New company to take on jet project

China will establish a new company by March to take charge of its large passenger airplane project, a senior executive from the country's top aircraft manufacturer said Tuesday.

Shareholders of the new firm are likely to include China Aviation Industry Corp I (AVIC I), AVIC II, State-owned investment companies and Chinese airlines, Liang Zhenhe, vice-president of AVIC II, told China Daily.

The aircraft will be assembled in Shanghai, with the nose, fuselage and tail sections manufactured in other provinces, Liang said.

"This project, which requires an investment of tens of billions of yuan, must give full play to the initiatives of both central and local authorities. It also needs to stimulate the enthusiasm of Chinese airlines because they will be the end users," Liang said, without elaborating on the new firm's share structure.

China is forging ahead with its ambitious plan to develop a homegrown passenger jet with at least 150 seats to challenge the domination of Boeing and Airbus in the country's fast-growing aviation market. The State Council, the Cabinet, approved the project in February and media reports earlier said the aircraft is expected to take off by 2020.

AVIC I and AVIC II are China's two State-owned aviation giants. AVIC I manufactures the ARJ21, China's locally developed regional jet with 70 to 100 seats. Both companies have been supplying components to Boeing and Airbus.

Liang made the remarks yesterday during the China Helicopter & Public Utility Development Forum. The two-day event was organized by AVIC II, the country's only manufacturer of military and commercial helicopters.

"The Chinese helicopter industry has developed a fair range of product models - from 1.5-ton to 13-ton types. We will try to make China a strong player in the world helicopter industry by 2020," said Zhang Hongbiao, AVIC II's president.

There are only 178 civilian helicopters in China - much lower than the world average. Airspace inconvenience has been a major bottleneck for the growth of China's helicopter industry.

But the General Administration of Civil Aviation, the aviation industry watchdog, plans to categorize China's airspace according to international standards by 2010. The airspace will be put into categories according to altitude and managed under different rules. The decision is likely to allow more use of the low altitude airspace.

It is widely expected that once the government relaxes low altitude airspace control in 2010 as planned, the helicopter market will take off. The country is expected to need 2,700 extra commercial helicopters between 2006 and 2026, AVIC II said.