What Do China’s Embraer 190-E2 And ATR 42-600 Certifications Mean?
In the span of just a few days, the Civil Aviation Administration of China certified the ATR 42-600 and the Embraer 190-E2. The recent Airshow China, formerly the Zhuhai Airshow, served as the platform for the announcements, giving them the visibility the Chinese administration intended. Why did China move ahead with the two programs, and why now?
The big-picture view is something like this: “With the Chinese, it does not just happen,” says Adam Pilarski, senior vice president of consultancy Avitas. “There is always a meaning to it.” In this case, the certifications probably have several different meanings, and not all of them are strictly aviation-related.
- The approvals are seen as political signals
- A weak Boeing is in China’s strategic interest
Politically speaking, the message is: “We, China, do not want to totally decouple from the West,” Pilarski adds.
The announcements occurred amid the backdrop of the recent G20 summit in Bali, where Chinese President Xi Jinping made an effort to avoid aggravating geopolitical tensions with the U.S. by supporting better trade relations and distancing China somewhat from Russia’s war in Ukraine. China has by now seen the damage that economic sanctions can inflict on countries, the most prominent case being Russia. Aviation is a good target for sanctions, which are all but guaranteed should China become more aggressive in its ambitions toward Taiwan.
The ATR and Embraer certifications are also part of a broader aviation strategy. At the air show, China repeated the news of a big order for 292 Airbus narrowbodies placed earlier this year, showing that the country is focusing on non-U.S. foreign aircraft manufacturers where needed. “They want to hurt one of the duopolists but not kill it,” Pilarski says. “And they picked a side, which is Airbus.” The Boeing 737 MAX is cleared to fly again in the country, even though operations have not resumed, and new orders for the type appear to be a long way off.
Weakening Boeing is in China’s strategic interest for the time being, but opening up a bit for ATR and Embraer is another piece in the political puzzle. A much stronger Airbus is also not in China’s interests. If one player becomes too powerful, customers have less pricing leverage during order negotiations, even if the customer is China. “They want to show that they can punish the U.S. right now, but it does not mean they will never order the MAX or the 787,” Pilarski says.
The Comac C919, though pushed by the Chinese government, will play only a marginal role for some years in the bigger scheme of things, given the slow buildup of production. One industry source says no more than five aircraft would be delivered in 2023, about 1/10th of Airbus’ current monthly rate.
Allowing the ATR and E2 aircraft into the country is an easy decision from China’s perspective. The E2 sits between the Comac ARJ-21 and traditional narrowbodies and so does not compete with the C919. The ATR 42-600, on the other hand, does compete with the Xian MA700 turboprop, so allowing it in could be a sign that China is losing faith in the Xian program, which has also been held back by Canada’s refusal of an export license for the Pratt & Whitney Canada PW150C engines. The MA60 aircraft is no longer produced.
For ATR and Embraer, the big question is whether certification will lead to substantial orders. “China can use the ATRs because of the MA700 situation,” one industry source says. He sees relatively few opportunities for the E-Jets, though.
Similarly, Pilarski does not not expect orders in China will move the needle much. “They may get some orders, but it is not a huge positive for them,” he says.
In short, both are too small for trunk routes. Embraer sees the 190-E2 as a good aircraft for hot-and-high operations, but that would still be a niche area. The Brazilian airframer currently has 91 E1s operating in China. ATR has had some aircraft placed at China Southern Airlines and small regional operators in the past.
ATR applied for a validation of the ATR 42-600’s European Union Aviation Safety Agency type certificate in 2019. It chose to pursue the 30-seat category rather than the usual 50 seats. “Up to 30 seats, an aircraft can be considered part of the general aviation sector, similar to the U.S. FAA’s Part 135 rule for commuters,” says Fabrice Vautier, ATR’s senior commercial vice president. “In China, it is easier to create an airline in general aviation than in regional aviation.”
In 2018, ATR worked out a 20-year market forecast showing potential demand for 800 aircraft in that category. “We realized the ATR 42-600 is better to enter the Chinese market,” Vautier says. Before that, ATR had focused on the ATR 72-600.
China’s cautious approach toward allowing new regional operators is playing a major role. “Chinese authorities do not grant air operator certificates to startup companies in regional air transport,” ATR’s then-CEO Christian Scherer said in 2017. “The idea is to avoid the simultaneous emergence of too many regional airlines that would be difficult to monitor and could thus create a safety issue.” The policy has affected not only ATR but all manufacturers of regional aircraft.
ATR’s salespeople and two determined customers, however, found the 30-seat workaround. At the time, Xuzhou Hantong Aviation Development and Shaanxi Tianju Investment Group signed letters of intent for a total 13 ATR 42-600s.
Today, ATR refers to a firm order from an undisclosed customer in the country for three aircraft to be delivered late in 2023 or early in 2024. There is room for many more, Vautier says. “Of the 4,000 commercial aircraft flying in China, 120 have fewer than 100 seats, a much lower proportion than the global average,” he says. “And of the 250 airports in the country, the smallest 100 airports receive only 2% of the traffic. The ongoing 14th five-year plan includes a section on regional aviation.”
Of the aforementioned 4,000 aircraft, the smallest 120 are essentially the addition of 70 Comac ARJ21s and 40 Bombardier CRJs, Vautier says. ATR 72-500 deliveries took place in the country between 1999 and the late 2000s, but the type is no longer operated by any Chinese carrier. A handful of indigenous Xian MA60 turboprops are still flying, Vautier adds.
Possibly helping ATR’s case has been its partial production in China. A section of the ATR 42-600’s fuselage and its center wingbox are manufactured in the country.
Embraer’s experience with Chinese manufacturing has been mixed at best, however. The company agreed to set up a local joint venture with the Avic conglomerate, which produced the 50-seat ERJ-145 from 2003 to 2016. Only 40 aircraft were ultimately built, even though the facilities were designed to deliver 24 per year. No major Chinese suppliers are on the E2 program, but that could change if it became a prerequisite for large orders, industry sources say.
The Brazilian manufacturer does have a significant marketing and sales team in China.
Similar to ATR’s efforts for its turboprop, Embraer has worked on the Chinese 190-E2 certification for quite some time; E195-E2 introduction is also a target. While the smaller E2 variant is mainly aimed at hot-and-high operations, the larger configuration could be flying more traditional thinner routes that do not justify the use of narrowbodies.