Is China casting a shadow over our aerospace industry?
The question has come up again!
Sombre-faced and with the smile of those who are in the know but remain tight-lipped, “people” are wondering about the future of the French supply chain faced with the rise of China’s civil aviation sector. This time around, it is not in the military but in the economic domain that pronouncements are being made.
Yes, Chinese domestic air traffic is set to more than triple over the next 20 years, making China the world’s biggest market. Yes, Chinese airlines are set to account for 18% of the global fleet and global deliveries over the next 20 years. Yes, China has made no secret of its industrial ambitions in the sector.
But is that enough to bury the French industry or, more broadly, the European one?
A bit of history: what is this all about?
First of all, this is about the political will to bring a national industry into being. Unlike other emerging powers – India, for example – China has no intention of contenting itself with acting as a supply chain for western programmes; it is keen to develop its own commercial aviation offering. Aerospace equipment thus features prominently in the “Made in China 2025” plan. And, while China’s aeronautical ambitions date back to the 1960s (or even, in the military domain, the 1950s), the 2008 creation of the Aviation Industry Corporation of China (AVIC) and, above all, the Commercial Aircraft Corporation of China (COMAC) injected fresh impetus into the development of national commercial aviation programmes.
After the Xian MA60(1) and the ARJ21 (2), distant cousins of Antonov (3) and McDonnell Douglas (4) aircraft, China has stepped out of the shadows, launching the C919 (5) as a potential competitor for Airbus (A320) and Boeing (B737). Three prototypes have completed their maiden flights and another three aircraft are under construction, but flight tests have had to be interrupted to address technical issues. Orders have been booked for 815 aircraft (orders for the A320 family stand at 6,000), mainly from Chinese leasing companies.
Meanwhile, in the wide-body space, Comac has teamed up with Russia’s United Aircraft Corporation (UAC) in a joint venture to develop the C929 (6), due to be delivered in 2032. The terms of the cooperation remain to be clarified. There may be convergence between political interests, but what about manufacturing cultures?
To gain entry into this developing market, Airbus and Boeing have each set up shop locally. In Tianjin, Airbus carries out final assembly of A320 aircraft intended for the local market and finishes off A330 cabins; the company also uses a Chinese partner to dual source the manufacture of A320 wings. Since December 2018, Boeing has also been assembling the B737 and carrying out internal finishing on some of its aircraft in China.
Two critical areas remain to be conquered
Two key areas remain the sole preserve of the Europeans and the Americans: engines and avionics.
To remedy this, the AECC (Aero Engine Corporation of China), established in August 2016, brings together the engine expertise of AVIC and Comac. The C919 will officially be available with two different engines: the LEAP-1C (7), made by Franco-American firm CFM International, and the CJ-1000AX, which is scheduled to enter into service after 2021 but whose development is not yet complete.
Meanwhile, the C929 should allow for three different engines: the American GEnX, the British Trent 7000 and the Sino-Russian PD-35, announced for 2025.
The engine is without doubt the component in an aerospace programme that relies on combining the broadest range of skills and expertise. Russia has little experience in designing and manufacturing engines of this power; China even less so.
Avionics suppliers, whose ranks include Thales, Honeywell International and Rockwell Collins, are also western; if their systems are included in the C919, it will be under a western flag. Manufacturers and governments alike have woken up to the risk of technology loss. They are keen to control exports of existing technologies and maintain their independence for breakthrough technologies. The arrival of artificial intelligence in the aerospace world will be disruptive, and thus conducive to the emergence of new entrants where current avionics suppliers are reluctant to become dependent on foreign solutions.
Certification: the door-opener for any aerospace programme
The conveniently drawn parallel between rail and aviation, no doubt in reference to financing techniques, fails to take into account one critical factor for any aerospace programme: certification by one of the government agencies responsible for air safety, essential for any company wishing to make its mark in export markets.
