Submitted by Experience Not Logic Blog

The Economist thinks: maybe. In Flying the Flag, The Economist examines whether the unique aspects of Commercial Aircraft Corporation of China (CACC) and China will allow this newly created commercial airplane manufacturer to succeed where others have failed. The purpose of CACC is to develop a big jet manufacturer with an aim to competing with Airbus and Boeing. The economist warns that “Wrapping a national flag around civil-aviation projects is a recipe for wasting money and dashing dreams,” and Embraer of Brazil is the sole success story out of developing economies, but it too was a “cash-devouring horror” for 30 years.

Despite this, The Economist suggests that CACC might succeed where others have failed for several reasons:

• AVIC I and AVIC II, China’s long-standing aircraft manufacturers, soon start producing 4 A320s per month in a joint venture with Airbus. This should provide significant know-how to the Chinese aviation industry.
• “China’s aviation industry has learnt a lot from making increasingly sophisticated parts for Boeing and Airbus over the past 20 years.”
• Though “manufacturing big commercial aircraft has ceased to be a national enterprise,” many of the world’s supply chains originate in China.
• Boeing and Airbus “are studiously polite about the prospect of a new rival.”

However, the magazine also warns that CACC has a few things going against it:

• “By the time the Chinese have their A320/737 rival ready, Boeing and Airbus will be selling their next-generation single-aisle planes which will deliver a vast improvement in operating economics.”
• China’s airlines are “highly competitive” and “have a record of resisting government pressure to buy planes they do not want.”
  • China’s airlines would otherwise be the natural market for these likely outdated aircraft.

Wen Jiabo pronounced that “It is the will of the nation and all its people to have a Chinese large aircraft soar into the blue sky.” It will be interesting to see whether CACC becomes something more than just a producer of national prestige: a big jet manufacturer able to truly compete with Boeing and Airbus.