Vietjet buys 10 Chinese-made COMAC C919 jets in a new finance lease deal. What does this mean for the airline, the aviation industry, and the future of Chinese aircraft manufacturing?
Vietjet, the popular Vietnamese budget airline, has announced a significant finance lease agreement with SPDB Financial Leasing, a Chinese financial institution. The deal involves ten COMAC C919 narrow-body aircraft, marking a potentially pivotal moment for the Chinese aerospace industry. The announcement was made on Thursday, April 16th.
A finance lease is essentially a long-term rental agreement. Vietjet will have the use of the aircraft for a specified period, making regular payments to SPDB Financial Leasing. At the end of the lease term, Vietjet may have the option to purchase the aircraft outright.
The COMAC C919 is a narrow-body airliner manufactured by the Commercial Aircraft Corporation of China (COMAC). It's designed to compete directly with the Airbus A320 and Boeing 737 families, the workhorses of the global aviation industry. The C919 represents China's ambition to become a major player in commercial aircraft manufacturing.
This deal is important for several reasons:
In our opinion, Vietjet's decision to incorporate the C919 into its fleet is a calculated risk with potentially high rewards. The airline is known for its cost-conscious approach, and the C919 may offer a more attractive price point than its Western counterparts. However, the C919 is a relatively new aircraft, and its reliability and long-term performance remain to be seen. This could impact public perception, particularly if any issues arise. The airline may be betting on the C919 to provide a competitive advantage.
It is important to note that the C919 does have some Western-sourced parts, including engines. This means that global supply chain challenges could still impact production and delivery. Additionally, regulatory acceptance in other key markets may be a hurdle that COMAC still has to address.
The success of this deal hinges on several factors:
Looking ahead, we expect to see COMAC actively pursuing more international deals to establish the C919 as a viable alternative to Airbus and Boeing. If the C919 proves to be a success, it could reshape the aviation landscape and give airlines more options when choosing their fleets. The C919's price competitiveness could also spur innovation from Airbus and Boeing. This entire move will affect airline tickets and airline prices in the future, by increased competitiveness and more affordable planes.
