The Editor’s Corner #31 – The Chinese Regional Market Is Hotting Up

LONDON – It is clear that through the certification of the ATR 42-600 and the Embraer E190-E2 in China, the regional market over there is hotting up. Welcome to The Editor’s Corner.

The Editor’s Corner is an op-ed series from AviationSource Editor-in-Chief James Field, who is going to give his thoughts (Maybe controversial) on all things going on in the aviation industry.

In case you have missed the last 29, feel free to browse through them before you continue to read this piece:

The Chinese Regional Market Is Hotting Up

The Civil Administration of China (CAAC) certifying both of these aircraft types alongside the COMAC ARJ21 and C919 shows that there is plenty of competition to take advantage of.

With ATR and Embraer now able to penetrate further into this market, it’s going to be interesting to see what each Chinese airline will opt for.

My personal view is that this is going to be a very intense battle between Western manufacturers and Chinese manufacturers.

280 Turboprop Aircraft Needed in China in 20 Years…

Two days ago, the Civil Aviation Administration of China (CAAC) provided validation of the type certificate for leading turboprop manufacturers ATR 42-600.

This milestone opens the opportunity for ATR to re-enter the Chinese market with a firm order from an undisclosed customer for three aircraft.

The most sustainable option for regional air travel, the ATR 42-600 is an ideal route opener for China, a vast country looking to grow essential connections profitably and responsibly.

Nathalie Tarnaud Laude, ATR’s Chief Executive Officer, said: “Receiving CAAC’s validation of the ATR 42-600 type certificate, along with a firm order, is a major achievement marking the re-introduction of ATR turboprops in China.”

“The ATR 42-600 will undoubtedly prove to be a game-changer. ATR offers an eco-responsible alternative to jets while bringing comfort and convenience to passengers and essential air services for communities and businesses to thrive.”

Regional aviation has a well-researched positive effect on a country’s economy and society: increasing regional flights by 10% generates a 5% rise in tourism, a 6% rise in regional GDP, and an 8% increase in foreign direct investment.

Fabrice Vautier, ATR’s Senior Vice-President of Commercial added: “By 2035, we anticipate that over 150 airports will be built in China, and turboprops will play a key role in creating a new network of short, thin routes, complementing the high-speed train offering.”

“Our 20-year forecast predicts a need for 280 new turboprops in the region, and ATR is perfectly placed to meet this demand whilst also contributing to decreasing the reliance on public subsidies and delivering reduced CO2 emissions.”

It is clear that there is a need for such regional turboprops, especially in areas of China that are quite difficult to access, such as mountainous terrain and short runways.

Embraer E2 An Opportunity for Chinese Operators?

Embraer announced on Thursday that their E190-E2 has been certified to operate in China, with the Brazilian planemaker believing that the E195-E2 is not far away from certification either.

“It’s a big moment for our newest generation Embraer jet – the E190-E2 – to be certified by CAAC,” said Guo Qing, Managing Director and VP of Commercial Aviation, Embraer China.

“Besides its right size and fuel efficiency, the E190-E2 was born with superior hot-and-high capability. It’s the first aircraft in its class to have flown to some of the world’s highest airports in western China, including Lasha and Yushu.”

“We believe the E190-E2 is the best aircraft to serve low-density but high-elevation markets in western China with the right performance and more profitability.”

Embraer latest market forecast revealed that 1445 new aircraft in the up to 150-seat category will be delivered in China through 2041; driven by the nation’s long-term economic development and the continuing trend of the Chinese civil aviation system evolving from point-to-point to a more hub-and-spoke based network.

So there is definitely an opportunity for Embraer to thrive within the Chinese market and take advantage of new revenue streams moving forward.

When Could We See Orders?

It is unclear when we could see orders produced from Embraer and ATR, as this is charting into somewhat new territory and will have to sound out new customers.

They do have quite a lot of time to achieve this, with the Paris Air Show not happening until June next year and Farnborough the year after that.

It also depends on how much of the market share COMAC can establish before such negotiations take place on the Western front.

Either way, it’s going to be interesting to watch.

Who Will Come Out on Top? Embraer, ATR or COMAC?

In my view, it’s a difficult thing to answer. Each manufacturer is going to have something unique to offer on the table.

Embraer has shown that with its E2 program, it can do short runway landings, and ATR can as well through the eventual introduction of its STOL program.

What about COMAC? There could be a limitation there that may play well into the hands of ATR and Embraer.

It also depends on which area of the regional market each side wants to penetrate, as this could be different as well due to it being three different sizes of aircraft.

Even so, COMAC has already been able to hit the ground running on the airshow perspective by securing an order for 330 aircraft at Airshow China.

Leasing companies signed orders to buy 300 new C919 planes and 30 ARJ21 aircraft with the Commercial Aircraft Corporation of China (COMAC) on Tuesday at the ongoing Airshow China 2022 in Zhuhai, South China’s Guangdong Province, COMAC told the Global Times.

COMAC told the Chinese news source the Global Times that it has purchase orders for 300 C919 aircraft and a further 30 orders for its ARJ21 regional jet aircraft.

The orders were brokered with several leasing companies, which include China Development Bank Leasing, ICBC Leasing, CMB Financial Leasing, BOCOM Leasing, CCB Financial Leasing, SPDB Financial Leasing, and Jiangsu Financial Leasing, with the top five companies each buying 50 C919 planes, according to news media reports.

Overall: This Is A Market to Watch…

As mentioned, this will definitely be a market to watch, especially as more players in the West come in and try and implement pressure on COMAC.

It is going to be an exciting thing to watch, especially if it means securing some more revenue share globally by ATR and Embraer, which is something they will be focusing on in particular.

Either way, we have to sit back and wait to see what happens.

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