The two main certification agencies – the Federal Aviation Administration (FAA) for the United States and the European Aviation Safety Agency (EASA) for Europe – represent the benchmark. The Civil Aviation Administration of China (CAAC), despite having been established as long ago as 1949, has little experience, tarnishing its international recognition. For the sake of consistency, these agencies are also bound by Bilateral Air Safety Agreements (BASAs), which aim to ensure certifications issued by each are recognised within the other’s territory. A “symmetrical” BASA is thus in place between the FAA and the EASA. The agreement between the FAA and the CAAC, although longstanding, is not built on the same foundations – and nor, at this stage, is the one being negotiated between the EASA and the CAAC. A CAAC certification does not serve as an entry visa into the European and US markets.
As regards certifications issued to manufacturers for the parts they make, the process is demanding enough to ensure that any change in the supply chain is carefully considered.
Service: a must-have, and not only in business class
When airlines talk about service quality, they are not only thinking about on-board service but also about the availability of parts so their aircraft can still take off on time if problems arise. A grounded aircraft costs money, schedules are ever tighter, and aircraft are increasingly… mobile! This means aircraft and engine manufacturers’ ability to very quickly make available spare parts and, if necessary, repair teams at any airport and for any version of an aircraft is critical for airlines. If purchasers have the slightest doubt about this, the aircraft in question will struggle to find a buyer, an example being the Sukhoi Superjet 100 (8). Chinese aircraft manufacturers still have much work to do in this area.
If we take an “aerial view”, what is happening?
For the time being, the aerospace world remains remarkably bipolar, and the two leading aircraft manufacturers seem quite determined to delay the emergence of a new player in the highly coveted narrow-body aircraft segment for as long as possible. Despite their fuselage sections being made in China, Bombardier CSeries aircraft ended up joining the Airbus family, while talks between Boeing and Embraer are making good progress.
Governments are also waking up to the need to protect their economic positions. In the US, the Committee on Foreign Investment in the United States (CFIUS), tasked with protecting domestic interests against foreign – and notably Chinese – ambitions, appears to be particularly busy. In Germany, foreign equity investments in sectors impinging on the country’s security are coming under ever closer scrutiny. Meanwhile, France is keeping a close eye on reform of the WTO that could result in monitoring of member states’ commercial policies and draw attention to competition conditions between “private” aircraft manufacturers and an industry that receives massive government support.
It clearly cannot be denied that China represents a risk to the European aerospace sector. However, apart from its technical expertise, the sector has demonstrated its efficiency, flexibility and ability to organise itself in a competitive environment. Let’s give it a chance: history has yet to be written.
Pascale Rombaut-Manouguian - Pascale.ROMBAUT-MANOUGUIAN@credit-agricole-sa.fr
1. A twin turboprop commercial transport aircraft made by Xi’an Aircraft Industrial Corporation, very similar to the Antonov An-26. Eighty-eight have been built, but a number of accidents on landing and a lack of after-sales service have dented its reputation.
2. A 70-90-seater regional jet launched in 2000 by AVIC and Commercial Aircraft Corporation (ACAC). After falling almost ten years behind the original schedule, around a hundred aircraft are set to be delivered to Chinese airlines between now and 2021.
3. A Ukrainian (formerly Soviet) aircraft design and construction firm founded in 1946 by Oleg Konstantinovitch Antonov, which developed aircraft with the same name.
4. A US aircraft manufacturer formed by merging Douglas Aircraft Company et McDonnell Aircraft Corporation to create a new company, McDonnell Douglas, on 28 April 1967. It notably supplied aircraft to the US Navy, the US Marine Corps and the US Air Force before being absorbed by Boeing in 1997.
5. A medium-haul twin-jet airliner built by Chinese manufacturer Comac with a capacity of 168-190 seats.
6. A joint project between Chinese manufacturer Comac and Russian consortium UAC to build a twin-jet airliner with a capacity of 250-350 seats.
7. A western-made engine system for the C919.
8. A regional transport aircraft built by Russian firm Sukhoi Civil Aircraft Company (SCAC). The Superjet 100 has a capacity of 75-95 passengers and made its maiden flight on 19 May 2008.