COMAC C919 - China's first modern airliner

Brumby · Nov 5, 2015

b787 said:
The C919 is built under a soviet style philosophy because it is not really competing in the export Market, the Soviet airliners once they were open to export under international and western rules were not able to compete, Embraer was different, once they stop building under the domestic market philosophy, they succeed.

You are conflating two difference issues i.e. business model and target market. The C919 is build around a business model closer to what its international competitors are doing in terms of supply chain because in my view that is a proven business model. It is initially targeting the local market simply because it is there for it to take and the whole reason for its conception. I am sure it will attempt to capture a slice of the international market eventually but that is dependent on how competitive it can become and is a function of market dynamics, its product offering and the strength of its business model. The Soviet philosophy failed because it just could not compete successfully internationally. Embraer has so far found a niche market not targeted by the big two but whether that can be sustained remains to be seen.

b787 · Nov 5, 2015

t2contra said:
The ERJ-145 seats 50 while the C919 seats 168. Different market segment and customers. Airbus and Boeing do not make 50 seaters. You should compare the ERJ-145 with the MA-600.

The first plane was just launched and has not even begun testing, and so it is too early to discount its international success. And keep in mind COMAC is new in the business of manufacturing passenger airliners.

It will take it a while longer to win foreign trust in their 168 seat jet than in Embraer's 50 seaters. And of course, the C919 is made to compete in the world market. Just don't expect it to win a proportionate share of the world market. Even if it does not, it still has the domestic market to cushion on.

I agree, i am sure the Chinese will succeed, because they have the market, the technology and more important the will, my point is just only to measure the potential success the C919 has, when i mean success i mean the potential alliances or programs they might develop based upon what happens to the C919, i mean they might become the leader in an international program or they might need a partnership to succeed, it is not easy to succeed in the international markets without sharing

b787 · Nov 5, 2015

Brumby said:
You are conflating two difference issues i.e. business model and target market. The C919 is build around a business model closer to what its international competitors are doing in terms of supply chain because in my view that is a proven business model. It is initially targeting the local market simply because it is there for it to take and the whole reason for its conception. I am sure it will attempt to capture a slice of the international market eventually but that is dependent on how competitive it can become and is a function of market dynamics, its product offering and the strength of its business model. The Soviet philosophy failed because it just could not compete successfully internationally. Embraer has so far found a niche market not targeted by the big two but whether that can be sustained remains to be seen.

Embraer has achieved something that is very difficult to achieve, international success means they buy their aircraft because they offer a jet that is economical, reliable, beneficial, and more important they have already customers that buy their jets because they are simply good.

C919 might be a very good aircraft, but they need the customers that buy it not because of a nationalistic or protectionist policy, but because the jet offers reliability, profitability and maintainability, that is not easy, Russia`s Tu-204 or Il-96 were jets that were only less capable by just a margin, that small margin is a difference in millions of dollars for the airliners, thus Russian airliners bought western jets.

Most E-170 are sold in the USA and the Tucano had its largest sale in England, not even Brazil

vincent · Nov 5, 2015

Embraer suceeded in a niche market where there are no strong established players and it was helped by the Brazillian government. It is far harder for a new player to get into an established market. Typical strategy for the established players is to lower prices to starve yhe new ones until they die, then raise the price back.

Like i said before, new players can only win if they can offer a value proposition established player can't match. i.e. Netflix vs Blockbuster, or if they get a protected market all for themselves till they become strong enough to take on the established players on their terms

COMAC will suceed because the Chinese government will provide a nursery for it to grow until it can stand on its own.

b787 · Nov 5, 2015

vincent said:
Embraer suceeded in a niche market where there are no strong established players and it was helped by the Brazillian government. It is far harder for a new player to get into an established market. Typical strategy for the established players is to lower prices to starve yhe new ones until they die, then raise the price back.

