Airbus to use Tianjin as delivery hub

France-based Airbus SAS plans to make more direct aircraft deliveries to Asian carriers from Tianjin, a top company official said recently.

The European aircraft manufacturer said it aims to make the northern port city its Asian hub and indicated that the final assembly line in Tianjin would start its second phase of operations from 2016. This "opens the possibility of delivering directly to customers outside China", said Rafael Gonzalez-Ripoll, Airbus China chief operating officer.

The factory in Tianjin, Airbus' only final assembly line outside Europe, has delivered 172 aircraft to 13 carriers. It has only marginally delivered outside China through leasing companies. Malaysian low-cost carrier AirAsia is the only foreign airline operating a leased A320 assembled in Tianjin.

"We will proactively convince our customers outside China to take delivery from Tianjin. All Asian customers are subject to this," Gonzalez-Ripoll said.

"I don't expect negative reaction for that because there is no difference in quality (between aircraft assembled in Tianjin and those in Europe). Tianjin is closer to their headquarters. It might save airlines' cost of transferring people to Tianjin compared with sending people to Europe. The ferry flight will be shorter," he said.

The Tianjin factory has been considered a jewel in Airbus' industrial cooperation with China. It delivered the first single-aisle A320 aircraft in June 2009. Airbus and its Chinese partners, Tianjin Free Trade Zone Investment Co and Aviation Industry Corp of China, agreed in March to extend the joint venture for an additional 10 years. The second phase will cover the period from 2016 to 2025.

The plant is expected to have a long-lasting impact on the future growth of the northern port city as it fosters a competitive supply chain locally. Tianjin could be the third-largest aviation center in the world soon, Eric Chen, Airbus China president, said earlier.

But more importantly, Chinese companies are also bidding to become suppliers to Airbus' first US-based production facility. Airbus started constructing the $600-million A320 final assembly line in the US state of Alabama, in April 2013, with aircraft assembly scheduled to begin in 2015 and the first delivery targeted for 2016.

Two local Chinese suppliers in Tianjin have won contracts for the project. Seven (Tianjin) Industrial Co Ltd has won the contract to supply wooden box packages to the factory in Alabama. Tianjin Saixiang Technology Co Ltd will supply transportation jigs and tools for the project.

"The US contract will have a positive effect on our business performance for the next two to three years," said Zhu Hongguang, board secretary of Saixiang.

China COSCO Logistics Co Ltd, the logistics supplier in the Tianjin factory, is also bidding to provide logistics services for the US project, said Gonzalez-Ripoll.

"Chinese companies are well positioned to get contracts or subcontracts for the final assembly line in Alabama as they have proved they are efficient suppliers with a competitive offer. It is a window of opportunity for our Chinese suppliers," said Gonzalez-Ripoll.

Airbus is expected to see its industrial turnover in China to reach $500 million next year as scheduled and is ambitious about increasing that to $1 billion by 2020, said the COO. The industrial turnover includes subcontracting of aircraft components from Chinese companies and revenues generated at Airbus' four joint ventures in China.

Gonzalez-Ripoll said Airbus will enhance subcontracting in China through developing new projects, in particular in the field of cabin interiors.

"Currently most of the cabin interior suppliers are from the US and Europe. But we know there are capabilities in China," Gonzalez-Ripoll said, without disclosing names of suppliers Airbus is talking with.

Hubei Ali Jiatai Aircraft Equipment Co Ltd, a subsidiary of AVIC, was awarded BFE (buyer furnished equipment) certificate by The Boeing Co last year. The Chinese company is now a seat supplier of limited offerability for the US-based aircraft manufacturer.