Tuesday, December 1, 2015
Domestic, International Partners Compete for a Place in China’s Booming Avionics Market
China’s burgeoning air transport sector is providing huge opportunities for those foreign avionics manufacturers that have done their homework and embedded themselves in the local market. But domestic players are catching up fast and the longer-term competitive landscape looks set to change.
Major international avionics manufacturers have been cultivating their presence in China for some time, positioning themselves to reap the benefits of what they believe will be a colossal growth market in the coming years. A brief glance through forecasts from Airbus, Boeing and local airframer the Commercial Aircraft Corporation of China (COMAC) — all of which predict eye-watering numbers of aircraft entering the Chinese market over the next two decades — leaves little doubt as to where this bullishness is coming from. Coupled with this, the Civil Aviation Administration of China (CAAC) has mandated that all domestic airlines equip 100 percent of their fleets with Head up Displays (HUDs) by 2025 — presenting considerable opportunities for established European and U.S. avionics manufacturers.
Meanwhile, as more and more new airports are built in rugged terrain across China, and with airspace remaining constrained, a growing need for Performance Based Navigation (PBN) procedures provides yet another reason for international suppliers to get excited.
But China’s home-grown avionics manufacturers are catching up fast. The Aviation Industry Corporation of China (AVIC) — albeit through a series of joint ventures with international companies — already provides a number of avionics systems on the in-development COMAC C919 aircraft. International avionics manufacturers are cognizant of the probability that AVIC’s ambitions will not stop there, and are preparing themselves for future competition.
“We have to keep running ahead of the competition, and Chinese companies will be just another competitor. They will be there sooner or later,” says Thales China Deputy Chief Executive, Jinsong Xia. “We see local companies coming up fast on [In-Flight Entertainment] IFE and seats, so one can believe they can be here soon [on avionics]. AVIC avionics equipment could be certified in the United States and Europe in a relatively short timeframe.”
Belinda Wang, a director at the North Asia Aviation Consultancy, has offered the following advice for international avionics companies working in China: “Basically, they need to safeguard their investments. China is still trying to understand the requirements to certify aircraft systems, both within China and overseas. Foreign companies need to deal with a domestic bureaucratic certification organization which is attempting to reach international standards.”
With that in mind, Thales and international rivals such as Honeywell Aerospace and Rockwell Collins are ensuring that they have strong relationships in place with Chinese players so they are firmly entrenched with the companies that might one day become direct competitors.
“Our approach is looking at different opportunities with Chinese avionics manufacturers, to bring together Honeywell’s years of experience with Chinese companies’ indigenous experience,” says Brian Davis, vice president of Honeywell’s Airlines Asia-Pacific division. “We don’t think of it as competitors working against each other. It’s more, ‘Who do we partner with?’”
Honeywell’s joint-venture approach and lengthy exposure to the Chinese market has seen it notch up four major product lines on the C919, the biggest of which is to supply the single-aisle commercial aircraft’s fly-by-wire flight control system.
Rockwell Collins has taken a similar approach and has won a series of avionics contracts across Chinese aircraft programs, including the C919, COMAC’s ARJ21 and the AVIC Xian MA700 twin-turboprop.
“In China, deep relationships with the local aviation industry are critical, and those relationships are not formed overnight,” explains Rockwell Collins China Managing Director Ron Ho. “Rockwell Collins is fortunate to have recognized the opportunities in China more than 30 years ago, so we have had a long time to build and foster the relationships we have in the region.”
Adds Ho: “International manufacturers should have a long-term investment commitment to this marketplace and build trust with the Chinese industry, continuing to solve customers’ problems while establishing more partnerships and executing flawlessly on the existing programs, so as to position on future new aircraft and airline opportunities.”
The next potential opportunity for international avionics companies to win contracts in China is likely to be on a new wide body that has been jointly proposed by COMAC and Russia’s United Aircraft Corporation (UAC). The twin-aisle aircraft, dubbed the C929, has not been officially launched yet and is still very much under discussion.
However, Thales is hopeful that if the airliner is given the go-ahead it will “have a chance to re-enter the competition,” says Thales’ Xia. Any future Chinese aircraft project would still be dependent on international suppliers, at least in the short term, as Wang from the North Asia Aviation Consultancy points out: “Currently COMAC has under contract large numbers of foreign aviation companies and engineers to make up for lack of experience domestically. This trend will continue.”