Like i said before, new players can only win if they can offer a value proposition established player can't match. i.e. Netflix vs Blockbuster, or if they get a protected market all for themselves till they become strong enough to take on the established players on their terms

COMAC will suceed because the Chinese government will provide a nursery for it to grow until it can stand on its own.

Embraer was privatized in the early 1990s, in the late 1990s they started the Erj-145, in fact Embraer almost got backrupt with the CBA-123 Vector co-produced with Argentina, the reason Embraer succeed was the way they organized their program, the supply chain they made and more important the good quality of the Brazilian made parts used in their jets, so the ERJ-145 became cheap, reliable and profitable, it has to do the program it self, not the support it received because in the 1990s it was a private company.

For Sale: Brazil's Embraer
Published: April 14, 1994
SAO JOSE DOS CAMPOS, Brazil, April 13— Brazil is seeking a world leader in the international aerospace industry to rescue its bankrupt state aircraft maker, Embraer, which is scheduled to be privatized next month.

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Assembly of prototype (PT-ZJA) began October 1994; fuselage sections mated January 1995; first flight 11 August 1995 ahead of formal roll-out and `official' first flight a week later; first of three preseries aircraft (PT-ZJB) first flown 17 November 1995; second ('ZJC) flew on 14 February and third ('ZJD) 2 April 1996; FAA and Brazilian CTA certification (to FAR/JAR 25, FAR Pt 36, ICAO Annex 16 and FAR Pt 121) achieved 16 December 1996. Single prototype and three preseries aircraft undertook a 1,600 hour, 13 month development flight testing and certification programs. Deliveries began on 19 December 1996 with two aircraft (N15925 and N15926) to US launch customer Continental Express. Designation changed to ERJ-145 in October 1997 to reflect `Regional Jet' terminology widely accepted by aerospace and travel industries. ERJ-145 certified by the aviation authorities of 27 countries by September 1998, including Belgium, Brazil, Czech Republic, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Luxembourg, Monaco, Netherlands, Norway, Poland, Portugal, Slovenia, Spain, Turkey, UK and USA. Total fleet time stood at 151,750 flight hours by December 1998. Production (ERJ-135 and ERJ-145) scheduled to increase from seven to 12 per month from December 1999 and to 16 per month by mid-2001.

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The segment they took was competitive, there were companies like Cessna, Gulfstream, Bombardier, BAe, Yakolev, Learjet, and many other companies like Dassault.

COMAC has to win orders not because it is supported but because the airliners (foreign and private) like the jet as a good product making money for them.

vincent · Nov 5, 2015

b787 said:
Embraer was privatized in the early 1990s, in the late 1990s they started the Erj-145, in fact Embraer almost got backrupt with the CBA-123 Vector co-produced with Argentina, the reason Embraer succeed was the way they organized their program, the supply chain they made and more important the good quality of the Brazilian made parts used in their jets, so the ERJ-145 became cheap, reliable and profitable, it has to do the program it self, not the support it received because in the 1990s it was a private company.

The segment they took was competitive, there were companies like Cessna, Gulfstream, Bombardier, BAe, Yakolev, Learjet, and many other companies like Dassault.

COMAC has to win orders not because it is supported but because the airliners (foreign and private) like the jet as a good product making money for them.

Bombardiaer is a private company too, that didn't prevent it from getting billions of handouts from the government. I remember that the Canadian government had to negotiated with the Brazillian government because Bombardier complained about unfair support Embraer got from their government.

New entrants to a market can't survive in an established market by making comparable products. There are simply too much inertia or lack of risk appetite for buyers to switch suppliers (no one will get fire for buying IBM) and established players can starve the new entrants in lots of ways. Do you think baidu, wechat, etc can exist if big internet players were allowed in China?

vincent · Nov 5, 2015

Brazil’s state-owned Brazil Development Bank, BNDES, implements the government’s industrial policy and is a source of long-term financing. In 2011, BNDES has total assets worth $334 billion and recognized a net income of $5 billion. The Brazilian government supplies Embraer financing assistance in several ways:

 Research and Development grants through Financiadora de Estudos Projetos (FINEP)
 Project development financing through (FINEP)
 BNDES, the government’s technology development institutions
 Short and long-term financing through the government-sponsored Banco do Brasil.
 The BNDES-exim sponsored program is a Brazilian government program that provides Embraer’s customers with direct financing for their aircraft.

