C919: China seen certifying passenger jet this year, but can the plane claim market share from Boeing and Airbus?

While China expects that its home-grown C919 passenger jet will be officially certified to fly this year, analysts say the nation’s aviation industry is far from capable of filling the void left by Boeing, which remains entangled in a political dispute between Beijing and Washington.

China’s rapid economic recovery from the coronavirus pandemic, strong government support, and the country’s continued ban on Boeing’s troubled 737 MAX jet on safety concerns all provide an opportunity for the C919 to claim a share of the domestic market from Boeing and Airbus. But first, the C919 must prove itself to be reliable and efficient.

As one of America’s largest exporters by value before the worldwide flight ban on the 737 MAX in 2019, Boeing is crucial to the outlook for the US economy. As such, the continued ban on the 737 MAX in China may well come up in discussions among top US and Chinese officials at their talks in Alaska on Thursday.

Wu Guanghui, the chief designer of the C919, China’s first medium-haul passenger aircraft, said on March 5 that he expected the C919 to finish flight testing and win airworthiness certification by the end of this year.

“The years 2021 and 2022 will be decisive for the C919 program. 2021 will be decisive because of the certification,” said Jean-Francois Dufour, chief analyst at intelligence consultancy DCA Chine-Analyse, adding that the Civil Aviation Administration of China (CAAC) will set stringent requirements for the new plane.

At stake is the future of the Commercial Aircraft Corporation of China (Comac), which was established in 2008 to design and build the single-aisle C919 to compete with Boeing’s 737 and Airbus’ A320. However, Comac was lambasted in a research note published in December by a Washington-based think tank, which called it “a true dumpster fire of an organisation” and said it posed no threat to Boeing or Airbus.

With heavy direct investment from the Chinese government, the success of the C919 is vital to both the nation’s technological development and its own aviation market, which is expected to continue growing rapidly over the next 20 years.

“China’s domestic market is certainly recovering faster than other single markets. At the market’s current pace of growth, there will definitely be sufficient demand for the C919, without question,” said Luya You, a transport analyst with Bocom International. “However, it is still too early to say with any kind of certainty if the C919 will be able to capture gains left by Boeing.

“Boeing and Airbus will still play extremely outsized roles right now, so it will take years for Comac to catch up, if ever. However, we do think that the trade war and pandemic have definitely accelerated the C919’s development track and brightened its overall outlook.”

The CAAC projected on Monday that airline passenger trips would recover to around 90 per cent of their pre-pandemic level in 2021.

But there is little indication that Boeing will be able to take advantage of the recovery in China’s aviation market any time soon.

The Chicago-based aerospace giant’s China business has taken a hit since the trade war broke out in 2018 as tensions between Beijing and Washington escalated and spilled over into the aviation industry.

In October, Beijing said it would sanction Boeing’s defence subsidiary over arms sales to Taiwan, while in January the US Department of Defence added Comac to its list of civil entities that it says has ties with the Chinese military, resulting in a ban on US firms from doing business with Comac without a special licence.

And even though the troubled Boeing 737 MAX passenger jet has resumed flying in the US and Europe, it has yet to receive the green light from the CAAC for the huge Chinese market.

China, which is among Boeing’s biggest markets, was the first country to ground the 737 MAX in March 2019 following two crashes that killed 346 people, with China’s biggest airlines since cancelling orders for the jet.

The Chinese aviation regulator said earlier this month that its major safety concerns with the 737 MAX “have not yet been fully resolved”, and gave no timetable for the narrow-body aircraft to return to service in China.

“This [slow return of Boeing’s 737 MAX to China] is clearly a reflection of Sino-US tensions, with Chinese authorities intending to obtain guarantees against sanctions that would target their civilian aerospace actors before releasing the Boeing card,” Dufour said. “This strategy is not motivated by the C919 – it reflects much broader, geopolitical stakes – but benefits the programme, as the later the Boeing 737 MAX comes back to Chinese skies, the later it can expect new Chinese orders.”

Based on data from Comac and Boeing, analysts from Galaxy Securities estimated that China’s demand for narrow-body airliners such as the C919 will average about 300 per year over the next 20 years. Given that forecast, Comac would need to deliver at least 100 C919s a year to be on equal footing with Boeing and Airbus – a duopoly that China aims to break.

China’s economic recovery from the pandemic and strong state support improve the C919’s chances of being commercially successful in its domestic market. But Comac still needs to demonstrate that it has strong management and a support infrastructure capable of matching the service records of Boeing and Airbus to make the C919 a viable option for airlines, especially those from overseas.

China Eastern Airlines, which counts the Chinese government as its major shareholder, booked an order this month to buy five C919s as is expecting to take the first delivery this year after the plane has been certified.

“Assuming this certification is obtained, 2022 will be just as decisive, as airlines will be scrutinising [the C919’s] first operational data,” Dufour said. “Airlines do not want to buy on-paper efficient airliners, they want to buy aircraft with proven economics and reliability. And this is where the C919 is at a major disadvantage to its main competitor, the [Airbus] A320neo.”