[Correspondent Diary] Chinese Passenger Aircraft Threatening US Boeing

C919 Price $99 Million, Cheaper Than B737 and A320
Passenger Aircraft, Future New Conflict Factor Between US, Europe, and China

[Asia Economy Beijing=Special Correspondent Jo Young-shin] China’s core competitiveness lies in price. The reason it could rise to the position of one of the two major powers (G2) also came from price competitiveness. The possibility that China’s price competitiveness will exert power(?) even in the aviation sector, considered cutting-edge technology, has increased. The civil aircraft (passenger plane) industry is dominated by the United States’ Boeing and Europe’s Airbus. This means the entry barrier is very high.

China’s self-developed C919 passenger plane successfully completed a test flight on the 14th. Chinese media including the official Xinhua News Agency reported simultaneously that the C919 (flight number B-001J), which took off from Shanghai Pudong International Airport at 6:52 a.m., completed a 3-hour and 2-minute flight and landed safely.

This aircraft is scheduled to be delivered to China Eastern Airlines soon and to enter commercial flights in the second half of this year. Last year, China Eastern Airlines officially signed a contract with the state-owned aircraft manufacturer COMAC for the delivery of five C919s. China Eastern Airlines plans to deploy the C919 on domestic routes connecting Shanghai with Beijing, Guangzhou, Shenzhen, Chengdu, Xiamen, Wuhan, and Qingdao.

The 'C' in C919 stands for China, and the number '9' symbolizes eternity (永遠). The number '19' hints at the maximum passenger capacity (190 people). The actual seating capacity of this aircraft is known to be 158 to 168 seats, with a maximum range of 5,555 km. Based on specifications alone, the C919 is similar to Boeing 737 and Airbus 320 series, which are the best-selling models.

Therefore, the price of the C919 is a hot topic. On the 10th, China Eastern Airlines announced plans to raise 15 billion yuan (approximately 2.8287 trillion Korean won) for the purchase and operation of new aircraft. Of this, 10.5 billion yuan is explained to be used for the introduction of new aircraft. According to the disclosure by China Eastern Airlines, the unit price of the C919 is 653 million yuan (99 million USD).

Aircraft prices are determined through negotiations between manufacturers and airlines based on order quantity and options. Although a simple comparison between the C919 price and those of Boeing 737 and Airbus 320 is somewhat unreasonable, it is estimated that the C919 price is about 20% cheaper than Boeing 737 and Airbus 320. The prices of Boeing 737 and Airbus 320 are known to be around 110 million to 130 million USD.

China includes the aircraft industry as one of the ten key sectors in its national strategy to strengthen manufacturing called “Made in China 2025.” The Chinese leadership’s dream is to rise even in the passenger aircraft industry, which has been almost exclusively dominated by the United States and Europe.

However, the barriers to overcome are very high. First, overseas sales are difficult due to safety issues. Verification of passenger aircraft safety requires considerable time. Therefore, the C919 is likely to be used only for the Chinese domestic market. In fact, most of the 28 airlines and aircraft leasing companies that submitted letters of intent to purchase to COMAC are known to be Chinese companies.

Also, checks from the United States (Boeing) and Europe (Airbus) are expected to be severe. Aviation authorities in North America and Europe are very likely to refuse entry into their airspace, citing safety concerns about the C919.

Insurance is another hurdle. Chinese insurers (primary insurers) will underwrite C919 insurance, but it is highly likely that American and European reinsurers, who dominate the global reinsurance market, will be reluctant to take on the risk. Even if they do, they are likely to demand high premiums. This will impose a financial burden on airlines operating the C919.

China’s core aircraft technologies have not yet been confirmed. Chinese media claim that the C919 was developed with independent intellectual property rights, but core technologies such as engines and electronic navigation devices are known to be American and European technologies.

However, it is expected that after 2025, China will start selling the C919 to pro-China countries. It cannot be ruled out that China will target the passenger aircraft market, monopolized by Boeing and Airbus, by leveraging its price competitiveness. Passenger aircraft are likely to become a new source of conflict between the United States and China, and between Europe and China in the future.

This content was produced with the assistance of AI translation services.