China‘s decision to move forward with Airbus aircraft orders proves the current dynamics in the global aviation market with emphasis on the interconnection of different political, diplomatic and financial interests:
China’s decision to ease a boycott of some $11 billion in jet orders followed a high-level appeal from the planemaker urging Beijing to recognize its support over a trade row with Europe, a letter seen by Reuters shows. It gives a glimpse into the intensity of the lobbying in the dispute, which helped persuade the European Union to freeze a law on regulating international aviation emissions. China partly lifted a blockade on 45 long-haul A330 jet orders during a visit by French President Francois Hollande last month. Behind the scenes, the European aircraft maker claimed partial credit for the EU climb-down and cheered what its chief executive described to Beijing as “joint efforts” to limit damage to Chinese airlines. Writing to China’s top aviation official shortly after the EU back-pedaled on its Emissions Trading Scheme last November, Fabrice Bregier said that the European aircraft producer had been “very active” in supporting China’s preference for a broader global system.
More importantly, France has a serious role on the efforts to improve Airbus sales in China:
China Aviation Supplies Holding Company (CAS) has signed a General Terms Agreement (GTA) with the European aircraft maker for the purchase of 60 airplanes, which includes 42 A320 Family aircraft and 18 A330 aircraft. The GTA was signed at the Great Hall of the People in Beijing by Li Hai, President and CEO of CAS and Fabrice Brégier, President and CEO of Airbus in the presence of the visiting French President François Hollande and the Chinese President Xi Jinping. It was part of a series of France-China agreements signed. “We are delighted to receive a new order from our long-standing customer CAS for both the best-selling single aisle A320 Family and wide-body A330 Family,” said Fabrice Brégier, President and CEO of the European company. “The A320’s high reliability and low operational cost has made it very popular with Chinese airlines. As congestion puts pressure on airports in large cities in the Chinese aviation market, the A330 is an excellent solution as larger aircraft can transport more passengers with less flights. The comfort of the A330’s spacious cabin is also appealing to passengers. These eco-efficient aircraft will contribute to the growth and success of China’s aviation sector,” said Fabrice Brégier. By the end of March 2013, there were some 750 A320 Family aircraft in operation with 14 Chinese airlines and more than 110 A330s in operation with six operators.
As there will be 450 million passenger trips in the Chinese aviation market by 2015, Air China plans to buy 100 aircraft:
Air China Ltd announced a large-scale aircraft purchasing plan, which analysts read as a clear signal of its confidence in the country’s civil aviation market. The Chinese flag carrier said it plans to buy 100 aircraft, without giving any details on models or a timetable for the purchases. It also added that six A340 aircraft, the oldest in its Airbus fleet at an average 14.6 years, will be retired. Industry sources suggested the new aircraft are unlikely to be added within two years. Li Lei, an analyst with China Minzu Securities, said: “The 100 aircraft are part of the company’s mid-term plans, and represent 20 percent of its current fleet.” At the end of last year, Air China had a fleet of 461 aircraft, including 209 airplanes from the European aircraft producer, according to its annual report. Li said that such a large order showed that Air China is optimistic of continued growth in the Chinese civil aviation industry. ”Expected capacity growth by other Chinese airlines is also large, especially on international routes,” said Li, suggesting more investment in overseas capacity is likely. According to the Civil Aviation Administration of China, by the end of 2015 there will be 450 million passenger trips being made a year, and investment in civil aviation will be worth 1.5 trillion yuan ($243.2 billion).
Finally, the competition is the global aviation industry rapidly increases with a main focus on international airplane producers, as they can be a true “locomotive” for reversing current trends in the global economy. China is a big market and Airbus is here…