Chinese Aviation Industry

tphuang said:

If you actually look at the international market, airlines are moving away from regional jets sized airliners and onto larger airliners. The smallest jets that airlines are now ordering will probably be CS100 or E2 size going forward. Which particular routes in China do you think need something of ARJ-21 size that something like CS100 can't do for greater profit? Remember with expansion in size of air travel, the number of runways and airport slots are going to be more restricted going forward. So airliners are going to use larger planes because they can fill them. Most of the LCCs are ordering planes that can sit from 180 to 240 people. You simply cannot get the same CASM with regional airliners as A321 if an airline can fill all the seats. There is really not a lot of point to stretching ARJ-21, since the need for that really isn't very high anymore. How many airlines are looking for aircraft with 110 seats in single class config. If you stretch ARJ-21 to be able to seat more than 110 people in single class config, you get into the territory of a shrunk version of C919.

As for profit level, every new airliner program looses money in the beginning which it recoups later as it lowers the cost in its mass production. So unless ARJ-21 can sell substantially more, it's going to loose money. I don't think that's a huge problem, since the main focus here should be C919. It's aimed at a much larger market. It's a far more advanced project than ARJ-21. The greatest value of ARJ-21 is the experience that it brings to COMAC in future projects like C919 and C929.

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The long delay to bring ARJ-21 to the market has caused it to miss its best window of opportunity in China, what with the high-speed rail network spreading like a wildfire now.

That said, there is still a sizable market and need for a regional jet of ARJ-21's class in Southwest and Northwest China, where the geography and terrain make it difficult and costly to build extensive rail network. As yet, those parts of the country are not wealthy enough, but they all have growth potentials. Many of those places are or will be attractive tourist destinations as the facilities and transportation improve. ARJ-21 would be a good choice linking the smaller cities in those regions to the major cities of the country, as the spokes in a hub-and-spoke system, or between them in a point-to-point network. Over time, there will be demands internationally, more likely in developing countries, as it builds trust and reputation. COMAC is also planning to modify it for the business jet market.

We should not judge the success of ARJ-21 in isolation. A lot of the investments into the project are in reality investment to build an industry base and infrastructure for the entire civilian aerospace industry in China. It's a down payment for the industry. To apply the criteria that Mr. Luo Ronghuai uses, from the interview that Hendrik_2000 posted earlier, if ARJ-21 achieves the technical success and market success, it should be considered a success in itself. If the Chinese civilian aerospace industry takes off, represented by the success of C919 and the following models, then ARJ-21 should be considered a complete success. Commercial success would be the icing on the cake in this case.

weig2000 said:

The long delay to bring ARJ-21 to the market has caused it to miss its best window of opportunity in China, what with the high-speed rail network spreading like a wildfire now.

That said, there is still a sizable market and need for a regional jet of ARJ-21's class in Southwest and Northwest China, where the geography and terrain make it difficult and costly to build extensive rail network. As yet, those parts of the country are not wealthy enough, but they all have growth potentials. Many of those places are or will be attractive tourist destinations as the facilities and transportation improve. ARJ-21 would be a good choice linking the smaller cities in those regions to the major cities of the country, as the spokes in a hub-and-spoke system, or between them in a point-to-point network. Over time, there will be demands internationally, more likely in developing countries, as it builds trust and reputation. COMAC is also planning to modify it for the business jet market.

We should not judge the success of ARJ-21 in isolation. A lot of the investments into the project are in reality investment to build an industry base and infrastructure for the entire civilian aerospace industry in China. It's a down payment for the industry. To apply the criteria that Mr. Luo Ronghuai uses, from the interview that Hendrik_2000 posted earlier, if ARJ-21 achieves the technical success and market success, it should be considered a success in itself. If the Chinese civilian aerospace industry takes off, represented by the success of C919 and the following models, then ARJ-21 should be considered a complete success. Commercial success would be the icing on the cake in this case.

