11 Sep 2017

China Aviation Industry Newsletter 11 September

Air France-KLM shareholders approve China Eastern, Delta buy-in Shareholders at Air France-KLM have approved plans for fellow SkyTeam alliance members China Eastern Airlines and US major Delta Air Lines to each acquire 10% of the Franco-Dutch group. The Delta and China Eastern stakes, which will inject €751 million ($893 million) in Air France-KLM, were approved Sept. 4 by Air France-KLM shareholders. The shareholders also approved board members from each of the new carriers. Bing Tang was named as China Eastern’s representative. Aviaam Financial Leasing China Hands Over The 7th Airbus A320 To Aeroflot AviaAM Leasing announced that its joint venture with the Henan Civil Aviation Development and Investment Company (HNCA) – AviaAM Financial Leasing China – has delivered the 7^th brand new Airbus A320 family aircraft to Aeroflot – Russian Airlines.The aircraft powered by two CFM56-5 engines comes in a configuration of 150 economy and 8 business class seats. The leading Eurasian airline will operate Airbus A320 for the next 12 years under the operating lease agreement. Boeing Raises Forecast for New Airplane Demand in China Boeing projects a demand for 7,240 new airplanes in the country over the next 20 years valued at nearly $1.1 trillion dollars. Boeing's annual China Current Market Outlook (CMO) was released today in Beijing, with total airplane demand rising 6.3 percent over last year's forecast. "China's continuous economic growth, significant investment in infrastructure, growing middle-class and evolving airline business models support this long-term outlook," said Randy Tinseth, vice president of Marketing, Boeing Commercial Airplanes. "China's fleet size is expected to grow at a pace well above the world average, and almost 20 percent of global new airplane demand will be from airlines based in China." Single-aisle airplanes continue to be the foundation of domestic and regional fleets in China. Boeing sees the need for 5,420 new single-aisle airplanes through 2036, accounting for 75 percent of the total new deliveries. Full-service airlines and low-cost carriers have been adding new single-aisle airplanes and expanding new point-to-point services to cater for both leisure and business travel demand in China and throughout Asia. Tinseth said the backlog from Chinese customers demonstrates that the new 737 MAX 8 remains at the heart of the single-aisle market. Boeing forecasts the widebody fleet over the next 20 years will require 1,670 new airplanes. Airlines continue to shift to small and medium widebody airplanes for long-haul expansion and flexibility. Primary demand for very large widebodies going forward will be in the freighter market. Chinese airlines growing twice as fast on domestic routes in 2017 than international services Passenger traffic statistics from the Civil Aviation Administration of China (CAAC) indicate that for the first five months of this year, Chinese airlines in the domestic market are reporting a 14% average monthly increase in traffic when compared to the same period of 2016. In contrast, the international sector for home grown carriers is showing an average increase of 7.1%, half that being seen on domestic routes. Chinese Airlines Need 5,000 Pilots Per Year in Next 20 Years Over the next 20 years, China’s airlines will require 5,000 pilots per year to meet the rapid expansion and growth of the local civil aviation industry, and today the carriers are scrambling to hire experienced pilots to address the growing shortage. According to Liu Shen, a senior official at the Civil Aviation Administration of China (CAAC), the number of pilots required increases every month, a fact he attributes to “fleet and network expansion, and retirement of senior pilots who have reached the age of 60.” Early last year, a study concluded that over the next five years the carriers would require an estimated 2,800 to 3,000 pilots per year, but those numbers turned out to be significantly underestimated. Liu pointed out that the industry should now be looking at what it would require in the long term to plan its manpower requirements. The 12 flying schools across China with expanded training facilities are now turning out an average of only 1,500 to 1,650 new pilots a year. China Return Mulled by Embraer in Potential Strategy Shift Embraer is likely to consider building a commercial-aircraft factory in China in two years, Chief Executive Officer Paulo Cesar de Souza e Silva said, marking a potential shift in strategy after the company shut down its private-jet plant in the Asian country in 2016. The Brazilian planemaker will wait for the rollout of its first E195-E2 aircraft in 2019 before it starts deliberating on the China plan, Silva said in an interview in Singapore. The plant would be the company’s first overseas factory for passenger planes. China Targets African Markets for its LE500 Turboprop Aircraft After South African Type Certification China Targets African Markets for its LE500 Turboprop Aircraft After South African Type Certification China is targeting African markets with AVIC developed LE500 turboprop trainer aircraft after obtaining the type authorization certificate (TAC) from South African Civil Aviation Authority (SACAA).Since April 2015, the application has been supported by CAAC (Civil Aviation Administration of China), AVIC International Aero-Development Company and the South Africa AVIC International Flight Training Academy., the company said in a statement last month. Acumen Aviation © 11 September All Rights Reserved.