In fact,
while the aviation world is focusing on the ARJ21, China is also developing
large passenger and cargo aircraft and expects to offer its own jumbo jets by
2020.
Jin
Zhuanglong, the general manager of Commercial Aircraft Corporation of China,
called the launch of the ARJ21 flight “a breakthrough for Chinese civil
aviation” that will “especially promote the China-made jumbo jet
plan”.
Boeing may
enjoy a few more years of strong sales to Asian airlines. But its best years are
absolutely behind it. And I expect business to get real ugly, real fast at
Boeing.
Here are a
few reasons why …
The
Unfriendly Skies #1: The Civil Aviation Administration of China (CAAC)
has notified Chinese airlines to negotiate postponements of delivery of jets
from Boeing and Airbus. And it is recommending a delay of about 3-5 months to
balance supply and demand.
The
Unfriendly Skies #2: Cathay Pacific Airways (Hong Kong: 0293.HK)
announced last Friday:
- It will
defer construction of a new cargo terminal at Hong Kong International Airport
because of falling demand,
- It
forecasts that passenger traffic would fall by 1% in 2009,
- It will ask
cabin crews and pilots to take unpaid voluntary leave beginning in January,
- It will
park two Boeing planes in California for a year, and
- It will ask
Boeing to delay delivery of previously ordered airplanes.
Cathay
Pacific Chief Executive Tony Tyler said, “This is a very difficult time for our
airline and for the aviation industry as a whole, and we cannot see light at the
end of the tunnel at this point.”
The
Unfriendly Skies #3: The International Air Transport Association said
that the number of Asia-Pacific passengers fell by 6.1% in October.
The
Unfriendly Skies #4: Business at China Southern Airlines, China’s
largest carrier by fleet size, is so bad that it is getting a $440 million
infusion from the Chinese government to keep it afloat.
The
Unfriendly Skies #5: Air China, China Eastern and China Southern all
posted losses in the third-quarter. And the entire Chinese airline industry will
likely end 2008 in the red, the first time since the SAR crisis in
2003.
And even
though oil prices have dropped, I would not be jumping on board any Chinese
airlines, such as China Eastern (NYSE:CEA), Cathay Pacific (Hong Kong: 0293.HK),
or China Southern (NYSE:ZNH).
The
One Bright Spot for Investors …
Are there
any bright spots in the travel industry, Chinese or otherwise? Only one that I
can tell — Ctrip.com, the largest travel agency in China.
I’ve
traveled all around China, and I’ve only seen a small fraction of its wonderful
sites.
