China’s aviation market is slated to slide past and over the U.S. market to soon become the largest market in the world. And naturally there is a rising demand for aircrafts in this fast growing industry.
To cater to that future demand, 50 Airbus SE single-aisle airliners that has a total price tag of over $5.42 billion have been ordered to be bought by China Aircraft Leasing Group Holdings Ltd.
A 2014 purchase agreement formed the basis for the transaction for the A320neo aircraft. And the Hong Kong-based leasing company said in a regulatory filing on Friday that Airbus, the European plane maker also gave “significant price concessions” on the deal. The lessor said that the deliveries for the aircrafts would be in stages and is expected to begin in 2023. Air China Ltd. and ANA Holdings Inc. are considered to be among the customers for the lessor.
According to estimates by the International Air Transport Association, China is slated to be transformed into the largest air-travel market potentially by the year 2022 and it is this flying boom that has prompted aa spree of expansion from China Aircraft Leasing for its fleet as well as for the competitors of the company. An estimate made by Boeing Co. states that the flying boom in China would see growing demand for narrowbody aircraft – comprising for three quarters of the demand for new planes, and the aircraft builder also expects that the market would require a total of about 7,240 new planes by the two decades through 2036. The total value of the new planes has been pegged at almost $1.1 trillion.
According to China Aircraft Leasing, after the completion of the delivery of this latest order, its fleet would comprise of 202 aircraft from Airbus and 50 from Boeing for a total of 252 aircrafts. The company has 107 planes in its fleet.
In the past year alone, billions of dollars have been used by Chinese companies to place orders for aircrafts. Orders worth a total of $22 billion for 140 planes – comprising of 40 widebody A350s and 100 narrowbody A320-series jets, was reportedly secured by Airbus from China during the latest visit of Chinese President Xi Jinping to Berlin in July, the company has said.
On the other hand, orders for 300 aircrafts which comprised of 260 narrowbodies, for a total worth of about $37 billion was placed with the U.S. aircraft builder Boeing by China Aviation Supplies Holding Co. after a meeting between Xi and U.S. President Donald Trump in Beijing in November.
By the year 2020, a total of about 600 aircrafts is being planned to be added by the three biggest state carriers – Air China Ltd., China Eastern Airlines Corp., and China Southern Airlines Co. according to the financial statements of the companies, 300 more planes are planned to be introduced by China Southern by 2020 while 167 and 191 aircraft respectively are being planned to be inducted by Air China and China Eastern by 2019.
(Adapted from Bloomberg.com)