Airbus Must Make More Jets as `Golden Years' Lie Ahead for China

Flying High: Why China's Spring Air Is Set to Soar
  • `There isn't overcapacity in China,' Spring Air's Wang says
  • China is building more airports to encourage air travel

Spring Airlines Co. has a message for Airbus Group SE -- produce more planes because China needs them.

“Airbus isn’t producing fast enough,” Stephen Wang, vice president of China’s biggest budget airline, said in an interview in Singapore Tuesday. “There isn’t overcapacity in China. For the Chinese aviation industry, there’s still at least 10 golden years, that is 10 years of big growth.”

Spring Air, which ordered 60 Airbus A320neos with a list price of $6.3 billion in December, said it wants more aircraft than it has ordered because of rising demand in a country projected to become the world’s biggest air travel and aerospace market in two decades. To meet that demand, Airbus already has a final assembly facility in Tianjin, near Beijing, while Boeing Co. said last year it plans to set up a finishing shop in the country.

Airbus, which makes an average of four A320 jets a month in China, is planning a groundbreaking ceremony in Tianjin next week for a completion and delivery center for its A330 widebody jets.

Early Delivery

Spring Air is willing to take early slots for plane deliveries that might become available if another airline decides to defer or cancel an existing order, Wang said. The Shanghai-based carrier, which went public in January 2015, expects to receive 11 A320s from Airbus this year and add a similar number of aircraft to its fleet annually for the next five years, he said.

Wang’s comments on capacity support remarks by Airbus executives last week that the planemaker isn’t manufacturing fast enough to meet orders and China continues to drive growth. China is building 66 airports through 2020 to encourage more air travel as it rebalances its economy toward consumer spending, with Boeing predicting the nation will displace the U.S. as the world’s biggest travel market in two decades.

Airbus and Boeing have received multibillion-dollar orders from Chinese airlines including China Eastern Airlines Corp. and China Southern Airlines Co., Asia’s biggest carrier by passenger numbers, as economic growth boosts the middle class in the world’s most populous country.

Chinese air passenger traffic -- measured by the number of trips made -- was projected to gain 10.7 percent this year after climbing 11.4 percent in 2015, the Civil Aviation Administration of China said in a statement in December.

Reasonable Demand

For China aviation, 10 percent to 12 percent demand growth is reasonable, Wang said.

Shares of Spring Air, which only flies Airbus aircraft, advanced 40 percent in the 12 months through Monday. The stock fell 1 percent to 51.50 yuan as of 10:11 a.m. in Shanghai.

Spring Air plans to increase flights to Japan, South Korea and Southeast Asia to cater to Chinese who are eager to travel, Wang said. Currently, overseas services account for about 39 percent of its total, he said.

The airline also is seeking to become the first budget carrier to fly to Pyongyang, the North Korean capital, Wang said. While Spring Air has submitted an application to the Civil Aviation Authority of China, it doesn’t expect to gain approval in 2016 given rising tensions since North Korea conducted a nuclear test and long-range rocket launch earlier this year, he said.

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