"State-owned Aviation Industry Corp. of China ...
unveiled ... its design for a single-aisle commercial jet
to break the Airbus and
Boeing (NYSE: BA) duopoly in the production
of large aircraft."
That was MarketWatch's breathless recap of yesterday's
news from Beijing. Yes, AVIC has an airliner in the works.
And with a planned capacity of 190 passengers, the new C919
aims at Boeing's position in the large airliner market. (As
opposed to, for example, China's ARJ-21 regional liner, which
targets
smaller jet makerslike
General Dynamics (NYSE: GD),
Textron (NYSE: TXT),
Embraer (NYSE: ERJ), and
Bombardier .) But while pundits have the bare
facts right, they're jumping at shadows when predicting the
end of the "Airbus and Boeing duopoly."
You must chill
Yeah, I know
China's going to change the world. But when you get right
down to it, this news isn't as big as it sounds. I mean, you
don't see Embraer and Bombardier quivering in their aviator's
jackets over the threat from China. Or the one
from Japan. Nor do they fear Russia's "
Superjet."
Similarly, I suspect the C919's advent will prove a
tempest in a Chinese teacup. For one thing, the plane remains
seven years from its supposed first delivery date. For
another, Boeing itself has
provided numerous object lessonsin the
malleability of deadlines. For a third ... even once it's
built, the C919 may only sell well within China.
Scare globally, sell locally
That is, after all, the way things have worked with
past challenges to the Boeing/Airbus hegemony. Pundits all
aflutter with the Chinese news may have missed the fact that
the "duopoly" has had a superpower rival for decades, in the
form of Russia's aircraft industry.
Nor are the Russians bad planemakers. I've flown in the
Tu-214, and prefer it to almost anything manufactured by
Boeing or Airbus -- but I'm not holding my breath waiting to
see
Delta (NYSE: DAL) add Tupolevs to its fleet.
The air traveling public here just wouldn't stand for it. And
if Russia's got a bad rep for quality, just imagine what
China has to overcome.
Foolish takeaway
When you get right down to it, I see no threat in the
C919. To the contrary, I see opportunity here. Just as
China's ARJ requires the help of
General Electric (NYSE: GE) and
Honeywell (NYSE: HON) to get it airborne, so
too do I expect the C919 will require Western assistance --
and pay through the nose for it. Long story short, China's
new plane isn't the bad news for Boeing many are
predicting.
But it's good news for
just about everybody else.
Disagree? Feel free. If you think China's got a real bead
on Boeing, tell us why below.
This article was originally published as
Boeing's Chinese Challengeon
Fool.com
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