- [Jon Sindreu] This is Boeing's 737,
and this is the Airbus A320.
They're by far the most popular passenger planes
sold around the world
with over a fifth of them flying in China,
making it a key market.
- This is a continuation of a long-term strategy
of Airbus in China.
- But these two rivals
may soon have a new direct competitor.
The C919 made by Chinese state-owned
aviation company Comac.
These planes are expected to enter
into service later this year
and state-owned airlines in China
have already ordered or expressed interest
in more than 1000 of them.
Comac is owned and heavily subsidized by Beijing.
And that makes the company potentially
the biggest challenge to a duopoly
that has dominated the market for over three decades.
- I'm looking forward to...
- [Jon Sindreu] The rise of China's aviation industry
is one big reason why the US and the European union
have called a truce on a 17 year tariff fight
over government subsidies.
- Others are taking the opportunity
to launch their own industries.
And we have been too busy,
fighting each other to pay attention.
- So how can Airbus and Boeing counter Comac.
Technology, their global reach
and growing political support
could be some of the answers.
Boeing and Airbus have been rivals since the 1960s.
Back then, the European company was seen
as an overly subsidized laggard,
but after 1988, Airbus' A320
allowed it to knock Boeing off the top spot several times.
So facing new competition, Boeing nudged the US
to start a legal fight in 2004,
and then...
- The EU has today decided to take the United States
to the World Trade Organization
over the massive subsidies they gave to Boeing.
- [Jon Sindreu] It became the longest and most costly battle
in the history of the World Trade Organization.
Resulting in more than a billion dollars in tariffs.
Lately, Airbus has pulled ahead of Boeing
in terms of orders.
That's also because Boeing has been dealing with a major
crisis since the grounding of its 737 Max planes,
After a string of crashes.
- All of us feel the immense gravity of these events
across our company.
- The Corona virus pandemic has also hit both companies hard
with both delivering hundreds fewer planes,
but there's one market that wasn't doing us badly, China.
At one point, China became
the world's largest aviation market.
As the US canceled flights.
- [Jon Sindreu] Now the US and Europe
have decided to suspend
their trade fight to work together and focus on China.
- To confront the threat from China's ambitions
to build an aircraft sector...
- [Jon Sindreu] Airbus told us that Comac could take a share
of the single aisle market by the end of the decade.
And in China, that direct competition
is about to start.
(foreign language)
- [Jon Sindreu] Since 2008, Comac alone has received
between 49 and $72 billion in government aid,
according to industry watchers.
and has successfully built a regional plane, the ARJ21.
The C919 has cost between 9 to $20 billion
to develop.
It's designed to directly compete
with narrow-body planes
like the 737 and the A320,
which can handle a range of short and medium haul routes.
The Chinese aircraft is less fuel efficient,
has a shorter range and lacks the global service network
of the Western plane makers.
But China alone will need some 8,600 planes
over the next 20 years, according to Boeing.
- I believe their need for aircraft is significant.
- And Comac wants to provide many of those.
Orders for Western planes from Chinese airlines
are much lower than what demand would suggest
indicating that they may plan to buy the C919 instead.
China and Russia are now also developing the CR929.
A long haul wide-body aircraft
that should start being built this year.
(tech music)
So how could Airbus and Boeing counter Comac?
Well, first there is manufacturing.
Boeing has been developing planes for over a century
and relies on decades of experience
and intellectual property
to deploy the latest plane technology.
Comac is some 90 years younger than Boeing.
And it's C919 has already faced production delays.
It will initially only be able to produce
very few C919s each month.
Boeing and Airbus have also used their duopoly
to create an international network of parts, servicing
and mechanics to ensure their planes
can operate around the globe.
Even if Comac's planes become successful in China,
they might be hard to export.
And then there is concessions.
Airbus has already received around $13 billion
in pandemic bailout support,
which it is partly investing
into researching hydrogen planes.
- One particular technology pathway,
which we find most promising, is hydrogen.
- Boeing and Airbus's new found truce
could help them pose legal challenges to Comac
while still trying to extract concessions
from their own governments to develop new, cheaper
and more fuel-efficient planes.
Finally, there is the fact
that the C919 is built mostly on parts
made by Western suppliers.
Engines are the hardest part of the plane to build.
And the C919 might still be a decade away
from flying on Chinese-made propulsion.
For now, it uses engines
made by General Electric and Safran.
The US and EU don't want to hurt these companies,
but geopolitical tensions could eventually reach them too.
China's already caught up with the west in many industries
like trains, cars, and digital technology.
So the C919 may be a stepping stone
to posing a real challenge in aerospace as well.
After all the country can potentially instruct
it's state-owned airlines to buy
as many homemade planes as it desires.
(tech music continues)