Paul Lewis/BEIJING
Boeing is sounding a warning that earlier expectations of a large new order for aircraft from China in June could be affected by a marked slowdown in local airline traffic growth and the knock-on effects from Asia's wider economic difficulties.
The Civil Aviation Administration of China (CAAC) is widely expected to announce new orders for Boeing aircraft during US President Clinton's planned visit to China in June. While the final number of orders has still to be determined, there is now doubt over whether it will come close to matching last year's purchase of 50 Boeing 737s, 747s, 757s and 777s.
"In terms of aircraft sales, it is too early to say," cautions Boeing's new China president, Ray Bracy. "Many airlines want more aircraft, but that is in the face of Asia's economic crisis and poor profits, and as a result there is some uncertainty as to what they can do," he adds.
China's economic growth has slowed to 8%. This is mirrored by recently released CAAC traffic statistics. The country's international and domestic carriers in 1997 moved a total of 56.3 million passengers, up by only 1.3% compared to an aggregate growth of 16.3% since 1980. Seat capacity at the same time grew by 11.7%, resulting in a 4.2% drop in average overall load factors to 65%.
"How many more aircraft they can take is the real question. Traffic is not down, but it is not up and is flat in the face of increasing capacity," notes Bracy. Boeing alone is scheduled to deliver some 80 aircraft to China in 1998-9, but many of these are replacements for older aircraft. He says these deliveries will not be effected.
Local observers, however, suggest the CAAC's caution may be outweighed by political expediency and the need to reward Clinton's visit. Beijing has traditionally linked lucrative aircraft orders with high-level political visits and Washington is looking for a reciprocal gesture for its more open policy on China.
Some major Chinese carriers are also continuing to press the CAAC for more aircraft. Air China and China Southwest Airlines have been allocated five and three new Boeing 737-800s, respectively, from 1997's order, but both have much larger narrowbody fleet replacement requirements.
The dilemma they face is that while traffic has slowed in the near term, an expected Asian economic recovery within the next two years will stimulate new growth. Boeing says its record level backlog of orders means it has few available delivery positions before 2001.
Source: Flight International
