Chinese aviation may fail to take-off


Farnborough in England and Paris take alternate years hosting the world's largest air show and at last year's event tens of billions of dollars were spent by airlines on new aircraft.

But this year's show at Farnborough is just two months away and the early evidence is that it will be a much quieter event. I understand that there will be a large Airbus order from Bahrain's Gulf Air but nothing to make the head reel.

The high cost of oil is having a terrible impact and with balance sheets under pressure now is not the time to go shopping for products that cost up to $300 million (Dh1.1 billion) each. So far, Airbus has had a good start to the year but even it admits that orders are about to slow dramatically. This sudden slowdown should worry executives in Toulouse as they must surely realise that the slump will continue into 2009 unless oil prices retreat.

Last week was not, therefore, an auspicious week for the Chinese to launch their rival to the Airbus-Boeing duopoly. It costs $10bn to develop a new plane and that is a very big investment to make if nobody can afford to buy the product once it rolls out of the hanger.