Boeing, Airbus eye larger Chinese market share

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Last updated at: (Beijing Time) Tuesday, September 16, 2003

Boeing, Airbus eye larger Chinese market share

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Boeing Co, the global commercial aircraft maker, made a bold 20-year forecast for the fledgling but promising Chinese aviation market just before the opening of 2003 China Aviation Exposition. It predicted that China's demand for aircraft will continue to expand for the next two decades.

"Last year, we predicted that 1,900 aircraft would be needed in China in the next 20 years. Now we have a higher figure. According to our current 20-year forecast, Chinese airlines will order 2,400 new aircraft worth US$197 billion over the next two decades," David Wang, president of Boeing China, told China Daily recently.

"This is still a very conservative number," Wang emphasized.

To make his point more convincing, Wang gave a simple comparison between China's GDP (gross domestic product) growth and the pickup in air traffic.

"I think China's objective of quadrupling its economy by 2020, with its GDP four times as much as it is today, is very realistic. Typically air traffic grows quite a bit faster than GDP. For example, this year, we expect GDP growth to be more than 8 per cent. Air traffic in August this year was 21 per cent higher than in August of last year."

Over the past 30 years, the number of air passengers, according to Wang, has increased 400 times. But Wang's envisioned sales of 2,400 aircraft would involve a passenger increase of four and a half times.

"Obviously it is very conservative. It is almost the same as the GDP growth. We do not want a wild estimate," Wang added.

In response to the "allegation" that Boeing is dishing out over-optimistic market forecasts to boost its sales, Wang joked that airlines were much smarter than that and that it was pointless to try to mislead them.

"Many people have said 'Boeing, you are baking big numbers so people will buy a lot of aircraft.' However, airlines do not buy aircraft because of a 20-year forecast. It is aircraft manufacturers who plan new products based on the 20-year forecast. The 20-year forecast is for our use, so that we know how to prepare for customers' needs," Wang added.

At the high-profile 2003 China Aviation Exposition, which is to kick off tomorrow, Boeing is to release more details of its proposed "super efficient" 7E7 jet, claimed to be moderate in size with fewer seats, more fuel efficient and comfortable.

Actually Boeing is to introduce the two 7E7s at the Expo - the 7E7 baseline and the 7E7 Stretch, which is for longer distance travel.

Airbus eyes larger market share

By concentrating on its core business, Europe-based giant aircraft maker Airbus has achieved a business landmark in China - the number of Airbus aircraft used by airlines on the Chinese mainland, Hong Kong and Macao has passed the 200 mark less than a month before the high-profile 2003 China Aviation Exposition, according to the firm's China boss.

The 200th aircraft in service is an A319, which joined the Air China fleet, the Chinese flag carrier, on August 19.

"Our goal is to take at least 50 per cent of the market share in China, as we have been doing in the rest of the world," Guy McLeod, president of Airbus China, told China Daily recently.

"We are very proud to see more and more Airbus aircraft joining Chinese airlines. In 1998, the number of Airbus aircraft in China was 100 and it took only five years for us to double this figure," McLeod added.

Keeping focused on core business and striving to be an industrial leader - that is the declared goal of Airbus, said the company's China boss just before the 2003 China Aviation Exposition, which kicks off in Beijing tomorrow.

"We concentrate on making better aircraft. That is the mentality of a challenger, an attitude that I think is important for us to maintain," McLeod said.

"We are clear on our focus, which is to be the number one aircraft manufacturer in terms of products and support. We don't worry about anything else," McLeod said, in response to being asked if Airbus will follow arch-rival Boeing's example and build a maintenance facility in China.

If Airbus goes into other business such as aircraft maintenance, it will often end up competing with its local customers, such as Xiamen-based Taeco and Gameco in Guangzhou, according to McLeod.

"We are here to assist customers. We do support customers' maintenance ventures, but what we are playing is a helping role, we are not trying to take over," McLeod added.

At this first post-SARS Beijing Airshow, which is to open tomorrow, the European aircraft powerhouse is to show off its recently-developed flagship product, the A380. This will be the debut of the A380 model in the Chinese capital.

"The 2008 Olympics in Beijing and the World Expo in Shanghai will stimulate the development of China's airline industry," McLeod said. "We believe that the 555-seat A380 is the ideal vehicle to transport tens of thousands of athletes, sports fans, businessmen and tourists to China, though there are no firm orders from Chinese airlines yet."

Vying for share of Asia-Pacific marketplace

International airliners are preparing to obtain a greater share of the Asia-Pacific market, especially in China, as the regions are becoming investment hotbeds for the world, said Chinese experts.

"From a global point of view, mutually opening skies and the deregulation of aviation have been the themes of the industry since the 1970s," Huang Wei, an expert with the China School of Aviation Management told China Daily. "The trend has never stopped and the regions have already been involved in it."

She also said alliances between domestic and foreign aviation sectors should be forged to prevent common losses in the industry, which is publicly taken as being fragile, especially when disasters occur.

She summarized that since 1997, consecutive disasters, such as financial crises, terrorist attacks and the spread of epidemics have heavily hit the industry globally.

"Despite that, China and the area around it are attracting foreign aviation competitors," said Huang.

She cited statistics from the International Civil Aviation Organization (ICAO) as saying that the percentages of passengers from the Asia-Pacific region out of the world's total will climb to 49.8 by 2010, from 36.2 in 1995.

Recently, the ICAO forecast that following a year of decline in 2001 and two successive years of stagnation, world airline passenger traffic is expected to rebound with 4.4 per cent growth in 2004 and to continue to expand at 6.3 per cent in 2005.

In 2001, total (domestic and international) scheduled passenger traffic fell by 2.9 per cent, as a result of a slowing world economy and the events of September 11. These effects continued into 2002 and were intensified during the days leading up to the Iraq War; traffic in that year grew only marginally, by 0.4 per cent.

Traffic fell in the first part of 2003 because of the war and particularly the impact of concerns regarding SARS.

A recovery is now underway, and traffic for 2003 is expected to be about the same as in 2002 on a year-on-year basis.

"It will go up in 2004 and 2005," the ICAO said recently.

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