Chinese Startup Airlines To Be Limited To Smaller Aircraft

Embraer Commercial Aviation CEO John Slattery believes a new rule, which initially limits Chinese startup airlines to smaller aircraft, could create opportunities for the Embraer E190.

Speaking on the sidelines of the European Regions Airline Association General Assembly in Madrid, Slattery said the Civil Aviation Administration of China (CAAC) issued a rule during the G20 meeting in early September that took immediate effect. This regulation restricts the size and number of aircraft that new air operator’s certificate (AOC) holders can operate.

“The restrictions prevent us from selling new Embraer E195s and restrict Bombardier from selling the CSeries [to Chinese startups], but our E190 is absolutely in the sweet spot of the policy. We’ve got very good penetration of the Chinese market with the E-190—it’s a recognized asset with very good support—so we’re hopeful that China will deliver a significant amount of activity for new and pre-owned aircraft,” Slattery said.

He added that there are currently around a dozen Chinese airline business plans that might result in an AOC application. “I’d be hopeful that we can capture at least half of those as Embraer customers,” he said. “We do think there will be a particular surge of activity in the Chinese market in the coming months.”

Over the 2016-35 period, Embraer is forecasting demand for 6,400 deliveries worldwide in the 70- to 130-seat segment, with 26% of that total—or 1,690 aircraft—destined for the Asia-Pacific region.