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Chinese commercial aviation market expected to pass US in 20 years


09-23-2016 02:43 BJT

US aviation giant Boeing says in its latest outlook for the Chinese commercial aviation market that in 20 years China will leapfrog the United States to become the first country with commercial airplanes worth over 1 trillion US dollars. In addition to growing tourism demand for air travel, air cargo is also a key driver of that growth.

Boeing predicts China will need to buy some 6,810 planes from Boeing, Airbus and other suppliers in the next two decades, 7.6% up from the company's estimate last year. That confidence in the market comes from China's increasing demand for both domestic and international travel. In the second quarter this year alone, China's Civil Aviation Administration approved 65 new flight routes for the country's airlines. Over half of those routes were flights to nearby countries, primarily Japan and South Korea, which require larger aircraft. The larger planes such as the Boeing 777 and the Airbus A330 with over 400 seats are also being called for on busy domestic routes.

"This kind of growth is not coming from out of blue. It's incremental growth and incremental projection on the strength of the Chinese tourism demand as well as outbound traffic. There is definitely an increasing trend in up-tiering in the size of the aircraft. Especially in the busy routes like Beijing and Shanghai. There is not much in the availability of slots, so hence the demand for larger aircraft has gone up. In terms of international travel, it's more focused on larger aircraft since the distance is involved," said David Yu, Chief Investment Officer of Inception Aviation Holdings.

At the same time, air cargo is also expected to become a key driver for the growth of commercial aviation in China. YTO Airlines, one of the largest all-cargo airlines in China, confirms the company has ordered 10 cargo versions of the Boeing's 737, a call on another possible ten. China Postal Airlines also has ten all-cargo planes on order.

"Freighters are also included in the projection if you look deeper down they've always been a large segment of the business line for Boeing and Airbus," Yu said.

Airbus has set up a local completion center in Tianjin to aid the company's integration with the China market. The first Airbus A330 rolled out of the facility in March. Boeing has been manufacturing aircraft components in China for some time, and there is speculation that it too may soon set up a completion facility here.

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