The rise of China's local aviation manufacturers has hit Boeing hard
Hello everyone, I'm a veteran aviation industry insider "aircraft fan". What I bring to you today is a blockbuster news that shocked the industry - Boeing was completely dumbfounded, a $30 billion order was banned by China, and the company's market value shrank by 400 billion!
That's an astronomical amount, and it sounds heart-wrenching. As the world's largest aviation manufacturer, Boeing has an absolute dominance in the Chinese market. However, just recently, an inconspicuous local Chinese company snatched a $30 billion deal from Boeing, which is the biggest blow Boeing has ever suffered!
You must be curious, which Chinese company is so "fierce"? Let's take a look at what happened.
As early as 2008, China launched an ambitious plan to independently develop large passenger aircraft, and established the Commercial Aircraft Corporation of China (COMAC) for short. For more than a decade, this obscure state-owned enterprise has been working hard to develop China's own brand of large passenger aircraft C919, although the process is tortuous, but finally in 2022 to obtain the country's first operational airworthiness certificate and officially put into commercial operation.
The emergence of the C919 passenger aircraft is undoubtedly a heavy blow to Boeing, which has long dominated China's civil aviation market. Because the launch of the C919 means that for the first time, Chinese airlines have the right to choose independently, and no longer passively accept the products of Boeing and Airbus.
Sure enough, from the end of 2023 to the beginning of 2024, three large airlines, China Eastern Airlines, Air China and China Southern Airlines, have successively issued large orders for a total of 300 C919 passenger aircraft to COMAC, and this order alone is as high as 30 billion US dollars! How much is it worth? Equivalent to a year's defense budget expenditure of a medium-sized country!
This is undoubtedly a heavy blow to Boeing. In the past, the $30 billion deal should have gone into Boeing's pocket. But now, Boeing has not only lost this sizable revenue, but more worryingly, the rise of COMAC will further erode Boeing's share of the Chinese market.
Boeing's reputation has been discredited, and COMAC has ushered in a golden age
For Boeing, losing the $30 billion deal is just the tip of the iceberg. What's even more terrifying is that it will further weaken its influence in China and the global market.
As we all know, Boeing has been "riddled with bad things" in recent years. In 2018 and 2019, 346 people were killed in two crashes on the Boeing 737 MAX. Both crashes were found to be related to design flaws in the 737 MAX's flight control system.
This undoubtedly dealt a devastating blow to Boeing's reputation. The world's major airlines grounded the 737 MAX, forcing Boeing to halt production and face hefty damages and fines.
Just as Boeing was recovering from the 737 MAX crisis, a new safety hazard came to it. In April 2023, a Boeing 787 passenger plane suddenly fell off the cabin door during takeoff, almost causing a major air crash.
This series of safety accidents has made people question the quality and safety of Boeing's products like never before. Many airlines are starting to consider switching to other manufacturers.
COMAC's C919 passenger plane is like a clear stream, bringing new hope to people. As the first large passenger aircraft independently developed by China, the C919 not only has excellent performance, but also is reassuring that it strictly follows the highest international safety standards and has gone through layers of checks.
The debut of the C919 passenger aircraft undoubtedly gave Chinese airlines an unprecedented choice. They no longer have to passively accept products from Boeing and Airbus, but can decide for themselves whether to buy domestic aircraft or foreign products.
This option is crucial to the development of China's aviation industry. For a long time, Boeing and Airbus, with their monopoly position, have had a great influence on the aircraft selection and procurement prices of Chinese airlines. Now with the C919 option, the bargaining power of Chinese airlines will be greatly enhanced.
China's aviation industry has ushered in a new era of independent development
The advent of COMAC C919 marks that China's aviation manufacturing industry has entered a new stage of development.
China's civil aviation industry has long relied heavily on two foreign aviation giants, Boeing and Airbus. Due to the lack of autonomous and controllable large passenger aircraft, Chinese airlines are in a relatively passive position in terms of model selection and procurement price.
But now, the C919 passenger aircraft has been put into use, allowing Chinese airlines to have the right to choose independently for the first time. They can flexibly decide whether to buy domestic aircraft or foreign products according to their own needs, thus getting rid of the situation of being passively beaten.
The advent of the C919 passenger aircraft will further enhance the independent development capability of China's aviation industry. According to the plan, COMAC will launch more models in the future, including large wide-body passenger aircraft C929, so as to form a complete product line.
Aviation products with independent intellectual property rights are crucial to the development of China's aviation industry. This can not only reduce dependence on foreign products, but also promote technological innovation in related fields and form a complete industrial chain.
In the long run, the independent development of China's aviation industry will bring huge economic benefits and strategic advantages to the country. On the one hand, China will no longer passively accept the pricing of foreign products, which can significantly reduce procurement costs; On the other hand, China will also have a say and exert greater influence in the global aviation field.
For Boeing, the rise of COMAC is undoubtedly a major blow. Boeing's share of the Chinese and global market will be greatly impacted. If you don't adjust your strategy in time, you are likely to be completely marginalized.
Competition is always a two-way street. The rise of COMAC will also promote Boeing to accelerate the pace of innovation, improve product quality and service levels, and bring more benefits to consumers.
China's aviation manufacturing industry has ushered in a new era of independent development. We will have more independent and controllable high-quality aviation products, and China's civil aviation industry will certainly show unprecedented vitality.