About 20 startup Chinese airlines are proving a hot battleground for Boeing and Airbus, which see each of the newcomers as the potential Southwest Airlines or Ryanair of China — a rapidly growing carrier solidly aligned with just one manufacturer.

In the chase to woo those emerging airlines at their launch, a series of wins this year has boosted the confidence of Boeing’s sales team.

“If you look at the (Chinese) low-cost carriers, I think we are 70 to 80 percent” of sales to that market in the past year, said Ihssane Mounir, Boeing senior vice president of sales for northeast Asia.

While the large, state-owned Chinese carriers order roughly equal the numbers of jets from Airbus and Boeing as a matter of policy, Mounir said in an interview, the entrepreneurial airlines that have launched or will soon launch inevitably go with one plane-maker and “have been primarily buying from us.”

Airbus won China’s first low-cost carrier, Spring Airlines, launched in a brief period of liberalization a decade ago. Spring has built up a fleet of 44 Airbus A320s.

For some years afterward, new airlines were not allowed in China. Once the government relaxed that stance, Airbus in 2013bagged two new Chinese carriers — Qingdao Airlines and Zhejiang Loong Airlines — with commitments for 43 narrowbody A320s.

Since then, however, Boeing has the momentum in sales to this sector.

Beginning in August 2013, Mounir’s team persuaded three new Chinese carriers — Ruili Airlines, 9 Air and Donghai Airlines — to commit to buy almost 90 of Boeing’s 737s.

In addition, most of an order for 80 Boeing 737s from China Eastern is expected to be deployed in that airline’s new low-cost subsidiary, China United.

Will Horton, senior north Asia analyst with the Australia-based Centre for Asia Pacific Aviation (CAPA), said Boeing appears for now to have a lead in the Chinese startup sector.

“But the story is very, very early,” Horton added. “Airbus is also on the offensive to claim market share in China.”

CAPA Executive Chairman Peter Harbison likewise advised caution.

“Bear in mind that Beijing only formally announced it would permit (low-cost carriers) domestically last December, so there is a long way to go,” he said.

Still, said Harbison, the 50-plane order from 9 Air was a particularly standout win for Boeing. The parent company of that startup, Shanghai-based regional carrier Juneyao Airlines, is an Airbus customer.

Mounir sees a definite resurgence in Boeing’s sales fortunes in China, “a leap in market share starting in 2012.”

And he cites an extra spurt this year that has so far brought announced deals for 265 jets, including more than 150 to those startup airlines.

“If you were to plot sales and commitments over the last two years, we’re in excess of 60 percent” market share, Mounir said. “If you look at last year alone, in terms of sales we’re over 70 percent.”

Insatiable demand

The importance of Chinese sales is apparent to anyone glancing at the rows of freshly painted 737 tails lined up at Boeing Field.

Last year, 123 of the single-aisle jets were painted with Chinese airline liveries. That’s nearly 30 percent of the 440 built at the Renton assembly plant, a ratio that is set to move only upward.

China will surpass the U.S. within 10 years as the world’s biggest commercial-airplane market, Mounir said.

He said the Chinese government is now actively encouraging low-cost airline startups, eager to replicate in China the way Southwest and Ryanair opened up air travel to the masses in the U.S. and Europe. Both carriers fly only 737s.

While the bulk of air traffic in China now flies around the “golden triangle” between the giant eastern cities of Shanghai, Beijing and Guangzhou, the Chinese government wants to expand the air system to foster economic growth in the vast, underdeveloped regions of the west and southwest.

So while the overall Chinese economy has slowed in recent years — from frenetic double-digit growth to a still-impressive 6 or 7 percent per year — there’s no slowdown in the aviation industry, Mounir said.

Earlier this month, Boeing released its 20-year market forecast for China, predicting the country will need 6,020 new commercial jets delivered over the next two decades.

Mounir calls that figure “conservative.”

He points out that China is as big geographically as the U.S., but with four times the population. Today China has just over 2,000 commercial passenger jets in service, versus more than 6,000 in the U.S.

