C919 Flights Show China's Potential to Reshape Jet Market

Yihan Wang

Air travel has roared back to life, leaving the COVID-19 pandemic far behind.

The International Air Transport Association projects that airlines will operate a record 40.1 million flights this year, with revenues seen reaching a record $996 billion.

To keep up with robust demand, airlines are looking to add still more flights, which in many cases will require more aircraft. But Boeing is ensnared in production troubles that have generated safety concerns, while Airbus' manufacturing capacity is already maxed out.

On the surface, this should be the perfect opportunity for a fresh market entrant like the Commercial Aircraft Corporation of China (COMAC). Its C919 model, the first jet designed in China to compete with the offerings of Boeing and Airbus, has been safely used for thousands of flights by Chinese airlines since May 2023, when it first came into service with China Eastern Airlines.

Yet geopolitical tensions and other complications appear set to keep the C919 from being globally embraced for the time being. Still, the successful development and commercialization of the C919, a process which began in 2007, marks a milestone in China's long-term push into the commercial aerospace sector, a strategic emerging industry for Beijing. The maiden journey of the C919, a flight from Shanghai Hongqiao Airport to Beijing Daxing Airport, loudly proclaimed COMAC's challenge to the Airbus-Boeing duopoly.

So far, COMAC has received more than 1,200 orders for C919s to be delivered over the next seven years, primarily to Chinese airlines and leasing companies. GallopAir, a Bruneian startup airline controlled by Chinese investors, signed a letter of intent to buy 30 C919s last September. Thailand's City Airways previously agreed to lease C919s from a Chinese lessor but has since gone out of business.

Some Western companies have shown interest in the C919 program, too. Ireland's Ryanair, one of Europe's largest low-cost airlines, provided support to COMAC for the C919's development, beginning in 2011. CEO Michael O'Leary, has talked of the plane's potential to help bring down aircraft costs globally. U.S. lessor GE Capital Aviation Services signed a letter of intent for 10 C919s in 2010 and in 2021 was sold to rival AerCap, which also reached a preliminary deal with COMAC.

Harbin Taiping International Airport in January: China's aviation market is one of the world's largest and fastest growing.   © Reuters

For now, the C919 cannot fly in Europe or the U.S. because the plane has not been certified "airworthy" by regulators in either place. While European regulators are reviewing an application from COMAC, the U.S. appears less open to the plane.

In January 2021, the U.S. formally blacklisted COMAC, alongside many other Chinese companies, as a "Communist Chinese military company" posing a threat to American national security. The measure only blocked U.S. investors from putting money into the company but could still be a barrier to the C919's entry into the American market.

So far, though, COMAC has been able to continue doing business with U.S. suppliers. Indeed, while the C919 is held up as an indigenously Chinese developed and manufactured aircraft, approximately 90% of its major components come from North American and Europe suppliers.

For example, the plane's engines are made by CFM International, a 50-50 joint venture of GE Aerospace and France's Safran. Components, including the autopilot system, fuel system, landing gear, avionics and flight recorder come from Western suppliers like GE, Honeywell, Parker Aerospace and Liebherr, or were co-developed with Western partners like Safran and GE.

This high reliance on Western suppliers and partners could potentially affect the stability and security of COMAC's research and development, manufacturing and overseas sales.

Since the start of U.S.-China trade war in 2018, several Western suppliers and R&D partners have suspended collaboration with COMAC. Others have raised concerns about COMAC's larger C929 model, originally launched as a joint development project with Russia's United Aircraft.

Beyond this, the "made in China" image of low cost, low-quality products could affect the confidence of potential Western passengers, and has probably been a factor in the disinterest of most Western airlines.

Both Chinese authorities and COMAC's stakeholders are highly aware of the constraints holding back the C919's advance into global markets.

Yet for now, they are not focusing on them. China's aviation market is one of the world's largest and fastest growing, so it makes sense for COMAC to keep its strategic focus on exploiting the domestic market in terms of R&D, manufacturing and sales.

As far as overseas markets, COMAC has enough work on its hands meeting increasing interest from potential buyers from the emerging economies participating in China's Belt and Road Initiative.

With continued indigenous innovation, strategic planning and diplomatic effort, the C919 could indeed become a competitive alternative in the global market. The strengthening of domestic supply chains and new collaborations with domestic and foreign partners could help mitigate the impact of geopolitical tensions. While the C919 is not likely to fly in Europe or North America anytime soon, that day should still eventually come as COMAC works through regulatory, technological and logistical constraints, perhaps with new Western partners.

By Yihan Wang is an associate professor of international strategy at EM Normandie Business School in Le Havre, France.

June 21, 2024