Air Transport World

To assemble an airplane: efforts by South Korea and China to create an Asian air transport-manufacturing consortium run afoul of real-world delays, conflict and doubt.(includes related articles)

Efforts by South Korea and China to create an Asian air transport-manufacturing consortium run afoul of realworld delays, conflict and doubt

I am in the center of a storm." That's how Gao Zhan Min, vice general engineer of Aviation Industries of China and director of AVIC's 100-seat twinjet transport program, described his life to ATW at Asian Aerospace '96 in Singapore (ATW 3/965. And with the numerous bidders and suitors swirling around the already-contentious program, his frazzled statement seemed far from exaggeration.

But the "storm" is much his and his colleagues' own making and herein rests the central paradox of what is known as the AE-107 program: The determination of China and South Korea to build this jet exists independently of market demand and the economics of developing such an airplane from scratch.

After all, few airlines--Chinese or otherwise--are asking China to become an airplane manufacturer or to collaborate with South Korea and/or Singapore to produce a brand-New 100-seat jet transport. None of the three countries ever has managed a program of this size and scope, much less as a collaborative venture. Chinese and Korean officials add to the "storm" of confusion by providing only the vaguest kinds of cost and sales forecasts; the proposed development schedule slips farther and farther into the future with each new day and with it goes the opportunity to steal a march on competitors in the market.

Even Western airframe manufacturers jockeying to be included in the project probably are doing so out of the belief that the only thing worse than being the Western partner is not being the partner.

Having said all that, analysts with whom ATW spoke believe that a market exists for the right kind of 100-seat jet (see box, page 25). Ultimately, however, future sales prospects probably are irrelevant to a program that rests more on the twin pillars of Asian technological nationalism and the desire to develop domestic aerospace industries than on the hope of selling DC-9 replacements to the Northwest Airlines of the world.

For several years, the Asian aerospace manufacturing community has been trying to make the transition from component building to whole airplanes.

The drive to assume this task is so widespread and so deeply rooted in national interests that the movement's strengths also have become its weaknesses, threatening to deadlock existing programs and at the same time to produce a proliferation of competing aircraft. Already, Indonesia's IPTN is building a 50-70-seat turboprop and plans to launch its own 80-130-seat family of twinjets, the N2130, which, if completed, clearly undercuts the uniqueness of the AE-100.

The air transport-manufacturing establishment has ample skepticism as well. The political, organizational, managerial, structural and skill problems discussed in this article represent formidable hurdles.

But if China possesses sufficient will to accomplish the program, it can be done. Still, the discord that surfaced between the program's prime partners on the eve of the recent air show in Singapore demonstrates the height of the barriers to this joint project. Indeed, China's declaration late last year that AE-100 production will take place solely in China killed the "cooperative" label on the project and confirmed that the Chinese expect to take charge. Since that time, talks between China and Korea have been at a standstill.

The announcement in Singapore of an agreement between AVIC and Singapore Technologies Aerospace (STA) for at least a 10% share of the program appears to serve as an indicator that China has tired of the stalemate and is moving on (ATW, 3/96). …

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