New China pattern

A few weeks back I started a discussion about the hot airplanes market in China. I wanted to return to the subject again, because there’s so much more to the story than just the market forecast.

When I first started going to China in the early 1990s I remember getting up in front of an audience or working with an airline many times, and giving a presentation. Afterwards, there’d be no response, no questions.

Well, what I find today is, you can go into meetings with airlines, and what’s been allotted for a one-hour presentation can stretch on for two hours and more! That’s how much the interaction and questions have evolved. And it’s one of the things I’ve noticed that define for me how far China has come.

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A display at Aviation Expo/China last month.

Another thing that’s even more amazing is that many of the presentations I give today in China, particularly with airlines, no longer need an interpreter. Many of the people in the audience don’t require it. That’s a real change.

The airlines have made great strides in terms of their technical capability, their evaluation process, and in terms of engagement. They ask tough questions when you give a presentation and you talk about airplanes. That just wasn’t there when I first started giving presentations in China 15 years ago.

The media is becoming just as dynamic and forward-thinking as the airlines. During my visit, I think I was challenged by the media and just about everyone I talked to - airlines, government agencies – about our market forecast. And not in the way you may think. They all told me they thought Boeing was being too conservative in our 20-year forecast for China. Mind you this is a forecast that already predicts an 8.8% increase in travel growth and a quadrupling of the airplane fleet!

Meantime, other reporters came up to me just to see whether the guy behind the blog was real. I felt almost like a rock star. It’s been an ongoing sense of wonder for me.

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Construction cranes seem to be everywhere in Beijing, even in Tiananmen Square.

And as I mentioned last month in the blog, Greater China is a dynamic market like I’ve never seen before. The streets of Beijing are incredibly busy - construction cranes everywhere, as they get things as perfect as possible for the 2008 Summer Olympics. I’ve never seen so much activity in Beijing.

And that brings me to airports. Did you realize that there are more than 40 new airports under construction in China today? And the plan is to build nearly 60 airports in addition to that by 2015. Now contrast that with the United States, where the last new major airport to open was Denver International Airport in 1995.

If you want to look at the growth potential from another angle, consider that today in the U.S. there are about 290 airports with commercial service. That’s for a population of 300 million people. Now, consider that in China there are only 142 certified jet-capable airports right now – serving 1.5 billion people! Getting the picture?

Boeing and China have a long, successful history together, and it’s our objective to grow as the Chinese economy and the airlines grow. We’re doing that by helping them create a safe, efficient transportation system. We partner with suppliers, and virtually 4,500 Boeing airplanes today fly with Chinese parts and assemblies. And they’re a partner on the 787 as well.

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It wasn’t all airplane talk during my recent visit to Beijing. I found some time to enjoy a local specialty: spicy fish heads.

We’ve created and work with a number of joint ventures within China for maintenance and modifications as well as manufacturing. In total we employ more than 5,000 Chinese workers in high value manufacturing and maintenance jobs. Something to keep in mind when you hear about proposed ventures by other airplane manufacturers.

Boeing has provided hundreds of millions of dollars of professional training to more than 34,000 Chinese aviation professionals. Alteon, a wholly-owned subsidiary of The Boeing Company, recently announced it will open a new training center in Shanghai, in partnership with Shanghai Airlines, housing the first 787 full-flight simulator in China.

It’s hard to properly put into words how exciting and fast-growing the China market is. But you can see it at the airports. You can sense it in talking to passengers. You can feel it in the cities.

Coming up for China there are increasing market opportunities, dynamic global competition, and the freedoms and economic growth that travel brings.

It’s clearly a region headed for an exciting journey.

Comments (6)

David Hefty:

You've been giving presentations in China for 15 years and are now amazed that your Chinese audience has learned English. However you give no indication of your having learned any Chinese. Isn't this a bit of an insult to the Chinese?

Why do we Americans always assume that the world will continue to learn our language when we do not reciprocate?

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David,

Thanks for the question. Certainly no offense was intended. Regarding my language skills, I will admit to struggling a bit, managing to pick up a little German, Chinese and Korean along the way. But more to the point, for years English has been the accepted language of aviation and it is likely to continue to be. And that's why presentations and Q & A in an aviation setting will tend to be in English, whether it is by a Boeing representative or by our competition or industry customers.

- Randy Tinseth

Chris C (South Africa):

China’s growth in all sectors truly is mind-boggling! It is almost unbelievable to read the forecast that China’s airplane fleet will quadruple in size over the next 20-years!! It therefore becomes imperative that all-new airplanes entering China, and of course the global airplane fleets, must offer the best economics and growth solutions as possible. Airplanes such as the super-efficient 787 Dreamliner and 747-8. Naturally, as the China airplane fleet grows by up to 4x its present size that does not mean that fuel-usage must increase by up to 4x either across the fleet!! If anything, with the implementation of airplanes such as the Boeing 787, although the China fleet my increase substantially, fuel-usage increase across the fleet should be in the region of no more than 1,5x its present value.

Clearly, China is also looking at increasing frequency of flights, and opening up all-new point-to-point routes with all these new airports being built, thus the 787/777 or even 787/777x combination is the superior offering for China, today and tomorrow. Clearly the 747-400s will be replaced with either the phenomenal 747-8 or all-new 777 offerings, but what is intriguing to note is that the over-hyped A380 truly is not seen as the right airplane, only garnering 5 orders in the region.

Paulo M (Johannesburg, RSA):

Your 3Q results reflect these changes we are seeing in the world today - in China, India etc. For a long time I thought that Boeing was a good indicator of where the US economy was heading. Lately its and many of the other Dow Jones components' fortunes reflect increasingly of the global economy. With that, there will be much challenges ahead including new competition.

Anyway, it's great that some pilots posting here keep on pushing for the 747-8. There is much anticipation on that lady - however small its market may be.

Jon Grams (Colorado Springs):

I am curious as to whether the range/performance improvements being made on the 748i can be transferred to the 748F (as firm configuration has already been decided for that model) I should think transferring the improvements to the freighter would increase it's performance margin even further vs. current or potential competitors.

Also, did you notice that Airbus revised the performance figures on the A380-800? Apparently trading passengers for range (now 525 pax at 8200nm vs 550 at 8000nm originally) It seems the decision to boost 748i performance (whether EK purchases it or not) is looking like a better idea all the time.

kees burger (Leiden Netherlands):

On the Chinese market, I think there is a challenge for both Airbus and China.

The Chinese were the ones to take the last 757 of the line. Domestic traffic is booming in this large market. Offering a real economic & clean aircraft type facilitating 200-300 seats 2 class, able to span the nation and neighbouring countries would fill a requirement. An aircraft positioned inbetween the 200 seat 737-900ER and the 300+ seat 787-3.

I think it is a segment left open by the 767-200, 757 and A310. Also in other regions in the world there seems to be a need.

Is Boeing looking into this area?

Norman (Long Beach, California, United States):

The Boeing 787 has the ability to link not just Beijing and Shanghai to LAX, JFK, of SFO but link
other important cities like Guangzhou, Shenzen,
Dalian, Nanjing, and Huainan to these cities as well
as link Chicago, Seattle, Washington, Philadelphia,
and Boston to the Beijing and Shanghai.

The 747-8I has a strong potential in China particularly as the travel market has increased and
the current A340s and 777s are quickly runing out
of capacity and the bigger 747 is needed, Air China,
China Southern, and China Eastern are or should be the prime canidates for the B747-8I.

I see China as a very stable market and the potential for growth is strong but we should not take China for granted, they can just as easily go
for the A350.

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