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Airbus looks to upstage Boeing with more deliveries in China

By Wang Wen | China Daily | Updated: 2013-04-19 09:32

Airbus looks to upstage Boeing with more deliveries in China

A scale model of an Airbus A380 is displayed at the International Air Show at Zhuhai, China, in November 2012. Provided to China Daily

Aviation giants from Europe and the US are turning on the heat in what promises to be a fight to gain market share in the highly competitive Chinese market.

The Toulouse, France-based Airbus, an aircraft manufacturing subsidiary of EADS, a European aerospace company, is leaving no stone unturned to overtake its US-based rival Boeing in China.

Chinese carriers currently operate 891 Airbus planes, accounting for 49 percent of the total Chinese fleet of aircraft with more than 100 seats. Boeing controls the remaining 51 percent of the market.

"To be the market leader in China, we need to achieve growth rates of over 50 percent in sales and fleet," says Eric Chen, chief executive and president of Airbus China.

"Back in 2004 we set a target to grab 50 percent of the Chinese market by 2014. We are now very close to that," Chen says.

Airbus delivered 125 new aircraft to Chinese operators in 2012, accounting for more than 20 percent of its total global deliveries during the year. Despite the higher shipments last year, Airbus is concerned because its US rival plans to ship 120 new aircraft to China this year, a 60 percent growth over last year's numbers.

Despite the setbacks to its A380 program, Airbus plans to continue its efforts to gain recognition from more Chinese carriers. China Southern Airlines Co Ltd, the only Chinese carrier using the super jumbo, is already in advanced stages of negotiations with Air China for joint A380 operations.

"We tell all our potential consumers, including Air China, that some routes from Beijing are extremely suitable for the A380," Chen says.

The super jumbo is not suitable for all airports or routes, and has a clear target market. It usually has long hauls and large passenger flows, he says.

The A320, a single-aisle aircraft and the company's top-selling model, is expected to be the sales mainstay this year also. The company's A320neo, scheduled to enter service in late 2015, is a revamped A320 with a new engine and boasts fuel savings of up to 15 percent.

Airbus had earlier said it would start assembling the A320neo in the northern Chinese port city of Tianjin after 2016. The A320neo had already received 1,734 orders by the end of 2012, including 20 orders from ICBC Financial Leasing Co Ltd. The first aircraft is likely to be delivered in 2015.

Boeing, on the other hand, is also upping the ante in the single aisle aircraft market with the 737Max that was launched in 2011. The 737Max is an improved version of its flagship 737 family airplanes. Though Boeing has not officially released the names of the Chinese carriers using the 737Max, market circles indicate that some Chinese carriers, like Xiamen Airlines and China Southern Airlines, plan to place orders soon.

But, Airbus is still confident about A320neo's future sales in China and is looking for bigger achievements from its Tianjin unit. The unit is also the company's first aircraft final assembly line outside of Europe.

The Tianjin factory has already delivered more than 100 aircraft to Airbus' Chinese operators and the two sides signed a framework agreement on the second phase cooperation in 2012.

"The experience we gained through cooperation during the first-phase business plan will ensure a successful partnership in the next phase," Chen says.

Being a Chinese-French venture, localization is often a topic that Chen cannot avoid.

"Localization is one of Airbus' strategies and I will continue working on this," he says. Airbus is also searching for more cooperation opportunities in China, except for production.

A shortage of pilots and air traffic management personnel are often cited as bottlenecks constraining the development of China's civil aviation and Airbus plans to work with Chinese companies in these two areas in the future, Chen says.

For Airbus, China is not only a market where it is looking for consumers and partners, but also a place where it may find domestic competitors.

Commercial Aircraft Corp of China, which is the manufacturer of the C919 - China's first locally produced commercial aircraft - is a potential competitor, Chen says.

The C919, the 150-seat single-aisle aircraft, which is expected to make its maiden flight in 2014, should pose a tough challenge to the A320 and Boeing 737 aircraft.

However, some experts feel that the C919 cannot pose a threat to the two global giants' best-selling aircraft in the short term, even though it has bagged 380 orders.

Both the A320 and Boeing 737 aircraft have more than 10 years' history and the companies have rich experiences in technical aspects, something that the C919 has yet to gain, says Li Xiaojin, a professor at the China Aviation University in Tianjin.

In the long run, Boeing and Airbus will focus more on larger and faster aircraft, such as the A380 and Boeing 787. This in turn will create more market space for mid-sized aircraft, like the C919, Li says.

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