The Tianjin plant would be the firm's first aircraft assembly line outside Europe and is expected to play an important role in the battle for the single-aisle jet market.

"The joint feasibility study is close to reaching a final result. We expect there will be some announcement by the end of October," said Airbus China spokesman Kevin Gu.

Airbus selected the Tianjin site in June. It said that the plant's first jet was expected to come off the assembly line in 2008.

Airbus and a consortium of Chinese enterprises, including several leading companies in Tianjin, China Aviation Industry Corp I (AVIC I) and China Aviation Industry Corp II (AVIC II), have been working on a joint feasibility study on the project.

The Tianjin plant is likely to be a joint venture in which Airbus has a 51 per cent stake, according to a report in the Securities Times newspaper. Tianjin enterprises would hold 29 per cent, while the remaining 20 per cent would be shared between AVIC I and AVIC II, said the report.

But neither Airbus or the Chinese firms were prepared to confirm the report.

Airbus currently has four A320 final assembly lines, two in Toulouse, France, and two in Hamburg, Germany. The final assembly line in Tianjin is most likely to be a copy of the one in Hamburg.

"We want to do a copy and paste of the most modern final assembly line for the A320 in Hamburg. Copy it and paste it here in Tianjin," Airbus China President Laurence Barron said in an earlier interview.

The final assembly line in Hamburg, which has a 2,600-metre runway, not only assembles the aircraft, but is also responsible for painting, cabin interior installation, static and dynamic tests, and final delivery.

"While twin-aisle aircraft, such as the A380, A350 and B787, are the focus of attention, the single-aisle jet market still remains a very important and competitive one for Airbus and Boeing," said Li Lei, an aviation analyst at CITIC China Securities.

"Especially in China, where there is a boom in domestic air traffic, the success of the two aircraft giants largely relies on single-aisle family aircraft," Li said, adding that the single-aisle jets, such as the A320 and B737, are "bread and butter" for the two companies as more of those aircraft are sold than any other types.

The Tianjin project had its origins in a request from the Chinese Government in April 2005, meaning that the project is likely to give Airbus a competitive advantage over Boeing in China. The government is eager to improve the Chinese aviation industry's know-how by absorbing international aviation giants' technologies and experiences.

Airbus believes the Tianjin project would help it better serve the Asian market by being closer to customers.

"We have the need for industrial volume and we have a market in China which is very receptive to this aircraft," Barron said.

"In all likelihood, most of the aircraft will be delivered to Chinese airlines. But it is not impossible we will deliver it to other airlines," Barron added.

The A320 has been Airbus' most successful model in Asia, especially China. More than 170 A320s currently operate in China, accounting for 60 per cent of the nation's total Airbus fleet. In addition, it is popular among China's burgeoning private airlines, with four out of the nation's six private start-ups using A320s.

The Tianjin assembly line could also help Airbus "share risks" while increasing production, said Tore Prang, media manager of Airbus in Germany.

"The commercial aviation industry has its own cycle and there are peaks and troughs. We are now experiencing the best period in the industry's history, but there will definitely be a slump one day," Prang said, adding that it would be unwise for Airbus to blindly expand production in Europe, which has much higher costs, in order to meet demand during the current "peak period."

Airbus now produces 30 A320s a month. It plans to up this figure to 34, with the Tianjin plant accounting for the additional four.

Airbus will roll out a new version of the A320 next year, featuring a new cabin design, improved engines and winglets that can save fuel.

It also plans to provide GSM mobile telephony on the A320 next year.

(China Daily 10/12/2006 page10)

(For more biz stories, please visit Industry Updates)