The joint venture operations are intended to import airframe structures from Wichita and conduct final assembly, paint, testing, interior installation, customization, flight testing and delivery of the Cessna aircraft to Chinese customers. As they become more adept, the Chinese factories will take on more work.
Embraer and Avic unit Harbin Aircraft, meanwhile, have already begun assembling a Legacy 650 business jet at Harbin. It is also due for delivery by the end of the year. There, the partners have had the much simpler task of converting a regional-jet assembly line to putting together derivative business jets. Most regulatory issues there were solved a decade ago for the regional-jet line.
In Cessna's deals, the partners and government authorities have to agree on such details as runway and airspace use, the extent of local assembly, and regulatory approvals for production processes. For Chengdu, it is not even clear yet where exactly the assembly will be done. The partners are still discussing whether to use a current factory at Chengdu, build a new one on Avic's site there, or build a new one on a new site in the southwestern city.
A new plant would normally produce at lower marginal unit costs, but reusing old facilities would be more economical for a low production rate. Getting local-government funds for aircraft programs, as in the case of Citation Sovereign assembly, is a big part of Avic's development strategy. In general, Chinese local governments, such as Chengdu's, are keen to see new factories, so over-investment in the Citation Sovereign facilities will not be surprising. That will not bother Cessna if the city pays the bill.
AAT builds fighters, trainers, drones and missiles, encompassing the well known fighter factories at Chengdu and Shenyang and the trainer plants at Nanchang (the Hongdu Group) and Guizhou. At Shenyang, ATT is already manufacturing the Cessna Skycatcher light sports aircraft. Harbin Aircraft is part of Avic rotary-wing specialist Avicopter.
“We're still in discussions, and those talks have not yet been completed,” says Schultz, referring to the AAT deal. For that reason he could not put a target date on the delivery of the first Citation Sovereign. The second official says the Chengdu talks are so far focused just on that aircraft, not on a second Cessna business jet that AAT would also like to assemble, the Citation Latitude, which is not due to fly until 2014. “At this stage it is one step at a time,” that person says.
The Latitude is due to be certified in 2015. Beyond the Latitude, Cessna and AAT have mentioned the possibility of jointly developing a business jet at Chengdu.
For that, Avic may have an alternative to Cessna. A senior Avic official said at the air show in Zhuhai last November that the group was also in talks with Israel Aerospace Industries (IAI), although it seems those negotiations have not gone as far as those with Cessna; there has been no announcement of a framework agreement on objectives, for example. At that show, Avic displayed a model of a proposed aircraft dubbed the New Generation Business Jet that seemed to share design roots with the IAI 1126 Galaxy, which was built until 2011 as the Gulfstream 200.
Asked whether IAI could use the design, Gulfstream President Larry Flynn points out that his company owns the type certificate. Still, the Israeli company's willingness to sell know-how may turn out to be the key to Avic's business-jet operations going beyond assembly of foreign designs.