Sunday, January 12, 2014

Embraer extends coverage in China's aircraft market

While soybean and minerals are attracting wide attention in trade between China and Brazil, Brazilian aircraft are enlarging the country's share in the Chinese market.

By the end of April 2013, Brazil's leading aircraft manufacturing company Embraer Commercial Aviation had delivered 136 planes to China, extending its coverage of the regional aircraft market to 80 percent.

"Second only to the US, China operates the largest fleet of Embraer commercial aircraft in the world," Paulo Cesar Silva, president of Embraer, said during the China Regional Aviation Forum 2013, held in the Inner Mongolia autonomous region.

The International Air Transport Association predicted that China would become the world's second largest aviation market in 2017, which is regarded as a great opportunity by some of the world's major aircraft companies, including the Boeing Co and Airbus.

As the world's third-largest commercial aircraft manufacturer, Brazil entered the Chinese aviation market in 2000, when China's Sichuan Airlines signed an agreement to purchase five ERJ145 jet planes from Embraer.

Since then, several major deals were completed between China and Brazil, including the purchase of 30 jets worth of $1.2 billion in 2011 by CLC Corporation, the leasing arm of the China Development Bank.

These airplanes were provided to China Southern Airlines for operation in the Xinjiang Uygur autonomous region to complete air travel routes in Northwest China.

Also in 2011, Hebei Airlines agreed to purchase 10 jets from Embraer as a way to strengthen its airlines in Hebei province.

"Brazilian aircraft are high quality, like those from Boeing and Airbus. The plane model suits the characteristics of the Chinese aviation market," said Wang Li, manager of the Hebei Airlines Planning and Development Department.

Wang said that China has a large market in air routes in second-tier and third-tier cities. These routes are relatively shorter with less passengers than routes connecting large cities like Beijing and Shanghai.

"Embraer's main plane models contain 70 to 122 seats, which are suitable for these regional air routes. This is the major reason we chose Embraer aircraft," he added.

Wang said Brazil enjoys a large potential in China's air travel market especially in air routes covering areas in China's Northwest where road and railway systems are less developed.

"Several airlines companies have already benefited from the cooperation," he said.

China and Brazil signed a series of commercial agreements during the Rio+20 Earth Summit in 2012, opening a broader market for Brazilian airplane exports to the country as well as allowing Brazil to produce commercial planes in China.

As a result, Embraer and the Aviation Industry Corporation of China jointly established the Harbin Embraer Aircraft Industry Co, which completed assembling a Legacy 650 large executive jet this August.

However, the cooperation between China and Brazil in the aviation industry met a challenge in 2010 when an E190 jet crashed while landing in Yichun, Heilongjiang province, causing 42 deaths and 54 injuries.

Although the accident was caused by improper operation, shares in the company on the New York Stock Exchange fell nearly 4 percent.

"It is very important for aircraft manufacturers to provide continuous support to airline companies, including technical assistance, pilot training and condition maintenance, as a way to avoid such tragedies from happening again," said Wang.

"Both Boeing and Airbus aircraft have had accidents in the past. It will not influence our confidence in the E190, because it is still a mature plane model in the world," he added.

Brazil's aircraft exportation to China is regarded as the key to enhancing Brazil's export structure, which is mainly conducted by primary commodities such as soybean and minerals.

Aircraft trade is still a "beautiful exception" in the trade between China and Brazil, according to Brazilian Ambassador to China Valdemar Carneiro Leao.


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