“China will be almost a close second to North America in the number of aircraft — it could be the largest. We expect passenger growth to be the highest in the world. Everybody in the industry is bullish this market will continue growing,” Xia adds. One of Xia’s “favorite subjects” is the CAAC’s HUD Application Roadmap, published in 2012. The government mandate requires all Chinese airlines to equip 10 percent of their fleets with head-up displays by 2015, rising to 50 percent by 2020 and 100 percent by 2025.
“The CAAC is putting the utmost attention on maintaining the safety of flights here,” says Xia, noting that Chinese airspace is “very congested” and aircraft coming in to land are often at the mercy of adverse meteorological conditions, particularly in Western China. “HUDs can enhance the situational awareness of pilots coming into these places,” he adds.
While the CAAC’s minimum requirement is for aircraft to be equipped with a single HUD, Xia believes a growing number of Chinese airlines will opt for a dual HUD configuration going forward. In September, Thales landed its first dual HUD order in China through a contract to install the double configuration across 30 of China Southern Airlines’ new Airbus A320s.
Avionics manufacturers are also seeing significant opportunities on the ground in China, as the country begins to implement Performance Based Navigation (PBN) procedures at its airports. This was evidenced in April at Shanghai Pudong International Airport when China carried out its first flight demonstration using Honeywell’s SmartPath precision landing system.
Davis says the Ground Based Augmentation System (GBAS) will be certified for use at Pudong “late this year or early next year,” adding that Honeywell “already has sales partners to spread GBAS across the Chinese market”.
“We’re already looking at what will be the next airports to deploy [the system],” adds Davis. “We think the RNP market is a great inroad to the GBAS market — they can be done in parallel.”
During the SmartPath trials at Pudong, “we did a number of curved path approaches and accomplished things that have never been done in commercial aviation before,” says Davis, adding that the use of this technology “can minimize constraints and take advantage of limited airspace.” This is a problem in China because the airspace is still heavily controlled by the military.
But some are more skeptical about how widespread the use of such procedures will be across China.
“Performance-based procedures are being talked about but many involve direct or smooth transition flight plans which, in some cases, are not optimum in controlling traffic over a wide area, taking into account foreign and national carriers with airspace restrictions changing on a local basis,” says North Asia Aviation Consultancy’s Wang.
“It is expected some performance-based systems will be introduced but, for now, these are likely to be showcases only,” she adds.
Avionics firms line up to tap growing Chinese helicopter sector
Rotorcraft avionics is widely tipped to be the next big growth market for manufacturers targeting China.
The Chinese commercial airline industry is already providing plenty of opportunities for international avionics companies, but the country’s rotorcraft sector is now beginning to take off.
“From an industry point of view, I think the next big need will be helicopter avionics. There will be a strong need for helicopters in China,” says Thales China Deputy Chief Executive, Jinsong Xia. “When you look at the size and wealth of the country, the helicopter market is not in proportion to the fleet in the United States.”
China’s growing oil and gas industries, together with the need for emergency medical services in what can often be challenging and difficult terrain to traverse, mean demand for helicopters in the country is expected to increase significantly over the coming years.
Thales is “positioning itself” to take advantage of future growth in China’s helicopter market, adds Xia.
Chinese state-owned aircraft manufacturer AVIC recently announced that it had entered an agreement with Russian Helicopters to develop a heavy-lift helicopter. On announcing the pact in May, Russian Helicopters Chief Executive, Alexander Mikheev, described China as “one of the fastest-growing helicopter markets worldwide.”
In September, Rockwell Collins won a contract to provide cockpit display systems and Pro Line 21 Communication, Navigation and Surveillance (CNS) equipment for AVIC Harbin Aircraft Industry Group’s (HAIG’s) new fleet of AC312E/C helicopters.
The company has supplied avionics systems on the AC312 commercial helicopter since 2003. In early 2013, it was selected by HAIG to supply Pro Line radio equipment to the AC352 6.5-ton commercial helicopter for search and emergency rescue purposes.
Rockwell Collins Vice President and Managing Director of Asia Pacific, Jim Walker, said at the China Helicopter Exposition in Tianjin in September, that China was a “high growth market for helicopter avionics, despite recent economic volatility.”
Kerry Reals is a UK-based freelance journalist specializing in aviation and aerospace. She writes for a number of titles in this field and previously worked as a staffer at Flightglobal.