China will need 590 regional aircraft worth US$18 billion over the next two decades, Embraer said yesterday.
The Brazilian aircraft maker, which currently holds about one-third of China's regional aircraft market, is poised to play a more active role and "grab a much larger share" in the country in the coming years, said Guan Dongyuan, managing director of Embraer China.
Guan made the remarks on the sidelines of a six-city tour of the company's latest model, the Embraer 190.
The 100-seat regional jet arrived in Beijing yesterday and will visit five other Chinese cities Urumqi, Chengdu, Kunming, Shanghai and Haikou. It will finally fly to Zhuhai, Guangdong Province, and be exhibited during the Sixth China International Aviation & Aerospace Exhibition beginning on October 30.
Embraer signed its largest single order in China at the end of August to sell 100 regional jets to Hainan Airlines. Part of the US$2.7-billion deal is to supply 50 Embraer 190 jets by the end of 2012.
The development of regional air traffic networks has been regarded as an important measure to boost economic growth in China's western regions, which lack developed ground transportation facilities. It would also help balance the growth of China's commercial aviation industry, Guan said.
Chinese airlines have been focusing on purchasing trunk-line aircraft. China has a fleet of nearly 900 aircraft, among which there are only 70 regional aircraft.
China's air transport capacity is skewed towards a small number of hub airports. Of the total 142 airports in China, the 20 largest airports transport 80 per cent of the nation's total passenger volumes. About 50 airports have daily passenger volumes of fewer than 200 people.
China had 852 scheduled routes last year, 26 per cent of which had a daily one-way passenger volume of 70 to 250 people, Guan said.
"The Embraer E-Jets will be a good choice for those routes because we are the only aircraft maker for the 90- to 110-seat capacity market," Guan added.
The E-Jet family has four models: the 70-passenger Embraer 170, the 78-seat Embraer 175, the 100-seat Embraer 190 and the 108-seat Embraer 195.
"There is definitely market demand for feeder-line services in China. But the point is how airlines can lower their costs when flying those routes," said Li Lei, an aviation analyst with CITIC China Securities.
A big challenge is the high import duties on small-size aircraft, analysts said.
The combined import tax and VAT (value-added tax) for an aircraft that weighs less than 25 tons is 23 per cent. Regional aircraft are usually within that category. But for an aircraft of more than 25 tons, the combined tax is only 5 per cent.
Guan said the Embraer 190 enjoys the lower import duties because it is heavier than 25 tons.
Embraer sold its first jet to China in 2000; 21 Embraer jets are now in operation in the country.
The company formed a joint venture with Harbin Aircraft Industry Co Ltd in 2003 to produce the 50-seat ERJ 145. The joint venture has delivered 11 jets.
(China Daily October 15, 2006)
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