A tough sell just got tougher

The MA-60: would you fly in one?

Earlier this month Merpati Nusantara Airlines crashed a plane in the Indonesian province of West Papua killing 27 passengers.

The Economic Observer said the crash was especially newsworthy in China as it was the fifth accident since January 2009 of a MA-60 – a plane made by China’s Xi’an Aircraft Industrial Corporation, a subsidiary of the China Aviation Industry Corporation I (AVIC I).

The MA-60, a turbo prop with up to 60 seats, was the first domestically-produced aircraft to receive safety accreditation from China’s Civil Aviation Administration in June 2000, taking the Ukrainian Antonov-24 as its design base.

But though China-made, the aircraft hasn’t proved a hit with Chinese customers. There are probably no more than 10 MA-60s in regular operation within China, says Caing.com, and most of those were sold to Joy Air, which is part owned by AVIC, and is also based in Xi’an.

Instead company executives have travelled to countries like Laos, Myanmar, Congo and Zimbabwe to make sales, often with flexible vendor financing terms attached.

Back in May 2006, the 15-aircraft contract with Merpati was a heralded moment, counting then as China’s largest civil aviation deal (around 30 MA-60s are currently still in service around the world).

It was also mired in controversy. Initially, several Indonesian lawmakers objected, arguing that production volumes for the MA-60 were too low, and that the model had not received certification from the US Federal Aviation Administration (FAA). Local newspapers also reported that the pricing was murky. Merpati was alleged to have paid more for the same model of aircraft than airlines in the Philippines, Ghana and Nepal, complains the Jakarta Post.

But the sale eventually went through, financed by an Rmb1.8 billion loan ($227 million) from the China Import Export Bank (Merpati is 93%-owned by the Indonesian government).

Then, when Merpati took delivery of the first two aircraft in mid-2007, it claimed to have found cracks in the rear wings, and announced that it was considering cancelling the purchase. It didn’t. Reportedly, Chinese officials threatened to halt another loan to Indonesia if the deal was terminated.

Indonesian Transportation Minister Freddy Numberi said last week that 13 of the 15 planes have now been delivered and the last two are due to arrive later this month.

Meanwhile investigators are still identifying what could have caused this month’s crash, although it seems that bad weather may have been a factor. Perhaps aware of the risk of annoying the Chinese, Indonesian regulators have been careful not to ground the MA-60 outright, although they have come in for media criticism for accepting an aircraft type lacking in international safety accreditation.

Clearly, the MA-60 incidents are not good news for Chinese aerospace firms, which have been very focused on delivering two new aircraft types as proof that they can compete internationally.

WiC has written before about the ambitious C919 programme (WiC31), which is seeking to deliver a single-aisle, medium-range jet by 2014. According to executives at Comac, another major aviation manufacturer with an AVIC shareholding, the new design will be more fuel-efficient than competing Boeing and Airbus models. Nine local manufacturing enterprises including Xi’an Aircraft Industrial Corporation have been contracted to supply major structural components.

Another China-made aircraft – the ARJ21, a smaller, regional jet – is also going through final testing at the moment, and should start being delivered to customers by the end of the year.

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