A version of this article appears in the June 23 edition of Aviation Week & Space Technology.
It’s no secret that Comac faces several major challenges if it is to become the next big competitor toand with the program.
First, it needs to produce aircraft for its testing program. After two schedule slippages, the first flight for the C919 is scheduled for 2015. Next, the C919 must be certified. And delays in securing approval of theregional jet, Comac’s other program, are holding up recognition of Civil Aviation Administration of China ( ) certification efforts. That casts doubt on the FAA’s eventual acceptance of the CAAC’s current work on the C919, and without Western airworthiness endorsement, the C919 will not see substantial sales outside of China. The latest estimate is for certification in late 2017 or early 2018. Given the history of other recent development programs, 2020 might be more realistic.
While these two challenges are receiving the lion’s share of media attention, an even larger and underappreciated challenge looms. In short order, Comac needs to create a competitive customer support function, including product support, field service, reliability engineering, aircraft-on-ground (AOG) support, spares, training, and repair and overhaul services. Creating a competent customer support function from scratch is incredibly difficult and will prove to be particularly nettlesome for Comac.
Why is developing aircraft customer support so difficult? It requires a blend of processes, infrastructure, technology, human capital and culture. It takes time to create and its development is difficult to accelerate with willpower or capital. Airbus did not hit its stride in customer support until the mid-1990s —25 years after its founding in 1970. Until this point, Airbus was at a competitive disadvantage versus Boeing’s outstanding customer support organization. Today both companies are best in class among aircraft OEMs in this crucial function. Customer support arguably constitutes the largest entry barrier to the air transport market and is one of the factors underpinning the Boeing-Airbus duopoly.
Comac has created a customer support function as a distinct branch in its organization, and even built a fancy building for the division on the outskirts of Shanghai staffed by scores of employees. Yet as a relatively new organization, it faces steep hurdles.
To be ready for prime time later this decade, Comac will need proven customer support processes and personnel with experience outside of China. And then there is culture. Customer support is about quickly getting the right answers and sometimes correcting mistakes made by superiors; this is at odds with China’s hierarchy-driven culture. Perhaps this is why there are few examples of Chinese capital equipment manufacturers providing solid customer support outside of China.
What are Comac’s alternatives? The current approach, organic development, is likely insufficient. The C919 already will be technically inferior to the 737 MAX and, which means the company must use price as a competitive factor.
Comac’s nascent customer support organization will likely cost operators up to millions of dollars per year in lost revenue, delays and additional maintenance expenses—at least in the early years. It won’t take long to wipe out any realized savings on the C919’s purchase price, and aircraft residual values will also suffer, which will spook lessors and potential financiers.
A second alternative is partnership. This is the approach that another aspiring new entrant, Mitsubishi Aircraft Corp., has chosen with Boeing. Mitsubishi will in essence plug into Boeing’s customer support organization to support thefamily of regional commercial jets. Comac should strongly consider this option to help address customer needs and accelerate its own support learning curve.
Finally, Comac can make an acquisition to plug its customer support gap. An MRO service supplier with OEM lineage, such as Fokker Services, could provide a solution. Even more intriguing is acquisition of another aircraft OEM.
Political considerations aside,would be an ideal candidate. It not only would immediately provide a ready-made global customer support organization but it could also address Comac’s certification challenges and provide much-needed engineering and supply chain capability. Bombardier, in turn, needs cash and customers for its slow-selling . The two organizations signed a strategic cooperation agreement in 2012. A Bombardier-Comac tie-up might provide the critical mass of products, technology and capital to break the Boeing-Airbus duopoly.
Which direction Comac will take is unclear, but remember that the timing of the C919’s first flight or certification will be secondary to its decisions in the unsexy world of customer support.
Kevin Michaels is global managing director of aviation consulting and services for ICF International of Ann Arbor, Michigan.