Competition Heats Up in Asia’s Aviation Sector

MRJ’S First Flight // Mitsubishi Aircraft Corp.

MRJ’S First Flight // Mitsubishi Aircraft Corp.

In Asia, aviation is a-booming. Both China and Japan debuted new passenger aircraft this month. Interestingly, both aircraft are being targeted at China’s growing aviation markets.
The Mitsubishi Regional Jet (MRJ), which embarked on its maiden flight on the 11th of this month, is the first domestic passenger jet that Japan has produced in 50 years. Japan Airlines purchased 243 orders and Skywest, the world’s largest regional airline, placed 200 orders. Of the two jets, the MRJ is the smaller, seating between 70 and 90. The goal here is fuel-efficiency. In an age of increasing environmental awareness, a fuel-efficient aircraft has public opinion on its side.

 

COMAC

COMAC

Earlier this month, Commercial Aircraft Corporation of China (Comac) released its own domestically produced liner called the C919. Over 517 orders have already been placed on the plane from various airlines, including many regional Chinese ones. Whereas the MRJ is looking to offset fuel costs through fuel efficiency, the C919 is looking to do so through sheer passenger volume. It can seat between 158 and 174. However, many of the parts of the C919–from the engine to the landing gear system, electric power system and more–are manufactured by foreign companies.

It’s tough to say how the market share will pan out, though I place my money on Japan. Since the post-WWII moratorium on building aircraft, the country has really made a comeback in airplane production. They produce a staggering amount of parts for Boeing and have decades of producing aircraft for the US military. Even though Mitsubishi Aircraft is only seven years-old they are aiming to sell 5000 MRJs in the next several years. That’s impressive.
At any rate, it’s refreshing to see some new competition in an industry that is all-too-dominated by Boeing and Airbus.

September Aviation Policy Change, India

Marc-Bombenon-Aviation2A new civil aviation policy in India is slated for September 2015. This highly anticipated policy expected to alter the current civil aviation rules has been cleared by the ministry and sent for approval of the PMO and department of finance.

The overwhelmingly controversial 5/20 rule requires an airline in India to complete five years of domestic service with a minimal fleet size of at least 20 aircrafts before it can be allowed to fly international. The total amount of air passenger traffic in India has increased from 109 million to 143 million in just 2 years, placing unsustainable demands on airlines under the current policy. Many organizations predict an increase anywhere from 290-300 million passengers by 2020. In order to prepare, an estimated 400 additional airports will need to be ready and available for both domestic and international flights. Repealing the rule will promote the necessary private investment to complete construction, increase fleet size, and train staff.

In addition to the 5/20 rule, new regulation will be sure to address land development issues, foreign direct investment (FDI), and bilateral agreements.