Even With China Allowing Its 737 Max, Boeing’s Challenges In China To Continue

Despite the United States based aircraft maker Boeing is close to getting back into the air its grounded 737 Max planes, there are a host of other challenges awaiting the company in the critical aviation market of China.

There has yet been no word from the Civil Aviation Administration of China (CAAC) about allowing a green signal to the 737 Max planes to fly again in its air space following the announcement of the US Federal Aviation Administration to let the planes fly again and the European regulators set to give the green light in January next year.

Even though the announcement from the US and European regulators is important for Boeing, the company will also need to convince regulators in other countries prior to enabling the 737 Max planes to fly on international routes.

For Boeing a green signal from the Chinese regulators is critical. The aviation regulator sin China was the first to ground the planes last year following two deadly crashes involving the plane within a span of just five months in different parts of the world in which 346 people were killed.

Before china will be satisfied with the plane again, Boeing has to fulfil its own criteria set by the Chinese regulator, the CAAC said last month. That would include assurances from Boeing that the changes to its design are “safe and reliable.”

“As long as they meet the requirements, we are happy to see them resuming flights,” Feng Zhenglin, director of CAAC, said last month at a press conference in Beijing. “But if not, we have to maintain strict examination to ensure safety.”

The approval form China will however be important in more ways than simply allowing the 737 Max planes to fly in its airspace again. Years of fighting between Washington and Beijing over trade, technology and intellectual property rights has significantly damaged Boeing’s business in China. Analysts believe that getting the business back on track in China will be a challenge for the company.

 China was a big market for Boeing prior to the trade war. According to its annual reports, 13 per cent and 11 per cent of the company’s total revenue in 2015 and 2016, respectively was accounted for by China sales. Boeing exported the largest number of planes to Chinese airlines in 2015 while in 2016 China was the company’s third largest export market.

But according to the state-owned Shanghai Observer, Sherry Carbary, president of Boeing China, said late last year that in the past two years not a single passenger plane has been sold by the company to China for reason that is “known to everyone”. Two freighters were ordered by China Cargo in May.

Richard Aboulafia, vice president of analysis at Teal Group Corporation, an aerospace space consulting firm said the Boeing’s China problems are “well out of Boeing’s control”.

“In China, Boeing is prisoner to forces beyond mere aviation market dynamics,” he added. “It would be impossible for Boeing to not be wrapped up in this giant mess, involving trade barriers, [intellectual property] disputes, and tariffs.”

(Adapted from CNN.com)

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s