China Aircraft Maker Delivers First Plane; No Direct Threat to Boeing, Airbus

Commercial Aircraft Corporation of China, known as Comac, has delivered the first ARJ21 regional jet, out of an order for 30, to China’s Chengdu Airlines. The airplane first reached the drawing board in 2002 with a plan to enter service in 2006. In 2008, Comac took over the company that had started building the plane and finally pushed it out the door some seven years later.

The regional jet is expected to sell decently in China, where a government agency reviews and approves all aircraft purchases. According to industry consulting firm Ascend Flightglobal, the global market for regional jets is forecast to reach 4,360 by 2034. The new Chinese aircraft will compete instead against Brazil’s Embraer S.A. (NYSE: ERJ) and Canada’s Bombardier, the leading makers of regional jets. Japan’s Mitsubishi flew a first test flight for its new 90-seater earlier this month, and Russia’s Sukhoi also has an offer in the space.

Chengdu Airlines currently operates 20 A319s and A320s from Airbus, and the ARJ21s, which can carry up to around 90 passengers, are not likely to supplant the larger Airbus planes.

The ARJ21 is not considered a threat either to Airbus or Boeing Co. (NYSE: BA) because neither makes a regional jet. Early in November, Comac rolled out the first of its new dual-engine, narrow-body C919s, a passenger plane the company expects to compete with the Airbus A320 and the 737 family of planes from Boeing. The first C919 is expected to begin flight testing early in 2016.

Boeing has estimated the Chinese market will need more than 7,200 single-aisle planes, and some 70% of those planes will be bought to meet the rapidly expanding Chinese domestic market. Globally, Boeing has estimated that demand for new single-aisle planes will total 26,730 between 2015 and 2034 while worldwide demand for regional jets is expected to total 2,490 new planes.

Comac’s new plane is not certified to fly in either the United States or Europe, and a new version is reportedly being designed to meet U.S. certification requirements. Until those requirements are met, the company can work on filling the more than 300 orders it has from Chinese airlines and leasing firms.

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