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I agree with you that we should not judge ARJ-21's success in isolation and that it's part of a process in developing an industry. My point is what makes you think ARJ-21 would be a better option for these routes that you are thinking of than 737 or 320? Aviation industry is all moving up in size. In the busy routes of PEK to PVG, there are plenty of 777 and 330 flying that, which you would really not see from JFK to OHR, because there is just so many passengers.

weig2000 said:

The long delay to bring ARJ-21 to the market has caused it to miss its best window of opportunity in China, what with the high-speed rail network spreading like a wildfire now.

That said, there is still a sizable market and need for a regional jet of ARJ-21's class in Southwest and Northwest China, where the geography and terrain make it difficult and costly to build extensive rail network. As yet, those parts of the country are not wealthy enough, but they all have growth potentials. Many of those places are or will be attractive tourist destinations as the facilities and transportation improve. ARJ-21 would be a good choice linking the smaller cities in those regions to the major cities of the country, as the spokes in a hub-and-spoke system, or between them in a point-to-point network. Over time, there will be demands internationally, more likely in developing countries, as it builds trust and reputation. COMAC is also planning to modify it for the business jet market.

We should not judge the success of ARJ-21 in isolation. A lot of the investments into the project are in reality investment to build an industry base and infrastructure for the entire civilian aerospace industry in China. It's a down payment for the industry. To apply the criteria that Mr. Luo Ronghuai uses, from the interview that Hendrik_2000 posted earlier, if ARJ-21 achieves the technical success and market success, it should be considered a success in itself. If the Chinese civilian aerospace industry takes off, represented by the success of C919 and the following models, then ARJ-21 should be considered a complete success. Commercial success would be the icing on the cake in this case.

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Together with Africa and some part of South America where the terrain or infrastructure (el grid) does not permit high-speed train to replace short distance regional jet.

tphuang said:

If you actually look at the international market, airlines are moving away from regional jets sized airliners and onto larger airliners. The smallest jets that airlines are now ordering will probably be CS100 or E2 size going forward. Which particular routes in China do you think need something of ARJ-21 size that something like CS100 can't do for greater profit? Remember with expansion in size of air travel, the number of runways and airport slots are going to be more restricted going forward. So airliners are going to use larger planes because they can fill them. Most of the LCCs are ordering planes that can sit from 180 to 240 people. You simply cannot get the same CASM with regional airliners as A321 if an airline can fill all the seats. There is really not a lot of point to stretching ARJ-21, since the need for that really isn't very high anymore. How many airlines are looking for aircraft with 110 seats in single class config. If you stretch ARJ-21 to be able to seat more than 110 people in single class config, you get into the territory of a shrunk version of C919.

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There will always market for regional jet in China or worldwide, because of the changing nature of air traffic network system. Regional jet come into being because the airline change from point to point system which is wasteful and inefficient to Hub and spoke system where the Hub to Hub connection are better serve with Large aircraft.

But you still need the feeder line or "spoke" that is better serve with regional jet like ARJ 21 specially for china north west and south west where you have sparely populated region separated by fast distance HSR doesn't make economical sense in this region.

This hub and spoke system is much more efficient and make better use of resources.
Specially now that 2nd and 3rd tier cities in China are getting their airports. Using large aircraft to serve these 2nd tier city is wasteful since they don't have high traffic.


contrary to your post the fastest segment of aircraft growth in 2000's is the regional jet Bombardier make a ton of money because they correctly anticipate this growth But then they squandered it by building larger jet that is drain on their profit

tphuang said:

I agree with you that we should not judge ARJ-21's success in isolation and that it's part of a process in developing an industry. My point is what makes you think ARJ-21 would be a better option for these routes that you are thinking of than 737 or 320? Aviation industry is all moving up in size. In the busy routes of PEK to PVG, there are plenty of 777 and 330 flying that, which you would really not see from JFK to OHR, because there is just so many passengers.

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Yes, this is the key from operating a commercial airline's standpoint. The advantage of a regional jet such as ARJ-21 over B737 or A320 is that it can fly more frequently in certain routes without having to fill up a bigger capacity (70-90 passengers versus 150-190 passengers). It could fly twice as frequent in this case, which is a much better service level.

