Provincial Administrations Fuel
China's Regional Airline Drive

The outlook for regional airliner sales in mainland China is very good-and it's improving behind the Beijing government's embargo on the import of any passenger aircraft of more than 100-seat capacity, Bombardier regional aircraft marketing VP Trung Ngo told Show News here.

"It's been a long haul to get people to buy into the concept of regional aircraft in China," he says. "It isn't something we started yesterday. We started promoting the concept many years ago."

Recent events have released "a pent-up demand" for smaller aircraft after operators in China found that larger airliners had not performed well for them in economic terms, Trung says.

The basic problem was too many instances of capacity outstripping market demand. Only by using smaller aircraft and maintaining service frequency have operators been able to make money, Trung says, citing the example of a batch of turboprop Dash 8s sold to China some years ago and since operated profitably.

He was speaking in the wake of Bombardier's sale of three CJ200 Series aircraft to Shanghai Airlines to replace far larger Boeing 737s, 757s and 767s on some routes. That order follows the sale last year of five of the same type to Shandong Airlines, based in the city of Ji'nan, about 500 km south of Beijing. They have yet to be delivered.

Bombardier sponsored a November conference on Chinese regional airline operations and aircraft which was well attended by, among others, the presidents of eight domestic airlines. The recent event served to focus attention on what the operation of the smaller commercial airliners could do for Chinese society and the economy, and contributed to the change of thinking there, Trung says.

"The onset of the recession has been very instrumental in changing the mind-set of some airlines on how they looked at regional aircraft and, more importantly, the relevance of regional airlines in the overall development of the air travel market within China," Trung says.

The air transport scene in China is no longer one of a single huge state monolith, the old CAAC. In contemporary China there are upwards of 90 separate airlines.

The drive to develop local and regional airlines has come not from central government but from provincial and regional administrations anxious to develop services and to support their local carrier, says Trung, "either financially or in some other way." The central government gets involved only when it comes to the allocation of funds for purchases abroad.

Though not yet having sold any regional aircraft to China, Brazil's Embraer also sees the Beijing embargo on big-transport imports as providing a window of opportunity for the regional aircraft builders-"ourselves, Bombardier, Dornier, even Boeing with the 717 and Airbus with the 318," says Embraer marketing VP Frederico Curado.

"They had a reason to do that," Curado says in reference to the Beijing edict, "to achieve some regional development. Their situation is similar to that in Brazil where our government, too, has had to stimulate regional airline growth. Both have large distances and populations concentrated in large cities. They have had trunk route development but little regional airline growth.

"Even our city, Sao Jose dos Campos, had no scheduled airline service ten years ago," Curado told Show News. "Now we have ten flights a day."

The EMB 145 on display here is to go on a demonstration tour in China next month, Curado says.

By Bob Rodwell