Is Airbus ready to take off?
By Wang Yu (China Business Weekly)
Updated: 2004-10-20 09:35

Boeing and global arch-rival Airbus are sparing no efforts to promote their aeroplanes' different design concepts in China.

In this bitter battle, Airbus currently has the upper hand in terms of confirmed orders. But what are the prospects for the future?

European plane maker Airbus turned out to be the largest beneficiary of French President Jacques Chirac's commerce-driven visit to China as the giant France-based aircraft manufacturer recently struck deals with two major Chinese carriers, Air China and China Eastern airlines.

Air China agreed to purchase six Airbus A319 planes, valued for their performance at some of the world's highest airports, in Latin America and China's Tibet Autonomous Region.

The carrier plans to deploy the aircraft mainly on the Chengdu-Lhasa and other routes linking high-altitude airports in Sichuan Province and Tibet in southwest China, which Air China serves with A319 and A340-300 aircraft.

"The A319 is an aircraft suitable for our operations at high-altitude airports. It fits perfectly with our strategic development in the western region of China, which increasingly attracts passengers whether travelling for business or pleasure," said Ma Xulun, president of Air China.

"We will also benefit from the A319's commonality with our A320s, which will help us reduce training and maintenance costs, and increase our operational flexibility."

The flag carrier also signed a memorandum of understanding to buy 16 Airbus A330s, a twin-engine plane its maker says boasts some of the lowest operating costs of any aircraft ever designed.

With an official price of US$130 million each, the order would eventually earn Airbus US$2.08 billion.

China Eastern Airlines, meanwhile, confirmed its order for 20 Airbus A330s.

"We are delighted that China Eastern Airlines, our first and largest customer in China, has chosen our aircraft again to meet its ever growing traffic demand," said Airbus President and Chief Executive Officer Noel Forgeard. "This agreement marks a new milestone in the long standing co-operation between our two companies."

According to Luo Chaogeng, president of China Eastern Airlines Co Ltd, the purchase of the 20 A330-300s will satisfy the needs of the firm's strategic development in China and also accommodate growing aviation market demand of China as a whole.

"These aircraft will enlarge our fleet and give a boost to our growth," Luo said.

So far, Airbus' confirmed orders for this year in China has surpassed 50, while its global competitor Boeing's land short of 10.

The two deals will not only bring Airbus big money, but they may also offer confidence to the European plane maker to promote its gigantic new aircraft A380, a 555-seat double-decker aircraft, among potential local buyers.

Airbus believes Beijing will order its A380 aircraft even though no deal has been clinched during the visit to China of President Chirac, the company's chairman said very recently.

"China is the new frontier for the development of Airbus. This will probably be the second biggest market in the world in terms of volume in the coming 20 years," said Forgeard.

"I am convinced that this is a place where we are going to develop with the whole range of planes, including the A380," Forgeard stressed.

He said he had no doubt China would buy A380s, perhaps before the country hosts the 2008 Olympic Games, and that he had taken part in some  "promising conversations" on this in China, where he was one of about 50 business people accompanying Chirac.

He said he also based his hopes of a deal on the A380 on the belief that all other major Asian carriers would want to fly A380s to China.

"China can be Airbus's main partner outside Europe," Forgeard said.

Early there were reports saying Airbus is very likely to sell A380s to Chinese airliners -- Air China and China Southern Airlines. The exact number was even given in some media reports.

However, the China branch of Airbus remained tightlipped on the issue. Air China and China Southern Airlines were unavailable for comment.

Meanwhile, Boeing's dreamliner 7E7 officially launched this year is in the spotlight recently.

Industrial insiders said that Boeing will get a  "big deal" very soon, involving 80 7E7s.

One Boeing press officer chose not to comment on this, only saying a big deal like this will not be announced until everything is agreed.

However, some carriers who favour Boeing's new aircraft are not concealing their true feelings.

"We will surely purchase the new jetliner by Boeing, but I cannot tell the exact number,"Liu Gang, manager of China Eastern Airlines' Beijing branch, said.

According to the carrier's manager, the design features of the dreamliner are in line with future aviation trends in China, which requires higher flight frequency and low costs.

"We believe that more flight frequency will be needed in China and airliners should provide customers with more alternatives. Carriers also have to figure out ways to lower costs. That is just what Boeing's new jetliner can offer," he said.

Dong Nianqing, a professor from the Civil Aviation Management Institute of China, said last week that both the new aircraft from Airbus and Boeing will find their respective niche here with local customers as different carriers have different focuses and specific requirements.

"Since the two new planes are out of different designing ideas, domestic carriers may find they suit different purposes. The A380 may be better for international flights, although the 7E7 can also travel long distances," Dong commented.

Nowadays local airliners are lagging behind foreign counterparts in terms of international flight performance.

"Service quality and reliability are extremely important for international flights. And bigger aircrafts exude a sense of comfort, security and safety," Dong added.

Of course, since the majority of the Chinese fleet are Boeing planes, the firm's products will still be welcome since it will be easier for local carriers to seek consistent maintenance service and other technical assistance, Dong stressed.

The 7E7 is the first new airplane Boeing has introduced in more than a decade, since the firm launched the 777 in October 1990.

The 7E7 is a family of airplanes in the 200- to 300-seat class that will carry passengers on routes between 6,500 to 16,000 kilometres.