China may, by the end of the year, start deliveries of the ARJ-21 Xiangfeng (Soaring Phoneix), its first indigenously designed and developed commercial regional jet. According to the Chinese media, the fourth domestically-produced ARJ21-700 plane completed its maiden flight successfully in Shanghai on April 13 (People’s Daily Online, April 14). Although the project itself is relatively modest in ambition and scope, the significance of the ARJ-21’s deliverance is that it could be the precursor to the development of an entirely new industrial sector in Asia. The ARJ-21 series of large passenger jets offers serious competition to a field that is currently dominated by just a handful of firms in the Western hemisphere. Asian aerospace companies have tried before to break into the “big boys’ club” of commercial aircraft production—and failed miserably. Just four companies dominate the global passenger jet business: Boeing and the European consortium Airbus are the sole manufacturers of large commercial aircraft (125 to 650+ seats), while Canada’s Bombardier and Embraer of Brazil vie to supply regional jets in the 35-to-125 seat capacity. The ARJ-21 is perhaps Asia’s best and strongest hope to date for finally penetrating this tight market. No other Asian commercial airliner program has ever progressed this far in terms of design, development, and manufacturing, and the Chinese government appears to be strongly committed to seeing the ARJ-21 through to fruition, not only by adequately funding the project and working to ensure domestic (and even overseas) orders, but also by restructuring the Chinese aircraft industry so it can expand and become globally competitive in the commercial jet sector.
Asia: The Elephants’ Graveyard of Commercial Aircraft Ventures
The Asian aerospace industry is littered with the bones of failed commercial aircraft endeavors. Most ventures were stillborn, such as South Korea’s plans in the 1990s to produce a 50-seat regional jet. Two of the most ambitious efforts were on the part of Indonesia and Japan. Indonesia’s former president, Suharto, at the urging of his Minister of Technology (and later his successor) B.J. Habibie, poured billions of dollars into IPTN, Indonesia’s aircraft manufacturer. Out of this came the N-250, a 50-passenger turboprop commuter plane, of which only two prototypes were built before IPTN collapsed under the weight of the Asian Financial Crisis of the late 1990s. Another IPTN project, the N-2130, a 100-seat regional jet, never even got off the drawing board .
Japan was even more ambitious with its plans to become a leading commercial aircraft manufacturer. In the 1960s, it built the YS-11, a 60-seat turboprop commuter plane that many thought would be the first in a series of Japanese-made commercial airliners. In fact, one of the more alarmist notions to come out of the Japan-bashing school in the late 1980s and early 1990s was the belief that by the turn of the century we would all be flying wide-bodies produced by Mitsubishi or Kawasaki.
The reality was much more sobering. From the late 1960s to the early 1990s, Japanese government and industry labored together on a number of passenger jet projects, starting with the YX, a planned 200-seat commercial jet. This was later scrapped in favor of the more modest YXX, a 100-150 passenger airliner, and later the even more modest YSX, a 60-seat regional jet. None of these aircraft ever made it beyond the specifications stage, let alone fly .
Today, most Asian aerospace firms have had to be content with being subcontractors and suppliers to the leading Western aircraft manufacturers like Boeing and Airbus. Not that this cannot be very lucrative; Japanese aircraft firms have a 20 percent stake in the Boeing 777 program and a 35 percent work share in the Boeing 787, including production of the critical central wingbox. On the other hand, being a subcontractor has none of the glamour and cachet of having your company’s name on the side of the aircraft.
China: The Future Center of Asian Commercial Aircraft Manufacturing?
China has also had its share of failed passenger airliner schemes. In the 1970s, it developed the Y-10, a virtual clone of the venerable Boeing 707. In the 1990s, it produced the MD-80 passenger jet under license from McDonnell Douglas. The Y-10 never made it out of the prototype stage, while MD-80 production was abandoned after only 35 aircraft were built.
