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Aviation giants look to China amid global turbulence

(Agencies)
Updated: 2008-11-03 15:28

The giants of the aerospace industry will jet in to China's only international airshow starting Tuesday hoping the country's aviation sector can provide shelter from the global financial crisis.

US manufacturer Boeing and Europe's Airbus will head the line-up of 600 civil and military manufacturers and parts suppliers from 35 countries at the 2008 China Airshow, an annual event in the southern city of Zhuhai.

And as airlines across the world report a drop-off in first and business class travel due to the economic turbulence, the firms will be looking to China to provide crucial growth in the next few years.

"China is going to be the fastest-growing market in the world," Wang Yukui, the spokesman for Boeing in China, told AFP.

Research released last week by the US giant found China will need 3,710 new commercial planes worth 390 billion dollars over the next 20 years.

The demand will represent 41 percent of the entire Asia-Pacific market, and only the United States will be a bigger buyer, Boeing said.

In addition, Chinese carriers will add about 370 freight-carrying planes by 2027, quadrupling their total freighter fleet, the Boeing research found.

Airbus chief executive officer Tom Enders also said recently it was expecting a "large order" from Chinese airlines by early 2009, on top of existing memorandums of understanding with Chinese carriers for 280 aircraft.

The company's giant superjumbo, the A380, will be on display at the China Airshow, as the company tries to take a bigger slice of the thriving market.

In 2007, China's air traffic soared 16.8 percent to 387.6 million passenger trips, on the back of 16.7 percent growth in 2006, state media reported.

The demand has sparked a similar boom in airport construction, with around 100 new airports planned by 2020, previous reports said.

Nevertheless, China's aviation sector is starting to feel the impact of the global economic turmoil, according to Tom Ballantyne, chief correspondent of industry magazine Orient Aviation.

"Although we are not talking about a cessation of growth, we are talking about a slowdown in growth," he told AFP.

"The industry in China has been growing at 10-15 percent (per year). It is likely to be more like 5-6 percent growth going forward."

Early signs that demand was beginning to slow in China came last week when two of the country's biggest airlines, Air China and China Eastern, reported heavy losses in the third quarter, normally peak season for air travel.

Air China said the losses were due to both the fluctuating oil price and a decrease in demand. China Eastern said the poor showing meant it expected to make a loss in 2008.

While international manufacturers are hoping they can continue to fill up their order books, China's nascent manufacturing industry may use the 2008 airshow to announce a major step forward.

The Commercial Aircraft Corporation of China (CACC) is expected to announce Tuesday that it has sold 25 jets to a US company, state-press reports said last week without naming the buyer. If confirmed, it would be a landmark deal.

The Guangzhou Daily said the company that has designed China's first homemade jet, the ARJ21 -- Advanced Regional Jet for the 21st Century -- would announce a 735-million-dollar contract when the show opens on Tuesday.

The potential contract for the ARJ21, which carries between 70 and 110 passengers, would come despite the fact the plane is yet to make its maiden voyage.

The CACC, which was only launched in May, has said it is aiming to eventually take on Airbus and Boeing, although the firm's president said that would take at least 20 years.