Business Life: Airbus in China

cctv.com 08-18-2003 14:26

Over the past three decades, China's sky has been dominated by American jet manufacturers who made roughly 70 percent of all airplanes in service in Chinese airlines. However, the playing field is quickly changing now as European consortium Airbus enjoys increasing popularity and profitability in China. This is shaking the US makers' stranglehold on China's commercial air transportation market. In today's Business Life, you will see how Airbus made its way into China and now thrives here, one of the world's most lucrative civil aviation markets.

At 9:00 a.m., on July 30, 2003, at Shanghai Pudong International Airport, nearly 12 hours, from Toulouse, France to Shanghai, China, this brand new Airbus 340-600 makes its debut in China at last. It is the first plane Airbus delivered to China after the SARS outbreak in this spring.

鈥淏y introducing this new plane, China Eastern plans to enhance its image. We will use this plane on the South Asia and Pacific routes, especially on the US route, to attract first-class and business-class passengers to fly with us. In the past, we flew international long-haul flights by the MD11 which is aging and suffered from lack of entertainment equipment and a first-class cabin. We hope by introducing this new airplane we can take a lead in the international flight service,鈥said Ye Yigan, president of China Eastern Airlines Co., Ltd..

From Toulouse to Shanghai, the new member of Eastern Airlines' fleet had waited for three months since it rolled out of the assembly line at Airbus' headquarters in France.

This spring's unprecedented SARS crisis in China dealt a hard blow to almost all civil aviation operators in the country. China Eastern Airlines was no exception. At the peak of the SARS epidemic in April, the deadline of the new plane's delivery fell in. Fretting at the colossal payment, China Eastern asked Airbus for an extension.

鈥淒uring the negotiation process, we gained full understanding from Airbus. Although Airbus itself had to deal with many problems in finance and planning, it gave us positive support. From a long-term perspective, we reached consensus at last. This plane's arrival just indicates that China's domestic aviation market is rebounding with growing demand for transportation capacity. Its arrival is also an indicator of Airbus' strong support for Chinese airlines,鈥said Li Fenghua, general manager of China Eastern Airlines Co., Ltd..

When Airbus received the extension request from China Eastern Airlines which is the plane-maker's earliest and largest customer in the country, they had two alternatives. One was to adhere strictly to contracted payment obligation which was due in May; the other was to find an appropriate and suitable solution acceptable to both parties.

A friend in need is a friend indeed. Based on mutual benefits and understanding, Airbus has forged healthy relations not only with China Eastern but also with another seven of China's airlines over the past 18 years. Currently, around 200 Airbus planes are in service in the Chinese mainland, Hong Kong and Macao. Rewind to eight years ago, when that figure was only 30. How did Airbus make it in a largely monopolized aviation market like China? Let's find out the answer.

This is the first Airbus plane delivered to China in 1985. From then on, the European aircraft manufacturer has established milestones on China's civil aviation market one after another.

Airbus Milestones in China

1985

* China Eastern Airlines became first Airbus customer in the Chinese mainland.

1994

* Airbus China established in Beijing.

1995

* 29 Airbus aircrafts in service in Chinese mainland, Hong Kong and Macao.

1997

* Airbus opened US$ 80 mn Customer Service Training and Support Centre jointly with CASC.

2001

* Airbus A319 wins performance competition against 737-700 in Tibet at Bangda and Lhasa airports.

2002

* Airbus subcontracted contracts worth over US$ 170 mn to three Chinese aircraft companies.

2003

* Around 200 Airbus aircrafts in service in Chinese mainland, Hong Kong and Macao.

Due to entirely different cultural, social and economic backgrounds, it's extremely difficult for a foreign company to adopt the same sales strategy to China. Apart from customer airlines, the government authorities are another tough nut Airbus has to crack. In Airbus China, there is a department called government affairs, which deals specifically with Chinese government.

China Aviation Supplies Imp. & Exp. Corporation signs a contract worth US$ 1.5 bn with Airbus, Paris, 1996.

China Aviation Supplies Imp. & Exp. Corporation signs a contract worth US$ 1.5 bn with Airbus, Beijing, 1997.

It is a billion-dollar business. If you look at China's three major civil carriers, nearly 70 percent of their airplanes in service are made by the world giant aircraft maker-Boeing. Chinese authorities that approve all purchases of new planes are dissatisfied with the dependency on one supplier. Airbus' entry into China was intended to break the market monopoly.

In order to demonstrate its commitment to China, Airbus earmarked 80 million US dollars to build up a training and support center jointly with China civil aviation authority CAAC. Globally, Airbus has only three such world-class training centers. One is at its headquarters in Toulouse, one is in Miami, the US, and the third one is in Beijing.

As an important part of Airbus' customer services, this center has trained more than seven thousand pilots, flight attendants and maintenance engineers from thirty Chinese and overseas airlines

Captain Wang Changwen and his flight crew come twice a year from Chengdu of Southwest Sichuan province to take a re-current training course in this center.

鈥淭his training center provides us with quality simulators, which guarantee uninterrupted training conditions. Secondly, the class schedule is set reasonably and considerately, which helps lessen our pressure. Thirdly, the training center helps us solve all the problems whatever they are, whenever they occur. We like coming here to have our re-current training course,鈥said Wang Changwen, captain of China Southwest Airlines.

Comprehensive after-sale services not only retain its old customers, but also help snare more orders from Chinese airlines for Airbus. In an attempt to further explore the country's fast growing commercial transportation sector, making win-win deals with the local industrial partners has been Airbus' another key to strengthening its position on China's booming aviation market.

With successful crisis management, well-forged relations with government authorities and considerate customer services, Airbus has successfully landed in China. This is year Airbus for the first time outshone Boeing in terms of new orders and deliveries in China. Does this mean the European jet maker will force its US arch rival out of today's most profitable aviation market? Let's find the answer in next week's Business Life.

Editor:Liu Baoyin  Source: