UPDATE: Aviation Giants Look To China Amid Global Turbulence

Tag : Aviation

(Updates with comments from national airline chief)
ZHUHAI, China (AFP)--The giants of the aerospace industry will jet in to China'sonly international airshow starting Tuesday, hoping the country'saviation sector can provide shelter from the global financialcrisis. But there are early signs China hasn't escaped the drop-off that has hit the global industry, withanalysts and airlines warning of a "cold winter" of slowingpassenger demand.
Boeing Co. (BA) of the U.S. and Europe's Airbus will head the lineup of 600civil and military manufacturers and parts suppliers from 35countries at the 2008 China Airshow, an annual event in thesouthern city of Zhuhai.
And as airlines across the world report a drop-off in first andbusiness class travel due to the economic turbulence, the firmsinsist China can provide crucial growth in the next few years.
" China is going to be the fastest-growing market in the world," WangYukui, the spokesman for Boeing in China , said.
Research released last week by the U.S. giant found China will need 3,710 new commercial planes worth $390 billion over the next 20 years.
The demand will represent 41% of the entire Asia-Pacific market, and only the U.S. will be a bigger buyer, Boeing said.
In addition, Chinese carriers will add about 370 freight-carryingplanes by 2027, quadrupling their total freighter fleet, the Boeing research found.
Airbus chief executive officer Tom Enders also said recently it was expecting a "large order" from Chineseairlines by early 2009, on top of existing memorandums ofunderstanding with Chinese carriers for 280 aircraft.
The company's giant superjumbo, the A380, will be on display at theChina Airshow, as the company tries to take a bigger slice of thethriving market.
In 2007, China's air traffic soared 16.8% to 387.6 millionpassenger trips, on the back of 16.7% growth in 2006, state mediareported.
The demand has sparked a similar boom in airport construction, witharound 100 new airports planned by 2020, previous reports said.
Nevertheless, China's aviation sector is starting to feel theimpact of the global economic turmoil, according to Tom Ballantyne , chief correspondent of industry magazine Orient Aviation.
"Although we are not talking about a cessation of growth, we aretalking about a slowdown in growth," he said.
"The industry in China has been growing at 10 to 15% (per year). It is likely to be morelike 5 to 6% growth going forward."
He Li, vice president of state-owned flagship carrier Air China Ltd. , said Monday the industry must be prepared for a "cold winter" ofslowing passenger demand and should be prudent about buying newaircraft.
"Airlines need to get prepared for passing the cold winter," hetold a conference in Zhuhai ahead of the Airshow.
"In 2008, the domestic aviation market has (experienced)fluctuations, even a slowdown, but aircraft numbers kept growing,"he said.
Both Air China and another major player, China Eastern Airlines Corp. (CEA), last week reported heavy losses in the third quarter,normally peak season for air travel.
Air China said the losses were due to both the fluctuating oil price and adecrease in demand. China Eastern said the poor showing meant it expected to make a loss in 2008.
While international manufacturers are hoping they can continue tofill up their order books, China's nascent manufacturing industrymay use the 2008 airshow to announce a major step forward.
The Commercial Aircraft Corporation of China, or CACC, is expectedto announce Tuesday it has sold 25 jets to a U.S. company,state-press reports said last week without naming the buyer. Ifconfirmed, it would be a landmark deal.
The Guangzhou Daily said the company that has designed China'sfirst homemade jet, the ARJ21 - Advanced Regional Jet for the 21stCentury - and would announce a $735 million contract when the show opens Tuesday.
The potential contract for the ARJ21, which carries between 70 and110 passengers, would come despite the fact the plane is yet tomake its maiden voyage.
The CACC, which only started in May, has said it is aiming toeventually take on Airbus and Boeing , although the firm's president said that would take at least 20years.
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