Boeing and Airbus are the current leaders in the air transport industry as they neutralize almost all the competition to their duopoly. A challenger from China is expected to be the next biggest competitor in the commercial aircraft business.
China's Comac designed their latest C919 commercial airplane which is expected to start its operation this year. It is expected to rival Airbus' A320 and Boeing's 737. Currently, the threat posed by China's aviation is being underestimated due to their lack of the latest technology. China's planes seem to be a distant competition because of the quality of the products produced by the two major companies. However, if traced back, Boeing also considered Airbus as an overly financed inferior competition before 1987. After the A320 started its fame due to state-fueled growth, it turned to be the toughest competition for Boeing.
China is capable of producing aircraft on a large scale. The country is known to give large subsidies to its companies. According to the report of the Rand Corp, a U.S. think tank, the Chinese government released more than $7 billion of public funds to aid the development of C919. It is significantly bigger than the cost of the development of Airbus' CSeries, 108-133 seater planes renamed A220 purchased from Canadian Manufacturer Bombardier, and it is on par with the A320 after inflation adjustments.
Comac's market is far wider than Bombardier. The C919 are reported to have an estimated 1,000 orders from Chinese airlines and it can also expand across Asia, Russia, and Africa.
Boeing and Airbus are currently in the winning track in the industry but they should be aware of the upcoming threat from the Chinese competitor.
Recently, Boeing is in negotiation to purchase an 80 percent stake in the commercial aircraft division of Embraer, a Brazilian manufacturer, which is worth around $4.2 billion. It was reported that the terms the deal were approved last month but the Brazilian government needs to approve the deal for it to be completed. Brazil's new President Jair Bolonaro told reporters on Friday through a text message that the merger was good but he said that it concerned about losing control of the company.
Boeing's merger proposition is in response to Airbus' Purchase of the CSeries. The deals made by the two companies are expected to take out the small players in the aviation industry. Bombardier and Embraer were the first real competition of the two big giants.
