That's something the market would want.
The market for chinese airliners will be (almost) exclusively Chinese airline companies. The west will not be buying chinese planes.
And actual destination for chinese airliners will not include US destinations. FAA will not certify chinese planes even if it means Boeings do not fly within China. THAT is the whole idea behind this notional medium range widebody. (it's not a small widebody, it's a full sized, 8 seats abreast big plane. Just not designed for 12 000 km and over kind of range) Airbus and Boeing thus have a completely different set of market accessibility and market parameters to work with than what a chinese widebody would have. It's not a direct comparison.
A smaller wide body plane is not cheaper per seat per mile than a larger wide body plane. There isn’t even an advantage for short haul routes because one long range plane can just do multiple rounds of one route or do point to point routes. All the shorter range does is constrain flexibility without giving any economic benefit.
Medium range wide body is cheaper per seat per mile than a long range wide body when great majority of flights that even the long range wide body could fly to would be medium range flights. It'd be perfectly optimized for such medium routes.
Of course short haul routes are not well served by big and long range planes. But they're served by single aisle planes, as it's more cost efficient. Otherwise we'd all fly in B777s on all routes, no matter how short they are.
Market need is 80% narrowbody jets, and 20% widebody jets.
Absolutely. Which is why C919 is a hugely important plane for China. And C929 or any long/medium range plane is an afterthought compared to it. That being said, it still doesn't make sense to make the C929 a vanity project, and make it optimized for routes it will almost never fly to.
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Even Boeing and Airbus don't really make plane models which compete DIRECTLY with one another. There are small subclasses in pax numbers and range between both B737 and A320 as well as b787 and a350 and B777, and in each of those narrow sub segments one product from one manufacturer is king.
C929, in its last iteration, was/is aiming directly at a super crowded segment that's already served by competitor's planes. EVEN if there were no geopolitical issues in the market, it'd be a super hard sell, it'd be very hard to break into such a market. But given the geopolitics at play - it makes little sense to even attempt to serve a market that simply won't be there for chinese airlines.
Instead of aiming for a direct competitor to A330-900 but with less range, COMAC should aim for a different subsegment. Obviously, the tech level isn't there to fully compete on range per seat even with A330-900, let alone A350-900, so even in a market devoid of geopolitics that model wouldn't really fly. But aiming at a segment that's not served by A330, A350, B787 or B777 - instead aiming for a segment that's just below those - now that's a sweet spot that happens to serve both the majority of future routes of Chinese airlines, and may even sell a few planes to airlines in neutral countries.