To use some personal experience, a few years ago, I flew from Beijing to Lijiang in Yunan province for a one-week vacation. I flew in an A319 in a direct flight, which is between A320 and a regional jet. I found that to be quite convenient schedule-wise (quite expensive though at over 3,000 yuan). When I returned from Lijian to Xian, I could not get a direct flight between Lijiang to Xian at the time I preferred. I had to layover in Chengdu for one night eventually. There were actually direct flights between Lijiang and Xian, but they were very infrequent. They were either sold out or the timing were not good (had to wait for a few days).

So smaller cities and/or tourist places like Lijiang in Southwest or Northwest can be better served by having more frequent flights to major cities (Beijing, Shanghai, Chongqing, Chengdu, Kunming, Xian, etc.) using regional jets. These routes would also be used as spokes connecting to a major hub, e.g. people in Luoyang or Baoding probably won't have direct flights to Lijiang, but they can either fly or take high-speed rail to Beijing and take the direct flights to Lijiang there. For that, you will need more frequent flights so these people can better connect and not waste a lot of time in Beijing en route to Lijiang.

Hendrik_2000 said:

There will always market for regional jet in China or worldwide, because of the changing nature of air traffic network system. Regional jet come into being because the airline change from point to point system which is wasteful and inefficient to Hub and spoke system where the Hub to Hub connection are better serve with Large aircraft.

But you still need the feeder line or "spoke" that is better serve with regional jet like ARJ 21 specially for china north west and south west where you have sparely populated region separated by fast distance HSR doesn't make economical sense in this region.

This hub and spoke system is much more efficient and make better use of resources.
Specially now that 2nd and 3rd tier cities in China are getting their airports. Using large aircraft to serve these 2nd tier city is wasteful since they don't have high traffic.

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contrary to your post the fastest segment of aircraft growth in 2000's is the regional jet Bombardier make a ton of money because they correctly anticipate this growth But then they squandered it by building larger jet that is drain on their profit

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A320 and B737 are not large aircraft for airlines. If you look at the recent moves, everyone have been investing in larger airliners. Now, A320 and B738 are becoming the most common aircraft flown in the regional network. Even A319 and 737-700 are not getting much orders these days. And this is in North America and Europe. In China and rest of Asia, there are far more people, which explains the usage of large aircraft like 777 and 330 for PEK to PVG which in US would be operated by 320 or 738. The question is that as this is happening, which airline is going to continue buying something in the 70 to 90 seat range.

weig2000 said:

Yes, this is the key from operating a commercial airline's standpoint. The advantage of a regional jet such as ARJ-21 over B737 or A320 is that it can fly more frequently in certain routes without having to fill up a bigger capacity (70-90 passengers versus 150-190 passengers). It could fly twice as frequent in this case, which is a much better service level.

To use some personal experience, a few years ago, I flew from Beijing to Lijiang in Yunan province for a one-week vacation. I flew in an A319 in a direct flight, which is between A320 and a regional jet. I found that to be quite convenient schedule-wise (quite expensive though at over 3,000 yuan). When I returned from Lijian to Xian, I could not get a direct flight between Lijiang to Xian at the time I preferred. I had to layover in Chengdu for one night eventually. There were actually direct flights between Lijiang and Xian, but they were very infrequent. They were either sold out or the timing were not good (had to wait for a few days).

So smaller cities and/or tourist places like Lijiang in Southwest or Northwest can be better served by having more frequent flights to major cities (Beijing, Shanghai, Chongqing, Chengdu, Kunming, Xian, etc.) using regional jets. These routes would also be used as spokes connecting to a major hub, e.g. people in Luoyang or Baoding probably won't have direct flights to Lijiang, but they can either fly or take high-speed rail to Beijing and take the direct flights to Lijiang there. For that, you will need more frequent flights so these people can better connect and not waste a lot of time in Beijing en route to Lijiang.

