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Aviation giants look to China amid global turbulence

While international manufacturers are hoping they can continue to fill up their order books, China's nascent manufacturing industry may use the 2008 airshow to announce a major step forward.
by Staff Writers
Zhuhai, China (AFP) Nov 3, 2008
The giants of the aerospace industry will jet in to China's only international airshow starting Tuesday hoping the country's aviation sector can provide shelter from the global financial crisis.

But there are early signs China has not escaped the drop-off that has hit the global industry, with analysts and airlines warning of a "cold winter" of slowing passenger demand.

Boeing of the United States and Europe's Airbus will head the line-up of 600 civil and military manufacturers and parts suppliers from 35 countries at the 2008 China Airshow, a biennial event in the southern city of Zhuhai.

And as airlines across the world report a drop-off in first and business class travel due to the economic turbulence, manufacturers are still confident China can provide the necessary long-term growth.

"Clearly right now the airlines are losing money. In China it has been a bad year," Laurence Barron, president of Airbus China, told AFP, pointing to natural disasters, visa restrictions and high oil prices for the problems.

"We believe that as in previous crises, China will pull out of it probably before anybody else. The trends for long-term growth have not changed.

"Next year, we will have to be prudent, cautious, but I believe that, at the latest, by 2010 China should be back on track," he said, adding that the firm had not yet suffered any deferrals or cancellations from customers.

Airbus's main rival Boeing backs the long-term growth prospects. Research released last week by the US giant found China will need 3,710 new commercial planes worth 390 billion dollars over the next 20 years.

"China is going to be the fastest-growing market in the world," Wang Yukui, the spokesman for Boeing in China, told AFP.

The demand will represent 41 percent of the entire Asia-Pacific market, and only the United States will be a bigger buyer, Boeing said.

In addition, Chinese carriers will add about 370 freight-carrying planes by 2027, quadrupling their total freighter fleet, the Boeing research found.

In 2007, China's air traffic soared 16.8 percent to 387.6 million passenger trips, on the back of 16.7 percent growth in 2006, state media reported.

The demand has sparked a similar boom in airport construction, with around 100 new airports planned by 2020, previous reports said.

Nevertheless, China's aviation sector is starting to feel the impact of the global economic turmoil, according to Tom Ballantyne, chief correspondent of industry magazine Orient Aviation.

"Although we are not talking about a cessation of growth, we are talking about a slowdown in growth," he told AFP.

"The industry in China has been growing at 10-15 percent (per year). It is likely to be more like 5-6 percent growth going forward."

He Li, vice president of state-owned flagship carrier Air China, said Monday the industry must be prepared for a "cold winter" of slowing passenger demand and should be prudent about buying new aircraft.

"In 2008, the domestic aviation market has (experienced) fluctuations, even a slowdown, but aircraft numbers kept growing," he told a conference in Zhuhai ahead of the Airshow.

Both Air China and another major player, China Eastern, last week reported heavy losses in the third quarter, normally peak season for air travel.

While international manufacturers are hoping they can continue to fill up their order books, China's nascent manufacturing industry may use the 2008 airshow to announce a major step forward.

The Commercial Aircraft Corporation of China (CACC) is expected to announce Tuesday that it has sold 25 jets to a US company, state press reports said last week without naming the buyer. If confirmed, it would be a landmark deal.

The Guangzhou Daily said the company that has designed China's first homemade jet, the ARJ21 -- Advanced Regional Jet for the 21st Century -- would announce a 735-million-dollar contract when the show opens on Tuesday.

The potential contract for the ARJ21, which carries between 70 and 110 passengers, would come despite the fact the plane is yet to make its maiden voyage.

The CACC, which was only launched in May, has said it is aiming to eventually take on Airbus and Boeing, although the firm's president said that would take at least 20 years.

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Boeing sees China buying 3,710 planes over next 20 years
New York (AFP) Oct 29, 2008
US aerospace giant Boeing said Wednesday it sees the booming China aviation market producing orders for 3,710 new commercial aircraft over the next 20 years.

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