Asian Express Project Called Off

China, Airbus Industrie and Singapore Technologies have decided to call off their $5 billion Asian Express 100-seater aircraft project due to the depressed market for civil aircraft.

The move comes nearly two years after the Aviation Industries Corporation of China (AVIC), China's state-owned aircraft manufacturer, threw out Hindustan Aeronautics Ltd (HAL) from the aircraft project.

AVIC had initially signed a memorandum of understanding (MoU) with HAL. Under the MoU, HAL was supposed to do the initial design for the aircraft, and later on subcontract entire sections.

However, in late 1996, China dropped HAL in favour of Singapore Technologies and Airbus Industrie. Airbus was to provide the technology, while production was to take place in China. The aircraft was to be sold under the `Airbus' brand name.

 

An Airbus statement from Paris said, "AVIC and Airbus have investigated a project for a new 100-seat aircraft. The four partners have made an in-depth viability assessment of such an aircraft, and have jointly concluded that no solid common basis was found for further developing this new aircraft." A senior HAL source said the news was not unexpected as the dropping of the project had been doing the rounds in the international aviation industry for some time.

In the present depressed market conditions for civil aviation, a new 100-seater aircraft project may not be a good idea, the source said.

He said it was good that HAL got out the project early or else it would have had to pump in about $25 million towards its share. AVIC is said to have lost $100 million in doing the spadework for the Asian Express project.

A project viability study in 1995 had predicted a market for 50-75 planes in the Asian region alone in the next five years. After Airbus stepped in during 1997, the aircraft was to carry an Airbus model number like `A317' to denote a smaller aircraft than their standard A320.

With the domestic aviation industry too looking bleak, HAL seems happier with the project falling through. It was banking on the growing tribe of private airlines to be its main customers for the 100-seater aircraft. In 1995, there were eight private airlines operating on trunk routes with some 40 aircraft. Now there are just three with the total fleet strength around 20.