Upgraded Airbus plane to roll out of Tianjin plant

Airbus SAS will start assembling the A320neo, the new engine version for its best-selling single-aisle aircraft, in the northern Chinese port city of Tianjin after 2016, a top company executive said on Thursday.

The European company and the Chinese side signed a framework agreement in August to continue cooperation in the project beyond its current business plan, which is due to expire in 2016.

"We are now talking about the second-phase business plan, and the factory will mainly assemble the A320neo after 2016," said Eric Chen, CEO and president of Airbus China.

The Tianjin factory is Airbus' first aircraft final assembly line outside Europe. The plant, in which a Chinese consortium holds a 49 percent stake, delivered its first A320 in June 2009 and has so far rolled out 118 aircraft.

"The experience we gained through cooperation during the first-phase business plan will ensure successful partnership in the next phase," Chen said.

The A320neo, scheduled to enter service in late 2015, is a revamped A320 with new engines and boasts fuel savings of up to 15 percent. It has received 2,050 orders globally, including 20 placed by ICBC Financial Leasing Co Ltd in August 2012.

"I am sure we will see new orders for the neo this year from Chinese airlines. Our Chinese clients have showed huge interest in this product," Chen said.

Airbus is expected to deliver more than 100 planes to China this year. The Toulouse-based company delivered more than 100 new jets to China annually in the past three years, which account for more than 20 percent of its global production, he said.

Its US rival Boeing Co also plans to increase deliveries to China. Boeing will deliver more than 120 planes to Chinese airlines this year, an increase of 60 percent year-on-year, Boeing China President Marc Allen said earlier this month.

Chinese carriers currently operate 891 Airbus planes, accounting for 49 percent of the total Chinese fleet of aircraft with more than 100 seats. Boeing still controls 51 percent of the market. Airbus sold its first plane to China in 1985, while Boeing had a 13-year head start.

"Back in 2004 we set a target to grab 50 percent of the Chinese market by 2014. We are now very close to that," Chen said.

"For the next 10 years, we want to be the true industry leader in China, not a follower," Chen said, adding that a key indicator will be controlling more than half of the Chinese market.

China's passenger air traffic grew 9.2 percent in 2012, according to the Civil Aviation Administration of China, the industry watchdog. That growth rate was almost the same as in 2011 and much less than the double-digit growth witnessed over the past two decades. CAAC has set a target of 9.4 percent passenger air traffic growth for 2013.

But Chen said the single-digit growth rate is "normal".

"A 9.2 percent growth rate is already a remarkable number if you consider the much bigger base we have now," said Chen.

China had a total fleet of 3,238 civil aircraft by the end of 2012. But back in 1992, the country only operated about 600 planes.

"The growth of Chinese civil aviation has turned from quantity to quality-oriented," Chen said.

Chen, who took the helm of Airbus' operations in China in January, said air traffic management and a shortage of pilots will be the two bottlenecks constraining further growth of China's civil aviation sector in the coming decade.

"Airbus will look for opportunities to cooperate with China in these two areas," Chen said. But he declined to elaborate, only saying that new plans are likely to be announced "in the next few months".

Boeing and Commercial Aircraft Corp of China - also known as COMAC - announced last month that a joint technology center has been established to conduct research projects on China's air traffic management.

The center will work with Nanjing University of Aeronautics and Astronautics, which hosts the National Key Laboratory of Air Traffic Flow Management Technology, on the development of an air traffic decision support system to optimize in-bound air traffic flow at airports.

"With the increasing demand for air transport and growing environmental concerns, air traffic management plays a key role in the healthy growth of air transport capabilities," said Wang Guangqiu, vice-president of COMAC's Beijing Aeronautical Science and Technology Research Institute.