China’s Civil Aviation Administration re;eased its latest (13th) five year plan on February 3. In this plan there are five areas of focus:
- sustained safety of civil aviation,
- building a national integrated airport system,
- comprehensively improving aviation service capability,
- strengthening support and service quality of air traffic management and
- speeding up transition through reform and innovation.
Of these items some caught our eye. For example, “The second target is to enhance the strategic role of civil aviation to continuously raise its contribution to the national economy and further increase the proportion of air transport in the integrated transport system”. Then there was this: “The third target is to comprehensively enhance the support capability of civil aviation. A well-planned and efficient airport network consisting of about 260 transport airports will be built.”
Rule 96 details are few, but we know the CAAC wants startup airlines to have at least 25 aircraft if they are serving passengers (20 for cargo). CAAC wants to encourage startups to focus on secondary markets. Which is why the latest five year plan’s focus on new airports is big news. Any Chinese passenger airline startup will need to acquire 25 regional jets. We don’t know any other details, such as: how old these regional jets can be? Will second hand aircraft be allowed at all? If it is thought this new combination of Rule 96 and five year plan are designed to help with ARJ-21 orders, then AVIC might be in a bit of trouble producing quickly enough. Reuters quotes a source saying the market might need 250 “new” aircraft.
The combination of the five year plan and Rule 96 could be a boost for Bombardier, Embraer and Sukhoi. In 2015 there was talk of a Chinese leasing firm being setup to lease up to 100 SSJs to Chinese airlines in 2016. That did not happen. But it appears that Chinese policies might favor a big jump in regional jet demand that China’s aircraft OEMs will not be able to meet. This is a space to watch.