China aircraft makers to form jv to develop short-haul planes

BEIJING (AFX-ASIA) - China's major domestic airplane manufacturers are to set up a multi-billion yuan joint venture to develop a new generation of regional passenger planes, the China Daily's Business Weekly reported, citing industry officials.

	    The government will inject some 2 bln yuan into the project to develop and manufacture 70-seat short-haul aircraft by 2004, the paper said, citing Yang Tingkuo, chairman of the Chengdu Aircraft Industrial Group Co (CAC), which is to invest 5 mln yuan in the new company.

	    Yang would not comment on whether the new airplane would be the "Xinzhou-60", a short-haul plane developed last year by the Xi'an Aviation Industrial Co, which is also investing some 5 mln yuan in the project, Business Weekly said.

	    The paper said China's last attempt to make a regional plane was a partnership with Airbus Industrie and Singapore Technologies Aerospace six years ago, but the venture failed to turn the proposal for a 100-seat plane into reality.

	    Yang said CAC has in the past held talks with a number of foreign companies about designing and manufacturing small planes for business flights.

	    The China No1 Aviation Industry Corp is to invest 20 mln yuan in the project, Shanghai Aircraft Industrial Group Co will invest 5 mln, and the Shenyang Aircraft Industrial Group will provide 3 mln, the paper said.

	    Yang said production is expected to begin in 2004 and that at least 50 aircraft would be turned out each year.

	    The development of the new aircraft is expected to fill a growing gap in China's aviation industry, and is being seen by analysts as a move to revive the ailing domestic air transport sector dominated by larger planes such as the Boeing 737, the paper said.

	    Philip Conduit, chairman and CEO of Boeing Co was quoted as predicting that China would be the largest aviation market outside the U.S. over the next 20 years.

	    Short distance flights account for 13 pct of China's 510 air routes, compared with some 50 pct of air routes in developed countries, the paper said. 

	    Zhang Guobao, vice-minister of the State Development Planning Commission was quoted as saying that China would re-organize its domestic flight market to include many more regional flights.

	    He said other measures would also be implemented to revive the sector, including the development of more smaller airports and removing price controls on regional routes.

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