Low Cost China Jets

Sept. 8 (Bloomberg) -- Commercial Aircraft Corp. of China, the government-controlled planemaker, said its first commercial jet will “surely be cheaper” than comparable Boeing Co. and Airbus SAS models, heightening competition in the world’s fastest-growing aviation market.

The 168-seater C919, due to enter service in 2016, will use as much as 15 percent less fuel than current Boeing 737s and Airbus A320s, Chen Jin, Comac’s sales head, said at the Hong Kong air show, where the company is showing a model of the plane for the first time.

Comac will initially target Chinese customers for the single-aisle C919 before seeking to challenge Boeing and Airbus overseas in the largest segment of the plane market. China’s carriers will likely need 3,710 new planes over 20 years, of which 70 percent will be single-aisle aircraft, Chicago-based Boeing said in October.

“In the medium- to long-term, Chinese aircraft manufacturers will be able to challenge the larger planemakers like Airbus and Boeing,” said Jack Xu, an analyst at Sinopec Securities Asia Ltd. in Shanghai. Price will be a “major advantage,” he added.

The plane is part of China’s push to develop its own technologies in a range of industries to move beyond being a low-cost assembler for overseas companies.

Aircraft Orders

The plane’s development schedule will likely coincide with a surge in aircraft orders worldwide as airlines move ahead with fleet plans delayed by the global recession, Comac’s Chen said. The first test flight is set for 2014, he added.

Boeing expects to be able to add new technologies to the 737 that will make it more fuel efficient, Randy Tinseth, the company’s marketing chief said today.

“We have to find new ways to consistently reduce the cost,” he added.

The C919 threatens Boeing and Airbus in China, which Boeing expects to be the world’s fastest-growing domestic air-travel market.

“Our home market is the biggest market and has the most potential, so it’s unnecessary to pursue overseas sales just yet,” Chen said. “In the future though, we will surely go into Europe and the U.S.”

The company’s first customers will likely included China’s big three carriers, Air China Ltd., China Southern Airlines Co. and China Eastern Airlines Corp., he said. Comac will offer also financial support to win customers, Chen said.

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