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China, Russia Near Deal for Wide-Body Aircraft

Beijing, Moscow Dream of Rivaling Airbus and Boeing

Russian and Chinese aircraft manufacturers are preparing to cooperate to help China meet soaring demand for new jumbo jets without kowtowing to industry heavyweights Airbus and Boeing.

Aviation industry officials on the sidelines of the recent Zhuhai Air Show in southern China told Caixin that the Chinese and Russian governments have agreed to cooperate on jumbo jet development, including wide-body aircraft design, research, and manufacturing. Negotiations between aviation sector representatives from the two sides are still underway, but officials said they expect a final agreement to be announced next year.

Key parties for the potential deal would be state-owned Commercial Aircraft Corp. of China (Comac) and Russia's state-owned United Aircraft Corp. (UAC)

Not invited to the negotiating table were the companies that now dominate the world's jumbo jet manufacturing industryEurope's Airbus and America's Boeing. These companies are currently among the only choices available to Chinese airlines looking to modernize or expand their fleets of long-distance, big-load aircraft.

Chinese airlines currently fly Airbus A340, A350, and A380 jets, as well as Boeing 777 and 787 models. These wide-body aircraft are commonly reserved for long distance flight and can accommodate at least 200 passengers, and as many as 800. They're also more fuel- and cost-efficient to operate than smaller passenger jets.

Chinese airlines currently fly about 170 jumbo jets combined, but will need to add at least 1,000 new wide-body aircraft over the next 20 years to meeting rising demand for long-distance air travel, according to a Boeing report.

Some demand for new aircraft is expected to be met by China's homegrown C919, a narrow-body family of Comac passenger jets currently under development. These models are designed to carry between 158 and 174 passengers, thus rivaling the Boeing 737 and Airbus A320 medium-range jets.

The first air-worthy C919 model is expected to take its first test flight in late 2015. Meanwhile, Comac has made it to the research stage of a project for an all-new wide-body aircraft that's currently called C929.

The production plan of C929 was first mentioned in 2009, when Shanghai officials released an aviation industry development report describing city plans to expand aviation manufacturing capacity to 230 aircraft annually, including 150 C919 and 30 C929 aircraft.

More recently, on November 7, the French news agency Agence France Presse said C929 production would likely begin in 2023. According to a Chinese aviation executive quoted in the report, Chia wants to begin the wide-body aircraft production within 10 years.

So far, however, the C929 is only on paper. But China is keen to develop its own, wide-body passenger aircraft to compete with the Boeing 747 and Airbus A380. And that's apparently why Comac officials have been eyeing a cooperation agreement with Russia.

Step by Step

The first definitive step toward a Chinese-Russian deal came last May, when Comac and UAC officials signed a memorandum of understanding agreeing to jointly conduct research into wide-body, long-range passenger aircraft.

The next step came in September with an announcement by Russia's Deputy Prime Minister Dmitry Rogozin. He said the two countries planned to sign a contract for joint development of wide-body aircraft in October.

October came and went without a contract signing. However, Comac Chairman Jin Zhuanglong said October 19 that the China-Russia research project would be launched in 2015.

China wants jumbo jets but doesn't want to pay relatively high, Airbus-Boeing prices. A single 787, for example, can cost about $200 million.

The Chinese government would also like to see its domestic aviation industry benefit from the kind of supply chain that would emerge to support homegrown jumbo jet manufacturing. Development of this niche industry would complement the country's emerging manufacturing base for narrow-body aircraft such as the C919. Eventually, China wants to see its passenger jets of all sizes accepted and flying around the world.

China's domestic civil aviation sector has been gradually phasing out small aircraft with fewer than 120 seats in favor of larger jets that can carry up to 250 passengers, according to Yang Yang, who heads Comac's market research division.

Thus, Yang said, the outlook is bright for the C919 and sets the stage for Comac's expansion into jumbo jets.

Agreeing with Wang is Dang Tiehong, Comac's Deputy Director of Marketing, who told Caixin that wide-body aircraft will be an important aviation sector segment in the future. For now, though, Dang said uncertainties have forced Comac to move slowly toward launching a jumbo jet project.

To complement talks with the Russians, for example, Comac recently completed a study on wide-body aircraft production and submitted it to government authorities for review.

Reviving the Dream

Russia has long sought a role in China's aircraft development. In 2005, for example, a Russian aviation official expressed hopes that his country could cooperate with China in the research and development surrounding UAC's Irkut MC21 family of narrow-body passenger jets, which Russian airlines are flying today.

