Firms flock to China's fast-growing aviation market

A model poses in a Binao Diamond light aircraft at the Airshow China 2014 in Zhuhai, south China's Guangdong province on Nov 11, 2014. Global aviation firms flocked to China on Tuesday to show off their wares as economic development and an expan
A model poses in a Binao Diamond light aircraft at the Airshow China 2014 in Zhuhai, south China's Guangdong province on Nov 11, 2014. Global aviation firms flocked to China on Tuesday to show off their wares as economic development and an expanding middle class promise a bonanza in one of the world's fastest-growing aircraft markets. -- PHOTO: AFP

ZHUHAI, China (AFP) - Global aviation firms flocked to China on Tuesday to show off their wares as economic development and an expanding middle class promise a bonanza in one of the world's fastest-growing aircraft markets.

Chinese defence companies and the People's Liberation Army's air force are also putting the latest weaponry on parade at the country's premier Zhuhai airshow this week, including the new J-31 stealth fighter and its biggest-ever military transport plane.

For foreign companies, the airshow offers a chance to tap a market in which air travel grew by an annual 11 percent last year to 350 million passengers - a gold mine for plane makers such as Europe's Airbus and Boeing of the United States.

"China will become the world number one aviation market," Airbus China President and Chief Executive Officer Eric Chen told a news conference.

Just days before the show, Airbus announced a US$10 billion (S$12.5 billion) deal for China Aircraft Leasing Co. to buy 100 planes from its A320 family.

Crowds gathered to take photos with the double-decker A380 superjumbo, which Airbus is showing off at the show.

The company says Chinese deliveries already represent 25 percent of its global production.

US rival Boeing forecasts China will need a total 6,020 new airplanes valued at US$870 billion over the next 20 years.

"That's a lot," Kent Fisher, vice president for supplier management of Boeing Commercial Airplanes, told a signing ceremony at which the company announced China's AVIC would produce tips for the vertical fin and horizontal stabiliser of its 777.

But China wants part of the multi-billion dollar market to go to its homegrown passenger planes.

Commercial Aircraft Corp. of China (COMAC) said Tuesday it has received orders for 30 of its C919 planes - a narrow-body with 158-168 seats - as well as 20 of its 78-90 seat ARJ21 regional jets, both of which have yet to enter full commercial production.

It is also seeking suppliers to build a new wide-body passenger plane, the C929, over the next decade, expanding its ambitions and rivalry with Boeing and Airbus, industry officials say.

Despite the optimism, industry officials see problems in the short-term: a slowdown in the economy, strict controls on airspace and a corruption crackdown.

China's economic growth - which has a direct correlation with air traffic - eased to 7.3 percent in July-September, the lowest since the depths of the global crisis in early 2009.

"The Chinese economy has been slowing, it has been impacting the development of the civil aviation industry," said Chen of Airbus.

But he added: "A growth rate of six or seven percent, compared to the other parts of the world, is still very impressive."

Massive flight delays across the country in July, blamed on military exercises, cast the spotlight on another problem - controls on airspace that leave only 20 percent of China's skies open to civil flights.

"It's so important for China to fix their air traffic management issues because it's starting to have economic impact," Briand Greer, president of aerospace for Asia-Pacific at US conglomerate Honeywell, told AFP.

A crackdown on corruption launched by China's leader Xi Jinping after he came to power in late 2012 has also hit the aviation market. Government officials stopped flying higher classes, prompting two Chinese airlines to cut or remove first-class seats.

The graft crackdown has also affected the small but growing market for private jets in China, where owning an aircraft is often viewed as a needless luxury.