Is The C919 Chinese Aircraft Competitor to Boeing and Airbus?

          There is no doubt the C919 will receive FAA certification if it fulfills the body’s requirements. FAA has no valid reason to deny the Chinese-based aircraft certification once it meets the set standards and requirements. There are indications that the Chinese airlines are doing everything possible to meet the FAA standards shortly. Perrett (2015) noted that although the China has a reputation for producing defective products, this could be their chance for redemption. The FAA certification could add to the credibility of the C919 aircraft.

            I foresee no challenges in future to the US carriers. Consumers tend to be cautious with Chinese products, so I do not believe US carriers will experience loss of business. According to Toh (2015), due to the defects are seen on Chinese products, consumers are likely to stick to the US airlines. Moreover, the US airlines have already positioned themselves well in the minds of travelers. They have built their reputation and trust among the passengers. Despite the prestige and effort that China has poured on the C919, it is not likely to attract significant foreign purchases due to the negative reputation of China-based products. The entry of the C919 into the market is not likely to change the perception of the general public even if it penetrates the market at relatively lower cost.

            The relationship between COMAC, the government, and the Chinese airlines is good as numerous Chinese airlines have already ordered for the C919. COMAC reported recently that it had received over twenty orders from customers for over five hundred aircraft, most of which are from Chinese carriers. Toh (2015) observed that the C919 aircraft is one of the major projects launched by the communist party (ruling party) to transform the country into a technologically profitable country. Since major airlines in China are owned by the state, the communist party can potentially order them to purchase the C919. The good relationship between the manufacturer and the government creates a favorable environment for the C919 to sell more. Besides, with the intervention of the government, the C919 is likely to receive the FAA certification easily as the American and Chinese governments have renewed their relations in the recent past.

            Since COMAC is a Chinese-based company, there is little chance that it will be a competitor to Airbus due to reputation. However, there will be inter-competition among the Chinese airline companies based on cost and efficiency. Airbus and Boeing enjoy massive competitive and comparative advantage over the C919. Moreover, Boeing and Airbus have been in the international market for relatively long, so they have a larger market share compared to the new entrants.

            According to Perrett (2015), Boeing and Airbus reacted to the C919 rollout by increasing their production rate to sixty aircraft per month. They projected that the production of the C919 is unlikely to be over five aircraft per month or sixty per year by 2018. To Boeing and Airbus, this is not a threat as it will take COMAC over ten years to hit this rate. Moreover, by the time COMAC will be manufacturing sixty aircraft per month, Boeing and Airbus will be aiming at successor airplanes. Furthermore, Boeing and Airbus have already re-engineered their planes so as to block the C919 from gaining economic advantages. It could take relatively long time before the new entrants realize significant profits due to the market challenges they are likely to face.

References

Toh, M. (January 01, 2015). China's ambitions rest on COMAC C919: Roll-out of first flight-test example of indigenous narrow body marks milestone on long march to certification and delivery. Flight International, 10-16.

Perrett, B. (January 01, 2015). Nearing roll-out: The C919 should be unveiled this year, but a 2018 delivery looks unlikely. Aviation Week & Space Technology, 8-21.