Then in 2012, officials at the Russian Ministry of Industry and Trade signaled a willingness to work closely with China's aviation industry. Moreover, Russia's media that year reported that Comac and UAC would work together on a wide-body aircraft based on Russia's now-scrapped Ilyushin IL-96 model passenger jet.

The IL-96, which went into service in 1993, can carry up to 300 passengers on a flight of up to 11,500 kilometers (7,146 miles), which makes it comparable to the Airbus A380 and Boeing 777 models. Later, though, the IL-96 was declared an aircraft with too many flaws and unfit for the world market. So the airliner was pulled off the market.

Russia had planned to improve the IL-96 by equipping it with more advanced, efficient engines. These plans never got off the ground, however, due to a lack of funding.

A cooperation project with China could revive the IL-96 dream. A UAC representative told Caixin that Russia would like to work with China on wide-body aircraft development based on the IL-96 model and fitted with engines made in Russia.

But there's no guarantee China would agree to a project based on the IL-96. One skeptic of such a project is Shen Kezheng, an aviation expert with Guangdong Changsheng Aircraft Design Co. who has worked on Chinese aircraft development projects.

Shen told Caixin that the IL-96 may lack the technological features needed for an aircraft to compete on the international market. For example, it's an all-metal aircraft, whereas the equivalent, 250-seat Boeing 787 and Airbus A350 are more than 50 percent composite materials.

In Shen's opinion, the proposed China-Russia cooperation would focus on a wide-body jet with about 250 seats. But to compete against Boeing and Airbus, he said, it should be built with composites. And Chinese authorities prefer non-Russian engines made by companies such as Rolls-Royce, General Electric, and Pratt & Whitney.

"Russia doesn't possess advanced technology for large aircraft," said Shen. "But from Russia's perspective, upgrading a mature model (such as the IL-96) will save money. The question is whether China would be willing to do it."

A Chinese aviation industry source said China wants only the best engines, while Russia is interested in supporting its own engine-manufacturing industry. "For civil aircraft manufacturing, we shouldn't think about using our own stuff but the world's best," the source said.

Russia's aviation technology is world-class in most areas except civilian aircraft engines, said Ni Jingang, Development Department Director at China's AVIC Commercial Aviation Engine Co.

Moreover, according to some industry analysts, China would also like to cooperate with Russia on projects involving heavy-duty helicopter technologies. But Russia's main interest is wide-body aircraft.

"Russia will not give away" technology, Shen said. "There are questions about whether they'll use the IL-96 plan as a condition [for any agreement], and whether China will accept it."

Complementary Partners

At the Zhuhai show, the Chinese Vice Minister of Industry and Information Technology Xu Dazhe declared, "China will accelerate its development of large aircraft and heavy helicopters, and develop wide-body aircraft at the proper time."

An aviation source told Caixin that China and Russia's pending partnership in developing wide-body aircraft would focus on products that could be on the market after 2020, including a model with long-range capacity and double aisles to compete with Boeing 787 and the Airbus A350.

AVIC's Ni said engines for such a wide-body aircraft could be based on an entirely new design, adding that his company is discussing possible cooperation agreements with overseas companies about using their advanced technologies in China's future engine development projects.

But the tone of the Russia-China aircraft relationship would likely differ from China's experience with Western aviation companies.

Liu Gongshi, a senior adviser for the China Air Transport Association, said that although many European and U.S. aviation companies have moved aircraft part or equipment production facilities to China, they have not transferred their core technologies to Chinese plants.

Before attending the Asia-Pacific Economic Cooperation (APEC) conference in Beijing in November, Russia's Minister of Industry and Trade Denis Manturov struck a friendly tone in announcing key agreements with China.

Manturov said China and Russia in June had completed preliminary studies on a wide-body aircraft project. Those studies set the stage for the cooperation plans now being drafted.

Manturov also said UAC and Comac in September had finished work on a business plan for manufacturing wide-body aircraft, and then had submitted these proposals to government authorities in each country.

Manturov also said that Russian and Chinese helicopter manufacturers had entered talks focusing on future helicopter project cooperation. These talks had followed an agreement signed in September for the formation of a strategic partnership.

"Both China and Russia have huge demand for wide-body aircraft," Liu said. "It will cost tens of billions U.S. dollars for Russia to work on it alone. Russia has technology and China has money.

"The partnership will be complementary."