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I think if they can actually deliver C919 on time (relatively speaking) and on spec, then the market size is far larger at this point. This is where all of the market is.

tphuang said:

A320 and B737 are not large aircraft for airlines. If you look at the recent moves, everyone have been investing in larger airliners. Now, A320 and B738 are becoming the most common aircraft flown in the regional network. Even A319 and 737-700 are not getting much orders these days. And this is in North America and Europe. In China and rest of Asia, there are far more people, which explains the usage of large aircraft like 777 and 330 for PEK to PVG which in US would be operated by 320 or 738. The question is that as this is happening, which airline is going to continue buying something in the 70 to 90 seat range.

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Bombardier have 1800 order for CRJ series of jets and they will still improve and produce the regional jet for decades to comes.New entrant like Mitsubishi and Sukhoi, CAC now have entered the market. Plus 60-90 jet give the airline scheduling flexibility depending on the passenger load. In Fact Mesa is the subcontract for Southwest Airlines often time they were used by South West if the load is low

Regional airlines order bigger jet because of the changing nature of airlines since 2000. We have now low cost airline like Sprint, Frontier etc. Which packed passenger like sardines. They offer low ticket price on the cost of comfort and convenience. But that is only apply to select few profitable route and high traffic route. The rest of feeder line still need 60-90 regional jet

Investors wary of Bombardier’s enthusiasm for regional jets


MIRABEL, QUE. — The Globe and Mail

Published Tuesday, Mar. 31, 2015 6:05PM EDT

Last updated Tuesday, Mar. 31, 2015 7:29PM EDT


Earlier this month, two Bombardier Inc. executives sat in the cabin of a nearly finished 76-seat regional jet destined for American Airlines and talked up the plane in superlatives.

This is the best interior configuration Bombardier has ever done on a CRJ regional airliner, the aerospace managers said. The best mix of seat pitch, materials and “overall harmony.” It has more leg room in economy than a typically configured Boeing 737 or Airbus A320, they insisted. And it can accommodate more seats than Embraer’s E-175, which means higher revenue potential per flight.


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It’s been a while since Hugues Lessard, vice-president of Bombardier’s CRJ program, and Jean-François Tessier, director of CRJ program strategy, beat the drum this hard to visitors of the plane maker’s assembly plant in Mirabel, Que.

For some time, the market has stopped paying much attention to Bombardier’s Canadair regional jets. With just over 1,800 orders since the planes first flew in 1991, the airliners remain to this day arguably Canada’s greatest aerospace achievement. Yet with all the scrutiny in recent years directed at Bombardier’s C Series – the company’s biggest-ever plane and biggest bet – the CRJs have largely fallen out of mind.

But a resurrection is at hand.

Not only does Bombardier insist it will keep producing the CRJ aircraft family for another decade at least, the company says it is committing a yet-undisclosed amount of money to improve the planes further. And that has some investors and analysts worried.

“Right or wrong, the C Series has been taking centre stage” in recent years, Mr. Lessard said. “But as [that airplane] is coming out the tail end of its development period, obviously this is going to create more opportunity” for other aircraft programs such as this one.

At a projected development cost of $5.4-billion, the C Series has now completed 80 per cent of its high-risk testing and remains on track for certification before the end of 2015. Bolstered by $2.4-billion of fresh capital, Bombardier now has $6.2-billion in cash and available credit, “more than sufficient liquidity” to carry it through the C Series launch and beyond, according to RBC Capital Markets.

Among the CRJ modifications Bombardier is testing is an improvement to the aircraft’s wings, including the winglets, taking advantage of computerized modelling to identify potential improvements to aerodynamics and reduce drag, Mr. Tessier said. The current CRJ900 model, the most popular in the lineup, offers a 5.5-per-cent improved fuel burn over the initial units delivered in 2003. Bombardier thinks it can wring another 4.5 per cent worth, for a double-digit fuel burn betterment by 2020.

“We know that it is possible for us to improve further,” Mr. Lessard said. “There’s a lot of stuff we could do to that airplane to improve it.”

Even small upgrades are significant because they can generate big savings for operators. For example, the conic-shaped exhaust nozzles Bombardier installed on its CRJ900 NextGen aircraft cut fuel consumption by 1 per cent. To an airline, that’s $50,000 a year in savings per plane.

