Why Did Chinese Airlines Spend 4.8 Trillion Won to Buy European Aircraft?

Airbus A320neo model. Photo by Airbus website capture

[Asia Economy Intern Reporter Kim Se-eun] China's four major airlines have signed a purchase agreement with European aircraft manufacturer Airbus for 292 aircraft.

On the 1st, China Eastern Airlines, China Southern Airlines, Air China, and its subsidiary Shenzhen Airlines announced this respectively through their statements.

China Eastern Airlines purchased 100 aircraft, while China Southern Airlines, Air China, and Shenzhen Airlines each purchased 96 aircraft, with a total purchase amount of $37 billion (approximately 48.026 trillion KRW).

All purchased models are A320neo, and the contract was made under the condition of phased delivery from next year until 2027. The A320neo is Airbus's latest aircraft model, with more than 2,000 units delivered over six years as of March.

According to AFP News Agency, Airbus stated in a press release on the same day, "This shows a positive recovery opportunity and development prospects for the Chinese aviation market."

Moreover, there are expectations that China's new aircraft purchases will resolve the previous issue of aging passenger planes. Additionally, Chinese domestic media forecast that "China's aviation situation is showing a gradual recovery similar to the pre-COVID-19 period."

In fact, the number of flights departing in China last month increased from 6,489 at the beginning of the month to 10,609 at the end of the month. The average daily number of passengers on commercial flights also rose from about 445,000 at the start of the month to about 896,000 by the end.

Airbus has competed with the American company Boeing in the global aviation market. However, Boeing's 737 Max aircraft suffered significant damage to its reputation due to safety uncertainty controversies over several years.

After the 737 Max aircraft crashed consecutively in Indonesia and Ethiopia in 2018 and 2019, aviation authorities worldwide, including the United States, suspended operations of the model entirely.

China approved the resumption of 737 aircraft operations last year, but in March, a China Eastern Airlines Boeing 737-800 flying from Kunming, Guangxi Province to Guangzhou crashed, resulting in 132 deaths.

Meanwhile, in May, China's state-owned aircraft manufacturer COMAC successfully completed a test flight before customer delivery of its first medium-sized commercial passenger aircraft, the C919, accelerating domestic aircraft production.

The C919 is expected to compete with the Airbus A320 and Boeing 737 medium-sized passenger aircraft in the Chinese market in the future.