Jake's View

Mainland’s bid to make 'all-China' aircraft is a vanity project

PUBLISHED : Monday, 29 August, 2016, 6:05pm
UPDATED : Monday, 29 August, 2016, 10:59pm

The mainland has set up a state-owned aircraft engine maker with a registered capital of 50 billion yuan ... in a bid to develop home-grown hi-tech capacities to compete in global markets.

Business, August 29

In an indulgence of my more nerdish tendencies I recently leafed through an old book on the development of Britain’s post-war civil aviation industry – Comets and Tridents and all that.

The author, a cynic, posed the obvious question: What sort of aircraft did Britain need in the second half of the twentieth century? He then provided the obvious answer: American ones.

I don’t think Britain makes its own civilian aircraft any longer. Bits and pieces of Airbus and other people’s designs, yes, but nothing that could be painted in a union jack without telling a lie. Even on the engine side, things are going downhill again. Rolls Royce’s civil aerospace division has just reported a 90 per cent decline in first half profits.

This is not a lament, far from it. What Britain has done is prove wrong that old adage: once you pay the planegeld you never get rid of the plane. The aircraft lobby just develops its own growing constituency and all it cares for is its own existence.

But Britain has finally stopped destroying its wealth in this futile manner. It has freed itself from the costly burden of building the plane. It no longer pays the planegeld.

Other countries are still far from achieving this liberation. Canada, for instance, supposedly privatised its horrendously wasteful planemaker, Canadair, but, to all intents and purposes, only renamed it Bombardier, in which guise it continues to bomb the national treasury.

Canada, unlike Britain, has never worked up the resolve to root out these public sector losers and never will. Canada has never elected a Maggie Thatcher and, trust me, never will.

Brazil with its Embraer is just as bad. They say Embraer makes money. Hah-hah-hah, tell me another! And Japan has now delayed its own version of the hole in the air into which you pour money. The first Mitsubishi regional jet will only be delivered in mid-2018.

One can at least say for China that its entry is at last in commercial service. The first Comac ARJ21, long plagued by certification troubles, took off from Chengdu on June 28 and landed in Shanghai ... two hours late. Well, what flight is on time in the mainland these days?

I suppose that if Beijing twists the arms of enough mainland airlines, it can pretend that the ARJ21 is a winner. There is, however, one big problem. Without engines any airplane is just an aluminium caravan and the ARJ21’s engines are American through and through – made by General Electric.

Time, therefore, to work up a made-in-China engine with a start-up 50 billion yuan. This will result in a true all-China commercial aircraft.

It will also ensure continued compliance with Jake’s No. 3 Law of industrial investment – the sexiest industries are always the biggest losers.

[A Chinese-made engine] will wind up not being as good as a General Electric or a Pratt Whitney but costing a whole lot more

Building an engine for a mid-sized commercial aircraft is actually dead simple. You just take a General Electric engine and copy it, bolt for bolt. But you must then place it in a museum as the writs will fly long before any aircraft on which you install it.

You have to make your engine an all-round original and this is very difficult because, although your engineers may come up with superbly brilliant ideas, these have to be ideas that no-one has earlier conceived and patented. Unfortunately, all the most brilliant ideas fall into this category.

Thus you still wind up paying for costly licence rights on most of your engine and, no matter how you cut things, it will wind up not being as good as a General Electric or a Pratt Whitney but costing a whole lot more.

Why do it then?

Answer: Because it is “a bid to develop home-grown hi-tech capacities to compete in global markets” or, as our short report also stated, it will be of “great significance for the future development of China’s aviation industry.”

I shall now summarise these sentiments by reference to the Bible, specifically the book of Ecclesiastes, Chapter 1, verse 2: “Vanity of vanity,” says the Preacher, “vanity of vanities, all is vanity.”