Airbus sees no serious impact on China plane market from slowing economy

03-Mar-2016 Intellasia | Reuters | 6:00 AM Print This Post

Airbus expects China’s aviation market, the world’s second-largest, to emerge unscathed from an economic slowdown thanks to robust demand for international travel, the planemaker’s chief executive said.

“The economy is slowing down. This is true globally, this is not true for our market,” Fabrice Bregier told reporters in Tianjin where Airbus is adding a completion and delivery centre for its wide-body A330 planes alongside an existing assembly plant for A320 planes.

“We believe over the next five years, plus 10 percent growth year-on-year in already the world’s second biggest market is a very cautious assumption,” Bregier, president and chief executive of the planemaking unit of Airbus Group, said.

Even though the Chinese economy has lost some steam, aircraft makers like Airbus and Boeing remain buoyant about air travel demand in the country.

Airbus expect China to need 5,400 new aircraft over 20 years. It is considering boosting its bets on China, and at the same time studying whether to increase the production rate there at its A320 assembly line, Airbus China chief Eric Chen said.

Boeing also signed a cooperation document with Commercial Aircraft Corporation of China (Comac) to build a completion centre for its 737 passenger jets in China.

Asked whether Airbus would some day open an assembly facility for wide-body jets in China, Bregier said: “We never say never. But so far we don’t have a business case.”

Final assembly for wide-body aircraft is more complex and more costly, he said, adding that Airbus needed more quantity to justify such a move.

Adding wide-body is a more viable option for Chinese airlines due to the country’s fast-growing outbound leisure volume and lack of slots at major airports, he said.

CHANGE OVER TIME

Currently, narrow-body jets still take a major share in the country’s overall fleet.

But Bregier expect that to change over time.

“China has focused, rightly so, on single-aisles (narrow-body aircraft) and will continue to procure a lot of single-aisles. But I am sure they will be getting more wide-bodies.”

The number of Chinese leisure travellers going overseas for the first time topped 100 million in 2014, official data shows. Foreign travel is tipped to grow another 10 percent this year as the United States, France and Australia ease visa policies.

State-owned carriers Air China, China Eastern Airlines, China Southern Airlines and their subsidiaries dominate the Chinese airline market, but they increasingly face stiff competition from HNA Group subsidiary Hainan Airlines and budget airline Spring Airlines.

Aircraft leasing firms owned by Chinese banks and companies are also becoming an important source of planes globally.

Collectively, these airlines and leasing firms have placed orders for hundreds of Airbus and Boeing aircraft worth tens of billions of dollars.

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Category: China

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