Financial News

  • 13 January 2014, 20:51

China Bets Big On 'Iron Bird' Of The Skies

In a vast hanger on the outskirts of Shanghai, the banging of hammers and screeching of drills indicates a company in a hurry.

Sky News has been granted exclusive access to the headquarters of Comac - China's answer to Airbus and Boeing. The vast campus forms the heart of China's attempt to take on the aviation giants.

Comac was only founded five years ago and yet it has already produced one passenger jet and, within a decade, it hopes to be selling planes to western airlines including Ryanair and British Airways.

Jack Lee, a Comac executive, says: "This is a really exciting event for China. This is the first time in China's history that we have manufactured (passenger) aircraft by Chinese people.

"It's a challenge ahead of us. We already laid out our plan. The schedule is tight. We must fight for this schedule and fight for this milestone."

Mr Lee and I are sitting in the cockpit of a full-size model of the C919, Comac's equivalent to the workhorses of the skies, Boeing's 737 and Airbus' A320. This is the plane which Comac hopes will launch its global success.

Mr Lee is Chinese by birth, but has spent most of his life living and working in the United States. His expertise from his previous career at General Electric and Raytheon are vital to the success of Comac.

The company is learning from mistakes and design failures made over decades by Boeing and Airbus in an attempt to get itself ahead.

"The advantage is that we have already learnt something from previous successful experiences or failures," says Mr Lee. "Lots of people here come from overseas and they bring lots of knowledge and talent.

"Also, there's lots of workers here and they work very hard."

The company is owned by the Chinese state who are as keen as Mr Lee that it is a success. The government recently pumped $3bn into the company and it has promised even more.

Taking on Boeing and Airbus is as much a project of national pride as it is a business necessity.

"There are a few reasons," adds Mr Lee. "The first is that there are tremendous market needs. In the future we need more and more airlines and aircraft to serve our people.

"Also, we like to use aircraft industry as our sign to improve - because the aircraft industry is very complex - so the aircraft industry brings the whole Chinese industry to a higher level."

The C919 is the key to their success. The company initially gave itself six years to design, build and sell the C919. It should have been in our skies in 2014.

That deadline has now been pushed to the right a little. Staff have been asked to work longer hours to ensure it will be in the sky by 2015.

To the untrained eye, the C919 looks almost identical to the Airbus A320. It has the same wingspan and is almost the same length.

Many of the components are the same too. The difference is that the C919 was designed and put together entirely in China by Chinese hands.

It seats 190 passengers, and if the real thing is anything like the replica we are in, the cabin will have a modern, airy feel. It feels a bit like a smaller version of Boeing's Dreamliner.

That's no surprise either, because Comac has learnt lots from the troubled Dreamliner project. They have cherry-picked all that worked and avoided the aspects which did not.

On the ground outside the replica C919 is the evidence this plane is essentially an outsourced airliner even if it is designed and built in China.

The massive wooden crates containing airline parts have been shipped from Europe and America. One has come from Miami, another from Germany.

The C919's power-supply system is made by America's UTC Aerospace; the on-board entertainment will be provided by Thales of France and the Engine Interface Control Unit will probably be made by a UK company called Meggitt.

Mr Lee is keen to talk about safety. It is, he says, natural that people will have concerns about Chinese-made passenger jets. After all, historically at least, China's record on safety and quality is not great.

"These will be as safe as any other aircraft in the sky - Boeing or Airbus," he insists, repeating himself. "The safety level is the same as other aircraft that fly in the sky. So very safe."

It is true that in order to fly, Comac will need to get approval from the US Federal Aviation Administration and the Chinese equivalent, the CAAC.

If the C919 passes those tests, then there is only one other obstacle in the way of success for Comac.

Even without American Federal Aviation approval, Comac can still sell its planes in the massive domestic market. The state-run Chinese airlines will probably be pushed to buy a Chinese-made plane.

But in order to succeed with the C919 abroad, Comac must make it cheaper and more efficient than the Boeing and Airbus equivalents. Mr Lee believes it will be, which is why there are already 400 orders for the C919.

There is no published price for the C919 yet, but speculation suggests it will be about $75m, which is $10m less than a B737 or an A320.

That has pricked the ears of one savvy Airline boss from Ireland - Ryanair CEO Michael O'Leary. At the 2011 Paris Airshow, Mr O'Leary signed a cooperation deal with Comac. He hopes the company will build him a bespoke passenger jet which will increase his profits.

Aviation rules stipulate that airlines must provide one flight attendant for every 50 passengers. So a plane with 200 passengers on board must have at least four flight attendants.

However, a plane with just 199 seats in it can legally have three flight attendants on board. Ryanair is reportedly interested in Comac's willingness to build a 199 seater jet.

On safety and passengers' willingness to fly on a jet made in China, Mr O'Leary is unconcerned, pointing out in a recent interview that 99% of his customers have no idea what model or make of plane they are travelling in.

Airbus has already shown its commitment to and belief in China. In 2009 it opened an assembly plant in the northern Chinese city of Tianjin. Chinese-constructed versions of its A320 have been rolling off the production line ever since.

The manager of the plant, German executive Andreas Ockel, gave Sky News an exclusive look inside the plant. He explained that China's aviation industry is now so huge, it is vital for Airbus to have a physical footprint here.

And on safety, he insists, the planes are identical, wherever they are put together.

"When you build an aircraft, safety is about what is designed into the process and into the aircraft itself," Mr Ockel says.

"What we have here is a process that's exactly the same as we have in Europe. You will not be able to differentiate a plane that comes out of here from any plane that comes out of Hamburg or Toulouse."

Back at the Comac plant, Mr Lee hints at just how far China has come in such a short time.

"I can't imagine," he says. "So few years, such tremendous changes, I couldn't have imagined it. And of course the next 30 years? Who knows!?"

:: Watch Sky News live on Sky channel 501, Virgin Media channel 602, Freeview channel 82 and Freesat channel 202.

Advertisement