In mid-May, the first C919 intended for the first airline customer had its first flight. This is good news for China’s dream of becoming a world-class builder of passenger jets.
The bad news is, it’s going to be expensive. A C919 could cost as much as an Airbus A320 or a Boeing 737.
That’s very bad news, in fact. Perhaps the only appeal of the C919 was its cheapness. It was supposed to be half the price of its competitors. Now that cost advantage has vanished.
The problem is, you can usually have two but not all three. “Better” and “faster” usually cancel out “cheaper.”
In fact, “cheaper” is always the hardest outcome, as the Chinese are discovering with the C919.
In fact, it didn’t fly until 2017. Nevertheless, five years later, the C919 has yet to be certified as airworthy by the Chinese Civil Aviation Administration of China (CAAC). In fact, it needs hundreds, perhaps thousands, of more hours of flight tests before it can receive CAAC certification. Even then, certification by the U.S. Federal Aviation Administration (FAA), which is essential if China wishes to sell the airplane overseas, is still far off.
Nevertheless, COMAC is already claiming the C919 to be a big success, boasting over 1,000 commitments to buy. Yet there are only around 300 firm orders for the plane, the rest being options.
Moreover, all of these orders are to Chinese airlines or Chinese banks and leasing companies. COMAC has failed to secure the sale of a single C919 to an overseas airline. Instead, it looks increasingly that Beijing is strong-arming not only Chinese airlines but also large state-owned financial institutions into propping up this program.
According to the Straits Times, China Eastern Airlines plans to buy 38 C919s for a total of $4.38 billion. This actually works out to $115 million per plane. In comparison, the latest version of the A320 costs around $111 million each, and the Boeing 737 MAX costs around $117 million.
Finally, calling these aircraft “Chinese” is stretching the point. In fact, the C919 relies heavily on Western suppliers for critical components and subsystems, including its avionics, landing gear, nacelles, flight controls, and—most importantly—jet engines. Around 60 percent of these foreign suppliers to the C919 are U.S. companies, such as General Electric, Honeywell, and Eaton.
In other cases, commoditized products are characterized by standardized technology or common attributes, such as consumer electronics or narrow-body passenger jets. All things being more or less equal, therefore, purchasing decisions are often made based on price.
But China is losing that price edge, and with it, the incentive to buy the C919 when compared to the A320 or Boeing 737.
At the same time, it is important to note that not all commodities are the same. There is good coffee, bad coffee, and awful coffee. It is the same with commercial airliners. Safety and reliability, as well as comfort, are at least as important as the price.
As we all know, China’s reputation for quality is spotty at best. One only needs to recall that back in 2008, a chemical compound called melamine was found in Chinese baby formula. Remember, too, that the C919 has still not been certified air-worthy by either the CAAC or the FAA.
As with many high-tech products coming out of China, the adage is still true: you buy cheap, you get cheap.