George S. May Business Blog

China has a plane that will cost less than Boeing and Airbus’ version

Chinese government controlled plane maker, Commercial Aircraft Corp. of China, has announced that their first commercial jet to hit the market will less expensive than the akin models from rivals Boeing and Airbus.

The C919 is a 168-seater and is set to enter service in 2016. Chen Jin, Commercial Aircraft Corp. of China’s (Comac) sales head, told onlookers at the Hong Kong air show that the aircraft will use up to 15 percent less fuel than current Boeing 737s and Airbus A320s. The air show was the first venue to host a peek at a model of the plane for the first time.

Because of the price, it is expected that down the road Comac will start to become a solid competitor to the other two manufacturers.

“In the medium- to long-term, Chinese aircraft manufacturers will be able to challenge the larger planemakers like Airbus and Boeing,” said Jack Xu, an analyst at Sinopec Securities Asia Ltd. in Shanghai.

China has spoke upon their plans to develop their own technologies across a wide range of industries and this is exactly that.

Airplane makers have seen a decline in orders, as of late, due to the global recession. As the world gets back on its feet, so speak, Comac looks to have their company’s development coincide with the projected surge.

So how can they make the planes at such an inexpensive price?

Boeing expects to be able to add new technologies to the 737 that will make it more fuel efficient, Randy Tinseth, the company’s marketing chief said today.

“We have to find new ways to consistently reduce the cost,” he added.

The company’s first customers will likely included China’s big three carriers, Air China Ltd., China Southern Airlines Co. and China Eastern Airlines Corp., he said. Comac will offer also financial support to win customers, Chen said.

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