Yet, the ARJ-21 could turn around Asia’s commercial aircraft sector. The ARJ-21 regional jet, launched in 2002 during the Tenth Five-Year Plan (2001-2005), is a different, more realistic venture. It is a smaller scale plane, seating between 90 and 105 passengers, designed for short-haul flights of less than three hours (People’s Daily, November 4, 2002). It is intended first and foremost to meet China’s burgeoning demand for internal air transport; estimates are that the country will require up to 1,000 medium-sized regional jets over the next 20 years (China Daily, November 11, 2008). Consequently, the ARJ-21 has a huge domestic market to tap into and build upon.
The ARJ-21, in fact, has already secured over 180 firm orders from Chinese airlines. From three original launch customers—Shangdong Airlines, Shanghai Airlines, and Shenzhen Financial Leasing—the plane’s order books have expanded to include three other local airlines: Xiamen, Kunpeng and Joy Air. Remarkably, the plane has also scored overseas customers, including Lao Airlines and GE Commercial Aviation Services (GECAS); GECAS, an Irish-American commercial aircraft leasing company, has ordered five ARJ-21s, with an option on 20 more (China Daily, November 11, 2008). Currently, the ARJ-21 has a respectable backlog of 240 planes (firm orders plus options) (Sinocast, October 26, 2009).
Overall, China is rapidly becoming the commercial aerospace hub of Asia. In addition to the home-grown ARJ-21, China is currently assembling the Airbus A320 commercial airliner in Tianjin. As part of the deal, Airbus built a final assembly line nearly identical to the A320 plant in Hamburg, Germany, and production will reach four aircraft per month by 2011 . Meanwhile, Embraer has a joint venture with the Harbin Aircraft Industry Group to co-produce the 35-50 passenger ERJ family of regional jets (See “Chinese Commercial Aviation Cleared for Take-off,” China Brief, January 21, 2008). Airliners produced at both plants will mainly serve the Chinese airline industry; therefore, these programs serve mainly as an offset to promote further sales to the Chinese aviation market.
At the same time, China’s domestic aircraft industry is not resting on its laurels. In 2009, it unveiled a scale-model of a 170-190 seat commercial airliner, designated the C919, which will directly compete with the Airbus A320 and the Boeing 737. An obvious play on the Boeing B7x7 designator system, one can infer that the Chinese intend this plane to be a player in the global commercial aircraft market. The C919 is supposed to have its first flight in 2014, with deliveries commencing in 2016 (Agence France-Presse, September 8, 2009).
One final point: Ironically, whereas in the past (and even up to the present), Chinese aerospace firms often have served as subcontractors to Boeing and Airbus, foreign companies are now vying to become suppliers and subcontractors to the Chinese aviation industry. More than 20 overseas firms are partnering on the ARJ-21, including General Electric (engines), Rockwell Collins (avionics), Leibheer (landing gear), and Parker Aerospace (flight controls) . In addition, CFM International has recently been chosen to supply its LEAP-X powerplant for the C919, and it will subsequently build a final assembly line in China to produce the engine (Flightglobal, December 21, 2009).
Reorganizing the Aviation Industry to Promote Commercial Aircraft Production
To develop and build the ARJ-21, China cobbled together several competing aircraft manufacturing groups into a single consortium, known initially as the AVIC I Commercial Aircraft Company (ACAC). Members of ACAC included the Shanghai Aircraft Research Institute, the Xi’an Aircraft Design and Research Institute, the Chengdu Aircraft Industrial Group (CAIG), the Xi’an Aircraft Industry Group (XAIG), the Shenyang Aircraft Corporation (SAC), and the Shanghai Aircraft Manufacturing Factory (SAMF). The Shanghai and Xi’an research institutes were responsible for designing the aircraft, while workshares were distributed among the four manufacturing companies accordingly:
• CAIG: nosecone
• XAIG: wings and fuselage
• SAC: empennage, pylon and vertical stabilizer
• SAMF: horizontal stabilizer
In addition, SAMF will have responsibility for final assembly of the ARJ-21 at its Shanghai facility .