(cont)
Bombardier is a sharp company . They are the first to recognized the profitability of regional jet. At that time nobody believe that Canada can have viable passenger jet industry. I guess that apply to CAC as well they have to work hard to earn the public trust with ARJ 21 Brand name is not establish over night

Bombardier believes the market for regional airplanes seating 60 to 99 passengers will remain attractive at an estimated 5,600 aircraft worth $185-billion over the next 20 years. Half of those will be turboprops and half-jets, meaning the company has an opportunity to snag as many as 1,400 CRJ sales over that time if it wins half of all new orders. “There’s still a huge market there in front of us,” Mr. Lessard said.

Despite the enthusiasm in Mirabel, skepticism abounds on Bay Street.

“We don’t see sufficient demand for a sustainably higher production run rate,” BMO analyst Fadi Chamoun said in a Feb. 22 note, adding he believes both Bombardier’s Q400 turboprop and CRJ programs are money-losing at current manufacturing levels. “In the absence of the company launching a new regional product, there may be additional downside going forward given stronger product offerings from competitors.”

“We were somewhat concerned with the fact that Bombardier mentioned more than once that they plan to continue to invest in the CRJ program,” Scotiabank analyst Turan Quettawala said in a March 13 note summing up his own visit to the Mirabel plant. “We think this could require a large investment – money that, in our view, could be better spent on other aircraft.”

The market for regional jet sales peaked in the mid-2000s. Since then, it’s been a constant battle for sales.

While Bombardier began freeing up funds in recent years to plow into its C Series, rival Embraer invested capital to develop its line of E-Jets, which outsold Bombardier during some years. The diameter of the Embraer fuselages is bigger than the Bombardiers and the seats themselves are wider, a feature appreciated by heavier customers who prize cabin space and lateral comfort above the leg room advantage Bombardier is able to offer with its stretched aircraft.

“The CRJs are a skinnier tube and a skinnier tube goes through the air more effectively,” said Rolland Vincent, a former Bombardier executive who now runs his own consultancy from Plano, Tex. “It is a more efficient airframe to go through the sky. With the Embraer E-Jets, you get more comfort.”

Neither Bombardier nor Embraer has delivered more than 100 regional jet units in any year since 2008, according to data from U.S. consultancy Air Insight. Meanwhile, new competitors such as Japanese manufacturer Mitsubishi have sprung up to challenge the traditional duopoly.

Embraer is now focused on the next version of its E-Jets, the E2 family, committing $1.7-billion to revamping the planes with improved engines among other improvements. The company snagged 210 orders for the new planes in 2013 and 2014, nearly tripling the regional jet orders Bombardier received over that time.

Bombardier has proven it can still win major contracts, such as Mesa’s options conversion in December worth $1.1-billion at list prices. However, new CRJ orders are trailing deliveries with uncompleted production now standing at about 20 months. BMO Capital Markets estimates that with its CRJ jets and excluding the C Series, the company holds barely 9 per cent of the world’s current regional jet firm order backlog, with rivals Sukhoi, Mitsubishi, Comac and Embraer all tallying more orders.

Still, Bombardier remains optimistic about the CRJ’s future prospects.

Executives argue every CRJ jet version delivers a 5- to 15-per-cent operating cost advantage over competing jets simply because they’re lighter and burn less fuel. Replacing the existing General Electric engines on the plane with new ones might deliver even better operating numbers. But the new generation of engines are heavier and Bombardier seems to be in no rush to make the change.

The executives say if major U.S. airlines further relax their so-called “scope clauses,” which restrict the capacity of regional aircraft flying for network carriers to 76 seats, the Bombardier planes would be an even easier sell in the marketplace. Historical trends suggest that will happen, although the timing is uncertain.

“It all comes down to how much they can do with the existing airframe to improve the economics,” Air Insight’s Ernie Arvai said. “You add up enough little improvements and you can make it so the airplane can survive for a while. The thing the CRJ is focusing on is being the lightest, cheapest thing out there. And there is a niche for that.”

A good video on the ARJ-21. Enjoy.

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China Insight 07/02/2016 First home-grown regional jet ARJ21-700

Published on 3 Jul 2016