles), putting its life expectancy well short of the B-737, but about the same as the A-32X.”

    I doubt any of NWA/Delta 45 yr old DC9s has flown more then 90.000 hours. On the A320, the service goal is gradually extended. Additional test cycles and are done on the test locations, stress and fatigue calculations are done to determine critical sections and determine if additional inspection and /or mods are necessary. If the market demand is there, the service goal can be extended to 180k hrs or 90k cycles whatever comes first. It seems unlikely operators will ever go there. I don’t think it is impossible Airbus will buy one of the highest hour A320 at one point & take it apart to see how everything looks. At 4000 hrs/yr of intense flying (average > 10 hrs a day, 365 days a yr) 90k extra means an additional 22 yrs on an already 22 yr aircraft. NWAC’s DC9 took 40 yrs to get to 80k hours..

    Who will be hurt more by the C919/ C929/ C939, the A320 or 737? I don’t know, take a look at the specifications. Maybe the Chinese want to keep open the Tjianjin line anyway.. I expect some serious A321NEO orders from the Chinese airlines.

  8. Who will be hurt the most is whoever was looking to sell the most single aisle jets into China. In general Airbus was looking to take the greatest share by opening their Chinese assembly site, but between them both of them they have only lost about 250 frames. With around 1,200 NEO’s sold and Boeing approaching 1,000 orders and commitments neither builder is feeling the effect much and at least for the next couple of years the C919 should be nothing more than a blip on their sales outlooks.

    However, the amount of cheap capital that the Chinese government provides COMEC and Chinese state owned companies is bottomless and not predicated on the company actually making a profit. Around 2008 it was estimated that the amount of Capital owed to Chinese Banks (also state owned) by Chinese State owned companies was approaching 150% of China’s GDP. Put in perspective in a $15 trillion US economy (or about the same for the EU) this would translate into the government providing a total $22 trillion in subsidized loans to US or European Industry. With that kind of money and the prospect of not even having to pay it back COMEC will be back before the end of the decade with an improved 2nd generation design better able to compete. Maybe then Boeing and Airbus will start to feel the lost sales.

  9. What will keep the Comac back for at least this decade will be production. The Chinese government can push the C919 on airlines all it wants but considering Comac had forecast a best case production rate of 150 per year by 2020, even if they’re not late, they would barely be able to fill their current quota, much less challenge the big two.

    In the meantime, Chinese airlines are going to want to expand. In a couple of years, Boeing and Airbus could be producing as many as 60 narrow bodies per month. Even with the current packed order books, that still gives the production slot edge to A and B.

    Add to that the CSeries. If they’re not too late and can come out of the box close to spec, their order book should fill up in a hurry and they are hoping to have a production rate of 20 per month in a few years. They produce fuse barrels in China and will share that technology with Comac.

    This hopefully will pay off if they aren’t late and heavy. If they can pulll it off, I expect them to announce a CS500 to slot just below the smallest C919.

    The ARJ is a mulligan. The C919 is the first modern Chinese airliner. China wll actually be better off taking the time and effort to make the plane as good and efficient as possible so they learn all the tricks for their next effort…and that’s when the real battle begins.

    What they learn from the C919 will put their technology close to par with Boeing and Airbus and their next shot will probably be a twin aisle. My guess is they will avoid the CFRP route and go with Al-li to eliminate a huge learning curve and with the new alloys, they gain most of the advantages of CFRP without the time and expense.

    The real fun starts next decade.

  10. The plan of applying Al-Li for front and back section of the body has been announced in cooperation with the newly-established Beijing research centre so the weight and suspicion on fuel efficiency improvement shouldn’t be a major problem in the near future. On production side, COMAC merged with 2 major manufacture firms (state-owned of course) in the past two years with a expanded production capacity, one in my home Chengdu who’s responsible for the build of J20. In Shanghai where COMAC is headquartered, a new manufacture hub is in planning on the now-empty site of 2010 EXPO, judging by the Chinese speed on building civil structures, you can guess when it can begin its production. Also C919 has just finished its final design evaluation as scheduled. So I’m not worrying at all on the production progress. However the limited productivity and the continuousness of the state financing does seem to be a problem. COMAC aims on a 14% share in the commercial airliner market by 2025, or at least so I was told. This aim still seems unrealistic for me.

    Besides, talking about direct competition and “borrowed” technology, the vice-chef engineer Dr. Li who interviewed me was dug from Airbus, where he has worked for more than 15 years to COMAC in 2009. You guys are quite right about Airbus being worse off in this competition-to-be, it seems.

    I’m the new customer service engineer of COMAC due to start my contract in July. It’s been a great honour and very informative reading all these comments. I now know what to do next as soon as I arrive in Shanghai. :)

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