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tphuang · Nov 5, 2015

It's a lot harder to compete in the a320/b737 segment than the bombardier/erj segment. And China has a large domestic market. Seeing that C919 doesn't offer any noticeable advantage over a320neo, it's not surprising that COMAC would focus on domestic market and possibly some of Asian neighbours to start off. We will see though. A320 and b737 order book are really long right now, so that might make some airlines interested in buying the unproven C919 or C-series aircraft.

vincent · Nov 5, 2015

Samuraiblue has some very valid points, namely the after market support. By focusing only on china first, with no language barrier, friendly/tolerant customers and short supply route, COMAC can learn and build up the expertise for after market support. Once it grow strong enough, it can transplant the support structure (with adjustments of course) to international markets

b787 · Nov 5, 2015

vincent said:
Brazil’s state-owned Brazil Development Bank, BNDES, implements the government’s industrial policy and is a source of long-term financing. In 2011, BNDES has total assets worth $334 billion and recognized a net income of $5 billion.

Embraer is not owned by the Brazilian government neither it is purely Brazilian

(1) Banco do Brasil Employee Pension Fund, also known as PREVI, was founded in 1904 as a pension fund for the employees of Banco do Brasil S.A., which is controlled by the Brazilian government.
(2) Shares belonging to the Bozano Group belong to both Cia. Bozano and Bozano Holdings Ltd., which are owned and controlled by Julio Bozano. 18,786,088 of the shares owned by Cia. Bozano have been pledged in favor of Banco Santander Central Hispano, S.A. in connection with its acquisition from Cia. Bozano of substantially all of the capital stock of Banco Meridional S.A.
(3) Janus Capital Management is a public company headquartered in Denver, CO, US. It pursues growth and risk-managed investment strategies. As of December 31, 2007, Janus managed $206.7 billion in assets for more than four million shareholders, clients and institutions around the globe. Outside the U.S., Janus has offices in London, Milan, Tokyo, Hong Kong, Melbourne and Singapore. Janus Capital Group consists of Janus Capital Management LLC, Enhanced Investment Technologies, LLC (INTECH) and Capital Group Partners, Inc. (doing business as Rapid Solutions Group). In addition, Janus Capital Group owns 30% of Perkins, Wolf, McDonnell and Company, LLC.
(4) Oppenheimer Funds, Inc. has been helping investors achieve their financial goals since 1960. Oppenheimer Funds is one of the U.S.’s largest asset management companies, and its controlled affiliates offer a broad range of products and services to individuals, corporations and institutions, including mutual funds, separately managed accounts, investment management for institutions, hedge fund products, qualified retirement plans and subadvisory investment-management services.
(5) Thornburg Investment Management is an employee-owned investment management company based in Santa Fe, New Mexico with assets under management of over $31 billion (as of March 31, 2009). The firm manages six equity funds, nine bond funds and separate portfolios for select institutions and individuals.
(6) BNDESPAR is a wholly owned subsidiary of Banco Nacional de Desenvolvimento Econômico e Social–BNDES, the government-owned national development bank of Brazil.
(7) Barclays is a major global financial services provider engaged in retail and commercial banking, credit cards, investment banking, wealth management and investment management services with an extensive international presence in Europe, the Americas, Africa and Asia.
(8) The Brazilian federal government also holds the “golden share.”

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Embraer is Brazilian but also American, it has also European partners so the reason Embraer can enter easily in the US and European Market is easy to understand

COMAC C919 - China's first modern airliner

Brumby

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b787

Captain

b787

Captain

vincent

Grumpy Old Man

b787

Captain

vincent

Grumpy Old Man

vincent

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tphuang

Lieutenant General

vincent

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b787

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