CHINA LED POST-COVID-19 RECOVERY IN ASIA-PACIFIC
In a testament to the strength of China’s domestic air transport market, its two largest airlines in the full-service and LCC segments, China Southern Airlines and Spring Airlines, each posted small third-quarter net profits based on domestic traffic alone.
Overall, China Southern Airlines has jumped to second place for revenues during the second and third quarter of 2020.
Chinese airline revenues for the latest available period were down by between 36% to 48% from the previous year, but still a significantly better financial performance than other passenger carriers featured in the top 10.
Aviation Week’s 2021 Commercial Fleet & MRO Forecast estimates that the YOY fleet growth rate for the next 10 years will be 3.3%.
CHINA: ONE OF THE FIRST TO RESUME MRO OUTPUT IN 2020
The total commercial MRO over the next 10 years in China is estimated to be almost $130 billion, with a 5% YOY growth rate.
China was one of the first countries to resume maintenance output at its facilities.
In the summer of 2020, Guangzhou-based Gameco broke ground on new $90 million component and composite repair centers that are planned to open in 2022 to help it further expand its capabilities.
MTU Maintenance Zhuhai, the China-based engine overhaul business of MTU Maintenance, introduced Leap 1B capability at the facility, and approval for the 1A is expected in early 2021. Services for the PW1100G-M are expected to follow in the middle of the year.
China’s aviation industry has grown rapidly, in line with its burgeoning economy.
The Civil Aviation Administration of China (CAAC) is the country’s aviation authority, under the Ministry of Transport. The CAAC is responsible for all civil aviation and the investigation of accidents and incidents.
The military controls Chinese airspace (which is restricted), in addition to handling flight clearances and authorizations. Non-commercial air travel is subordinate to military traffic and as such, general and private aviation in the country is rare.
For the past two decades, the outlook for Chinese defense spending has been more or less the same as the outlook for GDP. That has been because, by at least by one widely accepted estimate, the armed forces have been given a steady fraction of the economy throughout that period.
China’s rapid military modernisation
If the relationship between defense spending and GDP holds, growth in allocations to the military will trend downward over the coming decade and keep doing so toward the middle of the century. There are, however, reasons to think China will allocate more of its economy to military power and that this process has begun.
China’s military modernisation has proceeded rapidly and the country is shaping its forces specifically to deal with well-established U.S. methods of power projection. One example is production of the Avic Chengdu J-20 fighter, which evidently is designed to penetrate an enemy fighter screen, such as one operating from Okinawa, to destroy tankers and other support aircraft in the rear.
While sales of military aircraft garner the headlines, the provision of through-life support for these platforms represents a crucial market for suppliers.
Aviation Week’s 2021 Military Fleet & MRO Forecast estimates that maintenance demand generated by military aircraft over the next 10 years will amount to $1.1 trillion, a critical source of potential revenue for aircraft manufacturers and the wider aerospace supply chain.
Outside of the U.S., China will have the most military aircraft MRO demand.
China have most military MRO demand outside u.s.
China’s airlines and economy led the recovery in the Asia-Pacific market, with the Chinese domestic market allowing airlines to return to profitability by the end of 2020. This was primarily because of early success in controlling the coronavirus outbreak, a large domestic market and the importance of air cargo services.