With the Chinese middle class growing fast, air traffic in the east of the country is heavily congested. Mounir said that if a business meeting in Shanghai runs late so that he misses his flight back to Beijing, the many other flights between the cities are so full that he might not get another flight for days.

“Sometimes you have to resort to the train to get back to Beijing,” he said.

Hence the Chinese are enlarging their major airports and accelerating the building of new ones, at the same time encouraging new, private airlines to fill gaps.

Of course, the established Chinese airlines are providing Airbus and Boeing plenty of orders too.

The three biggest — China Eastern, China Southern and Air China — are already among the 10 largest airlines in the world. Their planes are newer and have better amenities than many Western airlines.

As international flying to and from China grows, those carriers are prime candidates to start taking more of Boeing’s bigger widebody jets.

Boeing has so far delivered 18 Dreamliners into China, and Air China will take its first 747-8 jumbo passenger jet at the end of this month.

“There’s a huge spurt in demand for big airplanes,” Mounir said. “In the last 18 months, we’ve sold more than forty 777-300ERs to China.”

In the end though, the key to Boeing winning a bigger slice of the China market may be increasing production rates in the Puget Sound region, particularly for the 737.

With an almost insatiable demand, China’s airlines are ordering whatever Airbus and Boeing have that’s available as soon as possible.

“The Chinese could absorb as many planes as you could put in there today,” said Mounir.

Placing work in China

Tracking jet sales in China is difficult because commitments to buy can take years to become firm orders, and some airlines may choose not to publicize orders.

Airbus China spokesman Robin Tao said the European jet-maker is confident it will emerge with a leading position in China.

For Boeing, it’s a matter of recovering its footing in a market it once dominated.

In the mid-1990s, about 80 percent of the commercial-passenger planes flying in China were Boeing jets.

But then Airbus outsold Boeing in China for years, and rapidly climbed to virtual parity today.

Flightglobal’s Ascend database shows 1,076 Boeing and 1,052 Airbus aircraft currently in service in China.

In terms of deliveries, Boeing was ahead in 2013. Boeing delivered 145 airplanes to mainland China (excluding Hong Kong). Airbus said it delivered 133.

In terms of firm sales however, despite Mounir’s claims of a sales lead, the Ascend data show Airbus ahead.

Over the past five years, Ascend shows Airbus booking firm orders for 190 jets from China versus 142 for Boeing.

Yet Mounir insists those firm-order figures don’t reflect the significant tally of recent commitments to purchase.

While the Boeing order website shows just 10 jet orders from China booked this year, Mounir said he’s signed solid agreements for 255 more.

He attributes the revival of Boeing’s fortunes to a new strategy of providing not just airplanes but substantial support to the Chinese airlines and to government aviation agencies.

“We’ve taken a very different approach,” Mounir said. “We help the airlines figure out how to deploy the (airplane) and drive the best efficiencies out of it. We accompany the aircraft with a whole slew of experts, from fleet planning to (engineering) performance analysis, to financial analysis.”

Boeing China President Ian Thomas recently told industry-trade magazine Flightglobal that the company has made a strategic decision not to set up an assembly line in China but will continue to broaden the parts-manufacturing work placed there.

Chinese suppliers make tail parts for the 737, rudders for the 787 and wing parts for the 747-8. Boeing has a joint venture composites plant in Tianjin.

Airbus’ star Chinese manufacturing operation, also in Tianjin, is an A320 final assembly plant.

Airbus’ Tao said that plant employs about 420 people and rolls out four single-aisle jets per month.

Mounir scoffs at this as insignificant.

“We are the largest buyer from China in the aerospace industry today,” Mounir said emphatically. “We have more than 6,000 people working at our joint ventures.”

Whether Boeing has an assembly line in China or not, “The Chinese are very sophisticated to understand the value you put in,” he said

Mounir said his job of selling commercial jets to China “will always be an intense battle given the scale of the market and how essential China sales are to our future.”

“We are having greater success, but can’t and don’t take this for granted,” he added.

Dominic Gates: (206) 464-2963 or dgates@seattletimes.com

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