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Read the following scenario. Write a short memo to Mr. Zhuanglong Jin, the chairman of Commercial Aircraft Corporation of China (COMAC). In your memo, briefly describe why he should or should not continue with his plans for entering the commercial airliner business. Your memo should not be more than 2 pages, double-spaced, Times New Roman font size 12.
Since the 1990s the global market for full-sized commercial airliners has been dominated by two companies – Airbus, a European firm, and Boeing, its American competitor. But in theory, at least, airlines will soon have a wider choice of planes. On November 2nd COMAC, a Chinese state-owned planemaker, revealed its C919 plane, a competitor to Airbus’s A320 and Boeing’s 737, the two most popular airliners in the skies. COMAC says the C919 plans to have its maiden flight next year—two years later than first scheduled—and enter service around 2019.
The Chinese are not the only ones who think they can break the duopoly. After several delays, Irkut, part of Russia’s state-owned United Aircraft Corporation (UAC), hopes to launch its MC-21 aircraft, another potential rival to the 737 and A320, into service in 2017.
Many aviation analysts remain skeptical about whether the Chinese and the Russians, even with generous government financial support, will ever be able to compete against Airbus and Boeing. The C919 will need mostly Western-designed equipment—including its engines, until China succeeds in making world-class commercial-airliner engines and equipment. Analysts predict that when it flies, its fuel efficiency will lag behind that of the newest versions of the Boeing 737 and Airbus A320.
Although the Russians and the Chinese may well be fairly good at designing aircraft, they have little experience in creating the complex production systems and supply chains needed to build them to the extremely high standards of reliability and safety that airlines expect. Without first improving their safety record, they are “not a near-term risk” of Boeing or Airbus, says Jason Gurksy, an aerospace-industry analyst at Citigroup.