By Phuong Nguyen, Francesco Guarascio and Lisa Barrington
HANOI (Reuters) – China’s push to break into overseas aviation markets with its homegrown COMAC jets has intensified, with efforts to convince Vietnam to approve its planes in the country, according to two people familiar with the talks and documents.
COMAC’s actions in Vietnam show how the state-owned company has taken a more deliberate marketing approach to regulators and airlines over the past year as it seeks to compete internationally with leading Western plane makers Airbus and Boeing (NYSE:).
After months of negotiations, Vietnam’s largest private airline VietJet was due to start a domestic short-term lease on January 15 of two C909 regional jets operated by crews from China’s Chengdu Airlines, according to documents seen by Reuters that provide insight into its strategy.
But Vietnam’s aviation regulator has yet to approve the deal, wary of giving the green light to a plane currently certified only in China and Indonesia, two of the people and a third person said.
The lease was reported by Vietnamese media, but the approval delay, VietJet’s long-term strategy for COMAC jets and the planemaker’s efforts to win regulatory approval, including an offer of favorable financial terms and training, were not previously disclosed.
The up to 90-seat C909, known as the ARJ21 until November, was China’s first jet engine to reach commercial production and entered service in 2016, with about 160 delivered so far.
The regional jet is not as prominent as COMAC’s more advanced C919 narrowbody, but it would allow the planemaker to gain a foothold in one of the world’s fastest-growing aviation markets and increase its visibility outside of China ahead of the C919’s production ramp-up.
It would also send a message to rivals.
VietJet has been in talks for months with a foreign lessor to lease two E190 regional jets made by Brazil’s Embraer, the world’s leading maker of 90-seat jets, various sources familiar with the talks said, with one adding that pilots were in the process of being hired for the planes.
But the negotiations broke down at the end of last year, Vietnamese media reported. VietJet intended to use Embraer or COMAC aircraft to connect Vietnam’s main cities with the tourist archipelago of Con Dao, where larger jets cannot land.
Two people familiar with VietJet’s negotiations with COMAC said the Chinese offer was on very attractive financial terms that one of the people said were “too good to resist.”
The people declined to be named because the talks were not public.
VietJet, one of Asia’s largest low-cost carriers with a fleet of about 100 Airbus planes and about 200 Boeing 737 MAX planes on order, declined to comment.
COMAC, the Vietnam Civil Aviation Authority and Chengdu Airlines did not respond to requests for comment.
THE CHARM OF THE OFFENSIVE
China and Vietnam have deep economic ties and in recent months have begun cooperation in sectors such as defense and transport infrastructure that were previously thought unlikely due to a history of conflict between the communist-ruled neighbors, who still occasionally clash over the South China Sea border. .
As it became clear that VietJet would not receive regulatory approval in time to begin leasing the C909 last week and take advantage of the busy Lunar New Year travel period that begins next week, Chinese authorities launched an apparent charm offensive.
COMAC board director Tan Wangeng visited Hanoi last Wednesday, and Chinese President Xi Jinping held talks with Vietnamese leader To Lam the same day, urging the countries to “strengthen connectivity”, Chinese state media reported.
Regulatory and VietJet personnel were scheduled to be at COMAC’s facilities in Shanghai starting Jan. 14 for 10 days of training on C909 standards, operation and maintenance, VietJet documents show.
It is unclear when Vietnam might approve the deal, but shortly after Xi-Lam’s call, the Vietnamese government publicly said it was working to remove regulatory hurdles to allow COMAC’s planes to fly in the country.
Rob Morris, global head of consulting at Cirium, said the leasing deal may not need a full certification review of the C909 aircraft by the Vietnamese regulator.
“So I think this agreement can potentially be done quickly,” he said.
GLOBAL PLANS
VietJet’s short-term lease of two COMAC jets is a small deal that industry sources say does not make traditional commercial sense for a major low-cost airline.
But after that, VietJet will eventually seek to introduce more planes, including possible routes to China, according to a Dec. 17 VietJet document.
VietJet’s discussions with COMAC included the ultimate goal of using the C919 in the future, according to a separate source familiar with the matter.
The C909 and C919 are currently only flown by Chinese airlines with the exception of one Indonesian carrier that uses the C909.
Both aircraft have solid safety records with no known accidents, but have far fewer flight hours compared to competing models and are not certified by Western regulators.
COMAC exhibited its aircraft for the first time outside of China in Singapore last February, including a stop in Vietnam, marking a changed approach from previously limited public engagement outside of China.
In January, Brunei-based startup GallopAir leased a China Southern Airlines C909 to Brunei as an interim measure while the country’s regulatory body considers certification of the aircraft, CEO Cham Chi said.
GallopAir ordered 15 C909s and 15 C919s in 2023, in its first non-Chinese C919 order.
COMAC has reached out to airlines, regulators and airlines across Asia and beyond, and said this month it wants the C919 flying to Southeast Asia by next year.
About 16 C919s fly with Chinese airlines, while COMAC plans to produce 30 this year.
COMAC is seeking EU certification for the C919, but the lack of certification for its aircraft by regulators outside mainland China remains a key obstacle for COMAC to be accepted by foreign airlines.
Vietnam’s regulator wants to ensure the authorizations will not jeopardize compliance with foreign aviation regulators, including the US, the two people said.
