China Eastern Airlines has grounded its fleet of Boeing 737-800s – some 108 planes in the China Eastern fleet together with another 117 planes it flies with subsidiary airways. That’s a lot of planes, in either the primary or second largest aviation market in the world, depending the way you measure it.
Number of passengers on airways worldwide in 2020, by registration country (in millions)…
GRAPH: statista.com
Last week a China Eastern Airlines, which operated the crashed Boeing 737, killing all 132 on board, left the world’s second largest commercial jet manufacturer with even more complications.
At this stage we don’t know what brought on the crash. But even if the evidence reveals that the plane was not at fault, Boeing has big issues in what was going to be the “period of recovery” after the 737 Max fiasco, which had become the US manufacturers’ low point in an otherwise stellar career, main the world’s business aviation market.
Boeing projected that the Chinese aviation market can be value US$1.5 trillion over the following 20 years. But that estimate is now in tatters.
Boeing finds itself on the verge of being nearly shut out of the area as commerce tensions between the US and China have virtually utterly stalled Boeing gross sales to China for the last 4 years. On prime of that, China’s Covid challenges have stalled (probably might have used a better word) the beforehand busy, and fast-growing, Chinese home market.
Boeing hasn’t introduced any commercial plane gross sales to a Chinese passenger airline for the rationale that finish of 2017. And even when orders had been made in the next few years, unlikely under the present circumstances, it will take many extra years to roll out those orders.
Boeing continued to ship jets to China in 2018 and early 2019. But solely 40 have been delivered since March in 2019. That was when, first China, then the rest of the world, grounded the Boeing 737 Max model aircraft following two fatal crashes that ended up being traced back to faulty software and allegations of systemic inside issues with safety at the US producer.
Read The Thaiger’s evaluation of a Netflix documentary about Boeing’s management failures that led to the crash of the two 737 Max jets HERE.
โซล่าเซลล์ราคาถูก on the earth eventually cleared the Max mannequin jet to fly again after 20 months of soul searching and thorough inspections from the US FAA. But in China, where aircraft safety has turn into one of the most scrupulous in the world, they waited one other yr to clear the controversial airplane to fly in China’s skies.
So with an ongoing commerce warfare, the problematic history with the Boeing 737 Max, and now the crash of another 737 jet, albeit from an earlier collection, Boeing’s future is in danger within the quickest growing aviation market in the world.
In 2017 and 2018 China accounted for practically 1 / 4 of Boeing’s international deliveries. That’s now dropped near virtually zero… actually 7 aircraft last 12 months and none this year. Indeed, the lack of deliveries into China has allowed Euro-rival Airbus to move Boeing in 2019 as the preferred business producer in the world… measured by deliveries.
The present scenario in China threatens to cement the widening hole between the 2 rivals.
Now there’s definitely been plenty of airline insider gossip about Boeing fudging agreements and promoting a number of planes to Chinese airways, both by way of a third celebration leasing company or through undisclosed gross sales the place the buyer just isn’t made public. And, after all none of this could occur with out the approval from the Chinese government.
For their half, the Chinese authorities need to hold using the ‘Boeing’ problem as part of their leverage in the ongoing, and somewhat protracted and complicated, commerce struggle negotiations between the US and China.
Certainly the Boeing CEO Dave Calhoun is conscious about shedding one of Boeing’s most profitable future markets. He defined to buyers last October concerning the significance of the Chinese market to Boeing and urged negotiators to search out some kind of decision quickly. Well, of course, he desires to enroll a quantity of gross sales. He also knows the longer the reluctance of China to buy Boeing planes, for whatever cause, the more difficult it will be to lure Chinese airways to the Boeing family of passenger jets.
Since 2018 Airbus has been delivering extra planes than Boeing into the Chinese market and will become the predominant model of aircraft in China after the Boeing model being more popular in the past. But, worldwide, Airbus has now passed its long term rival and that scenario is now happening in China.
Once airways make a acutely aware switch to a model new brand of aircraft, or even a new mannequin jet, it turns into more difficult to modify again with the prices of re-training, upkeep, new supply chains for spare parts, pilot training, etc and so forth.
But it’s not as if the 2 big aircraft producers make exactly the identical products, like for like. Both Boeing and Airbus have a special vary of plane that slot into various markets… design parameters together with the number of passengers, flight distance, gasoline efficiency, cargo capability, even cargo versions of the planes.
Whilst it’s easy to check Boeing 737s with Airbus A320s, the 2 are nonetheless quite different plane with variations in design elements and variations of model sort, though most passengers wouldn’t know, or even care, as soon as they’re sitting inside.
So while the Chinese aviation market may pivot to a largely Airbus fleet, they’ll never be in a position to get all of the plane they want from a single producer.
If the present turbulence for Boeing in China leads to them losing a big chunk of their market, the US producer shall be relegated to being a permanent No. 2 globally behind Airbus… such is the dimensions and potential of the Chinese aviation industry.
And then there’s the looming upstart of a Chinese built business competitor referred to as COMAC, and especially their single-aisle counterpart, the new C919. Comac has over 1,000 sales commitments together with 305 totally paid deposit orders, however mostly from Chinese leasing corporations or native airlines at this stage. But that’s one other story on our next flight.
For now, Tim Newton signing off from The Thaiger flight deck..