LONDON – With China still experiencing low travel demand due to lockdowns as well as offering strict regulation, this will hinder Boeing’s reapproval of the 737 MAX in the country.
Chinese Travel Sector in Tatters…
In 2021, China’s aviation industry lost $12.5bn in revenue due to the continued lockdowns caused by new outbreaks of COVID-19.
This, mixed up with the cargo hub of Shanghai being majorly disrupted, is creating a perfect storm for Boeing as a case study.
It is clear that with the Chinese travel sector essentially in tatters due to COVID, that recovery will take significantly longer than the rest of the world, which effectively has COVID beat or reduced.
Of course, it is in the interests of the Chinese authorities to clear up as many of the COVID infections as possible before opening up its borders safely.
China Eastern Airlines In No Rush To Receive MAX Aircraft…
As well as this, the Chinese authorities’ strict regulations will also make things a lot slower than Boeing wants them to be.
In a report from Bloomberg, China Eastern Airlines has said that there are several items that Boeing needs to work on before they are happy to bring the aircraft back into service.
With that in mind, the airline has said that they are not in any rush to receive new units of the aircraft type, which digs another hole for Boeing in this respect.
Commenting on this was Li Yangmin, the Vice-Chair of the carrier:
“Obtaining airworthiness approval is one of the most basic tasks, and afterward the company will also need to complete the aircraft modification, parking aircraft recovery, pilot training”.
Li also added that once supplementary approval has been received, flights “will only be resumed after meeting relevant national requirements”.
China Southern Airlines To Expect The MAX in 2024…
It is understood that China Southern Airlines mentioned to investors last week that MAX deliveries would not continue until 2024, according to the same report from Bloomberg.
This is based on uncertainties with deliveries, which is more than likely based on approval of the type in China as well as the weakened travel demand too.
China Southern has over 100 MAXs still to be delivered over the next few years, so it is within Boeing’s interest to get this sorted out as quickly as possible in order to prevent losing out on a big customer.
With COMAC making significant gains with the C919 and ARJ21, this may encourage conversion of orders if Boeing isn’t quick off the plate.
What Will This Mean for Boeing?
With China being the first regulator to ground the aircraft type following the crash of Ethiopian Airlines Flight 302, it is clear that Boeing has a lot of work to do in this regard.
A spokesperson for Boeing in China said that the manufacturer will continue “to work with global regulators and customers to safely return the 737-8 and 737-9 to service worldwide.”
On the other side, looking at travel demand for China as a whole, re-certification of the type is one thing, but deferral of deliveries could be another thing to be factored in.
With Boeing wanting to make progress on the 777X and the 787 alike, a slowdown in China could very well put the manufacturer even further on the back foot, which Airbus will probably be watching the situation closely.
Of course, the same thing could apply to Airbus as well, with the potential for there to be deferrals on the European side of things.
With such a slowdown also exacerbated by closed Russian borders as well, it is an eclectic mix of problems that both Boeing and Airbus will have to juggle moving forward.
As a suggestive prediction, Boeing’s momentum in China with the MAX will definitely be reduced, especially with every waking day that the aircraft is not back in service in the country.
With there being no clear indication surrounding recovery in China, this is also going to place even more pressure on Boeing to keep hold of their customers in the region.
Deferral of deliveries will of course be the first step post-recertification, but this could very well convert into cancellations if the Chinese carriers don’t want to play ball and accept them on the grounds of travel.
With this in mind, Boeing has a lot of work to do, but also a lot of damage control to do as well.