To further aid the development of its aviation industry, China also recently decided to consolidate its aircraft-manufacturing sector. In 1999, Beijing broke up its large defense-oriented state-owned enterprises into smaller units, in the hope that these new industrial groups would compete with each other and therefore become more efficient, innovative, and market-oriented. Hence, the old Aviation Industries of China (AVIC) was split into AVIC I—which manufactured fighter jets and undertook most large commercial aircraft projects—and AVIC II—which had responsibility for building helicopters and trainer aircraft. From the beginning, however, it was apparent that these two new industrial groups would overlap very little in terms of products, and so any benefits of competition were few. Additionally, AVIC I appeared to get the bulk of the lucrative and prestigious aviation programs, while AVIC II staggered along with a handful of less glamorous projects.
In 2008, therefore, Beijing re-merged AVIC I and AVIC II back into a single unit, again called Aviation Industries of China. This new AVIC regards this reconsolidation as creating sufficient “critical mass” so as to more effectively and efficiently develop new indigenous aircraft and aerospace technologies, both in the military and commercial sectors. It is also likely that the new AVIC foresees so much work coming out of future commercial aircraft production that it will require the involvement of the manufacturing centers of the old AVIC II to help fill all the orders.
With the re-merger of AVIC, ACAC was re-established as the Commercial Aircraft Corporation of China Ltd. (COMAC). This new civil aircraft company will have responsibility both for building the ARJ-21 and for developing the C919 passenger jet. COMAC is jointly owned by the reconsolidated AVIC, the central Chinese government, and the Shanghai regional authority (BBC News, May 11, 2008).
The success of the ARJ-21 will revitalize the Asian commercial aircraft industry. For the first time, this part of the world will have a product that can compete in an industrial sector historically dominated by North Americans and Europeans. More importantly, China could eventually become a hub for regional civilian airliner production, bringing in other aerospace firms from throughout Asia to partner on follow-on commercial aircraft projects. Singapore Technologies Aerospace, for example, already cooperates with Chinese aviation companies in manufacturing the Eurocopter EC-120 light utility helicopter, while back in the mid-1990s South Korea and China explored the idea of co-developing and co-producing a twin-engine regional jet .
Can Asia, led by China, do with commercial aircraft what it did with consumer electronics, automobiles, semiconductors, and personal computers? In other words, can it leverage its comparative advantages in low-cost manufacturing and growing technological prowess to become a global powerhouse in this sector as well? Despite recent progress, the Chinese aircraft industry still faces some substantial challenges. The passenger jet business has very high entry costs—and these costs are likely to soar as China tries to develop an all-indigenous airliner, with a locally built engine (in particular, China wants to eventually power the C919 with a locally developed engine), avionics, and flight controls, all of which are currently imported. Additionally, the ARJ-21 faces stiff competition from Bombardier and Embraer, and they are not going to cede sales quietly. Finally, airlines value safety and reliability as much as they do a good price. Given China’s substandard reputation in general quality control, China’s aircraft industry may likewise face considerable skepticism when it comes to buying their indigenous commercial airliners.
None of these hurdles are likely to deter the Chinese from their efforts, however. The commercial aircraft business is as much a matter of national pride as it is one of profits. The momentum that propels China to advance itself in microelectronics, automotives, space and emerging technologies is also driving its aircraft industry. The ARJ-21 may not end up being a commercially successful airliner, but it is a big step forward in China becoming a major manufacturer of commercial aircraft.
1. M. Cohen, “New Flight Plan,” Far Eastern Economic Review, March 2, 2000.
2. Richard J. Samuels, “Rich Nation, Strong Army”: National Security and the Technological Transformation of Japan (Ithica: Cornell University Press, 1994), pp. 247-249, 256.
3. “Construction Started on Airbus A320 Family Final Assembly Line in China,” Airbus Press Release, 15 May 2007.
4. AVIC I Commercial Aircraft Company (ACAC) website, http://www.acac.com.cn.
6.. “K100 Regional Jet,” GlobalSecurity.org, http://www.globalsecurity.org/military/world/rok/k100.htm.