Airbus Heads Home After China Visits

The Airbus A380 superjumbo flew home Friday after stopovers in three of China's biggest cities, visits symbolizing the company's ambitions in the booming Chinese market, where the outlook for the colossal jet is mixed.

The 555-seat plane visited Guangzhou, Beijing and Shanghai on a swing through China this month, part of the process of winning its air-worthiness certification. It left Shanghai on Friday for its home base in Toulouse, France.

While technically a flight test, the visit gave Airbus the chance to generate buzz that it hopes will translate into orders.

"It's a technical exercise, but it doesn't hurt that it's occurring in a country which Airbus sees as a natural market for the aircraft," said Richard Pinkham, a Singapore-based analyst with the Center for Asia Pacific Aviation.

Despite world-leading growth in China's aircraft market, just five of Airbus's 166 orders for the A380 have come from China, all from Guangzhou-based China Southern Airlines, one of the country's big three carriers. Neither of the other two, flag carrier Air China and Shanghai-based China Eastern, have announced plans for orders.

That's certainly not from lack of trying on Airbus's part. The company's sales of its smaller aircraft have cut deep into archrival Boeing Co.'s former dominance of the Chinese market.

Yet, some analysts see the double-decker A380 as a poor fit for China, where the demand for frequent, direct flights calls for smaller planes.

"For its size and growth rates, China is arguably the least important A380 market," said Richard Aboulafia, an aviation analyst with Teal Group Consulting in Fairfax, Virginia.

Not necessarily, said Pinkham. The big-city markets of Shanghai, Beijing and Guangzhou are seen as ready-made for the A380 because of their massive populations.

"With big, concentrated metropolitan areas, there is a huge local market, so you dont need to rely on feeder services from other cities to fill the aircraft," Pinkham said. "There's no doubt that a route from Shanghai to Los Angeles, or Beijing to London could fill an A380."

Given the uncertainty, the A380's success in China may depend heavily on the impact it has on China Southern's business, which lags behind its rivals on long-haul international routes.

"It's a test for Southern, as well as for the other Chinese airlines," said Li Lei, an aviation analyst with CITIC China Securities.

With demand over the next 20 years estimated at 2,900 new planes worth US$280 billion (euro220 billion) - around 10 percent of estimated global demand over that period - China represents "one of the Holy Grails of aircraft sales looking forward," Pinkham said.

"It's a huge market that is only going to get much, much bigger," Pinkham said.

Airbus has taken steps to ensure it receives a high percentage of those orders, lobbying the country's top leaders and agreeing to open a final assembly line in China, its first outside Europe, for its mid-size A320 aircraft.

The announcement of plans for that plant, to be located in the northeastern city of Tianjin, was accompanied by word of Chinese orders for 150 A320s.

Already, China has proved a strong market for Boeing's 787 Dreamliner, with 60 of the planes on order. Chinese companies produce the rudder and other significant parts of the 787, contracts worth hundreds of millions of dollars (euros) over the project's lifetime.

For now, China Southern secretary Su Liang says no more A380 orders are planned, while a Chinese Eastern spokesman, Luo Zhuping, said: "We have no plan to buy the A380."

No Air China spokesman was available for comment. Reports say the carrier may be planning to lease two A380s.

Singapore Airlines is slated to be the first carrier to fly the superjumbo after it receives its first plane in October 2007 - a year later than originally planned. Subsequent deliveries have suffered longer delays, averaging two years.

Airbus and its parent company European Aeronautic Defense and Space Co. have blamed wiring problems for the holdups, which they say will wipe euro4.8 billion (US$6.2 billion) off profit over the next four years and are complicating plans for a still-unlaunched mid-size jet to compete with Boeing's 787.


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