x Abu Dhabi, UAEWednesday 24 January 2018

Airbus creates good lift in China

Building Brics: The French aircraft manufacturer set up its Tianjin facility to build its A320 range. The factory has just completed its 100th jet and the plane maker will extend the plant's life 10 years beyond its original termination date of 2016.

Three aircraft are completed a month at the Tianjin plant, although this is due to increase to four a month by the end of this year. Daniel Bardsley / The National
Three aircraft are completed a month at the Tianjin plant, although this is due to increase to four a month by the end of this year. Daniel Bardsley / The National

Looming large and green in the cavernous space of the final-assembly line in Tianjin, three rear sections of fuselage for an Airbus A320 stand in a neat row.

A glance inside the open sections reveals what seems to be an impossibly complex array of pipes, padding and bars.

Just ahead in the factory are a few forward sections, their noses yet to be fitted, the large holes at the front covered instead by transparent plastic sheeting attached to the fuselages with red tape.

This month, Airbus delivered its 100th aircraft made at its final-assembly line in China, little more than three years after finishing its first Chinese-made plane.

It was also just under seven years after the manufacturer and the Chinese authorities signed a memorandum of understanding to set up the plant.

The aircraft made in eastern China are, says the Airbus spokeswoman Chen Shuang, "exactly the same or even better" than those constructed at Airbus's other final-assembly lines, in Toulouse, France and in Hamburg, Germany.

"Each aircraft has been delivered on time and on quality," she adds standing in the shadow of one of the huge fuselages.

The Tianjin plant manufactures two models - the A319, which carries about 124 passengers and has an average list price of US$80.7 million (Dh296.4m) and the A320, which has space for about 150 passengers and costs in the region of $88.3m. The A320 range also includes the 100-seat A318 and the 185-seat A321.

During a recent tour of the plant, which employs about 400 Chinese and expatriate workers, the 100th aircraft assembled in Tianjin was sitting outside, gleaming in the autumn sunshine in its white Air China livery.

Its completion was the second landmark for the Tianjin plant in as many months. Last month, Airbus, based in France, announced it had signed an agreement with its Chinese partners to keep the plant in operation beyond 2016, when the initial contract expires. The facility is now likely to remain in business until 2026 at least.

That means the plant, in which Chinese partners the Tianjin Free Trade Zone and the Aviation Industry Corporation of China have a 49 per cent share, will almost certainly produce the heavily updated version of the aircraft, the A320neo.

Three aircraft are completed a month at the plant, although this is due to increase to four a month by the end of this year. By the time the first contract ends in 2016, Tianjin is expected to have assembled about 284 aircraft.

China is developing its own single-aisle aircraft, the Comac C919, a family of 168 to 190-seat narrow-body airliners to be built by the Commercial Aircraft Corporation of China (Comac), to rival the A320 and the Boeing 737 in the market for single-aisle aircraft. Airbus's efforts in setting up a plant of its own in China could prove crucial in securing its own orders with Chinese airlines.

"Having a final-assembly line in Tianjin has greatly promoted the Airbus brand and image in China and brought us closer to our customers in one of the world's most important aircraft markets," Fabrice Brégier, the Airbus president and chief executive, said last month.

There is no doubting the importance of China for aircraft manufacturers, with Airbus alone having more than 800 aircraft at the country's airlines. Last year, more new aircraft were delivered to China than to any other country except the United States and further expansion is likely.

According to Airbus, over the next two decades, airlines in China will order 3,832 aircraft worth a total of $509 billion as they expand their domestic and international networks. Of these, about two thirds, or 2,520, are forecast to be single-aisle aircraft such as the A320 and its derivatives.

"The economic development of China has been going very well for over 30 years and against that backdrop, the demand for aviation transport has been increasing. We expect this is going to be very significant for the development of aeroplane manufacturing," says Dennis Fan, an associate professor in the Chinese University of Hong Kong's business school and a member of the university's Aviation Policy and Research Centre.

"Having a manufacturing site in China benefits both China and Airbus because the production cost is lower in China than in Europe. I believe it's a win-win situation."

At the Tianjin factory, the final-assembly line is surprisingly serene, with none of the buzz of a typical factory.

Instead, it resembles a supersized workshop, with staff toiling quietly on sections of each aircraft. One man was inspecting sections of fuselage with a torch, while there were several other workers, alone or in pairs, wearing dark blue Airbus Tianjin-branded T-shirts, blue trousers and white gloves who were fitting components and wiring.

Each plane's kitchens and bathrooms are fixed in place before the sections of fuselage, imported from Europe, are joined together to make the complete aircraft.

When they leave the hangar, only the tails are painted in the colours of the airline that will receive them.

One of those at the plant during our visit sported the red, white and blue tail livery of Sichuan Airlines, which received the first Tianjin-assembled Airbus. Another almost-completed airframe had the red and yellow colours of Jixiang, another Chinese airline. The final stop after the assembly plant is the paint shop.

So far, Tianjin has provided aircraft to 11 airlines, all from China as the agreement between Airbus and its Chinese partners states planes made there go only to the domestic market.

However, later this year Air Asia, a Malaysian carrier, will take delivery of a Tianjin-made model. This aircraft will be owned by a leasing arm of the Industrial and Commercial Bank of China, which signed an order last month to buy 50 A320-family aircraft in a deal valued at $3.5bn.

Airbus announced in July it would set up another overseas assembly plant, this one in Mobile, Alabama, in America, suggesting the Chinese project, targeted at helping to grow market share outside Europe, is a successful model.

Such are the benefits to the local economy of having an aircraft assembly plant that Alabama provided Airbus with incentives valued at $158m.

Given the hundreds of billions of dollars in play, the desire within Airbus to localise its production could increase and nowhere more than China.

"[It is] a very significant market for us," the Airbus's president in China, Laurence Barron, said recently.