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Global airlines flirt with Chinese and Russian plane makers

07/18/2016| 11:54:37 AM|

Two Chinese lessors plan to buy 90 regional aircraft from state-owned commercial aircraft maker Comac, in a deal potentially worth billions of dollars.

China and Russia are making their presence felt in the multibillion-dollar aviation market.

With demand for single-aisle aircraft expected to grow for years to come, particularly from Asia, some experts think the new firms have a real chance at cracking the market, especially if they have the backing of their national governments. But it won’t be easy — loyalty to the likes of Airbus and Boeing for one will remain a factor, for sure.

They might be upstarts, but they are telling Europe’s Airbus and its fierce U.S. competitor Boeing as well as smaller regional jet-makers such as Brazil’s Embraer and Canada’s Bombardier: It’s not just about you guys anymore.

At this week’s Farnborough Airshow in southern England, two Chinese lessors declared their intent to buy a total of 90 regional aircraft from state-owned Commercial Aircraft Corp. of China, known as Comac, in a deal potentially worth billions of dollars.

Comac also laid out its plans to industry publication FlightGlobal for a larger wide-body aircraft to be built in conjunction with state-owned Russian maker United Aircraft Corporation. The jet will strike at the heart of the market for larger airplanes, a market that Airbus and Boeing have dominated for decades. Their size and technical expertise have helped them see off any burgeoning competition.

But new challengers in Russia and China want a piece of the market, which both Airbus and Boeing say will be worth more than USD 5 trillion over the next 20 years.

The newcomers have something previous competitors just didn’t have access to — the deep pockets of governments seeking economic and political influence.

To become successful, the plane makers each have to seize between 5% and 10% of the overall single aisle passenger jet market over the next 10 years, according to AlphaValue analyst Thomas Picherit.

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TAGS: airlines | Russia | China
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