The signing ceremony in the Great Hall of the People for the sale of 30 Airbuses to China on April 25 was a moment of optimism in the midst of bleakness. The SARS crisis was at its peak, China had turned temporarily into a pariah nation, and Chinese airlines were experiencing an 80-percent downturn in business.
In attendance at the ceremony were French Prime Minister Jean-Pierre Raffarin and Chinese Premier Wen Jiabao, and the fact the French Premier was willing to come at a time when China was on the ropes diplomatically will no doubt not be forgotten. Now, with SARS apparently in retreat, any fears that the sky is falling have been put to bed. The Chinese airline industry, it is unanimously agreed, will recover. It is just a matter of time.
"Players in the industry are repositioning themselves now with cancelled or postponed orders," says one industry analyst adding that the unscheduled disturbance from SARS was providing an opportunity for a necessary overhaul, reviewing health standards and work practices. The Chinese commercial aerospace market is like a number of markets here. It is huge in potential and growing fast but difficult to make a profit in. But SARS apart, the potential growth fates of tourist and business air travel within China dwarf just about any other opportunities in the world today.
Airbus is a serious player in the China market, and still has room to grow. Its main rival, Boeing, currently has a 75 percent market share here, although the agreement signed on April 25 will help shift that balance. There are reported to be 170 Airbus planes flying in China's commercial fleets today.
The value of the April deal was not revealed, but the book value of the planes ordered amounts to EU 1.7 billion. The total number of air passengers in China has been growing at a fast rate for two decades. Total passenger numbers in 2002 came to 84 million, compared to 75 million in 2001 and only 29 million in 1992. Now, whole new sections of China's urban population are ready and eager to fly off on package holidays to Hainan and elsewhere.
As the Chinese airline industry has grown, so has the market for planes. China's commercial fleet in the past mainly consisted of Russian or locally-built turbo prop aircraft which were largely impractical or unacceptable in the new age of aviation. Even the China-assembled MD-82s, the result of a joint venture with McDonnell-Douglas (now par of Boeing) in 1985, have mostly been pulled out of service.
The result has been a huge Chinese appetite for planes, and a passenger fleet which is one of the youngest in the world.