China Needs Bigger Airliners, But Maybe Smaller Ones Too

By Bradley Perrett
Source: Aviation Week & Space Technology
February 03, 2014
Credit: Antony J. Best/

For years, the story of Chinese commercial aircraft demand has been mainly about enormous growth, especially in the domestic arena, with a subplot about sizes creeping higher to mitigate shortages of airspace and skilled workers.

Now things are becoming more complicated. For a start, the economy has slowed. Over the past year, the airlines have found themselves with too much capacity and even when balance is restored, the carriers will not be able to grow as fast as previously. But concurrently the authorities are promoting budget airlines, which should stimulate traffic demand. A five-year-old and growing trend to set up small local-government airlines is creating an opportunity for regional aircraft manufacturers.

The major Chinese airlines, traditionally weak in international business, are trying to remedy that old shortcoming; their attempts should boost their demand for long-range widebodies, especially if they succeed. And there is still a shortage of pilots, technicians, runway slots and airspace capacity. So aircraft sizes continue to creep up.

In the first 11 months of 2013, Chinese airlines carried 12.7% more passenger traffic than a year before. But the seemingly healthy figure was evidently driven quite as much by capacity as by demand, since yields were weak. Moreover, annual growth rates for the first decade of the century were typically around 15%. We are unlikely to again see such powerful expansion over a prolonged period, because the Chinese economy's days of 10-11% annual economic growth are almost certainly over.

Still, there can be no suggestion that the Chinese market will be anything but enormous. China will be growing more slowly but now from a very high base; it already has more commercial aircraft than any country except the U.S. “We don't have double-digit economic growth, but 7 or 8 percent [the current rate] remains spectacular compared with other parts of the world,” notes Eric Chen, president of Airbus's commercial aircraft business in China. Whether even that growth rate will continue is much debated, however; the Chinese cabinet's Development Research Council predicted last year that the economy would be growing at 6% by 2020.

Chen predicts the current Chinese fleet of about 2,000 mainline commercial aircraft will double by 2020. That implies about 10% annual fleet growth, and a little more traffic growth if average aircraft sizes keep edging higher.

Average aircraft capacity per domestic departure has grown 5% since 2004, from 142 seats to 150, says Boeing. “It is likely this trend will continue through the decade as the market continues to grow and mature and as airlines look to match the best combination of capacity and efficiency for their markets,” says Ihssane Mounir, Boeing's senior vice president of sales for Northeast Asia.

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