China's drive to break into foreign aviation markets with its homegrown COMAC jets has intensified, with a push to persuade Vietnam to authorise its planes in the country, according to two people with knowledge of the talks and documents.
COMAC's actions in Vietnam demonstrate how the state-owned firm has in the past year embarked on a more deliberate marketing approach to regulators and airlines as it seeks to compete internationally with leading Western planemakers Airbus (AIR.PA) and Boeing (BA.N).
After months of talks, Vietnam's top private airline VietJet (VJC.HM) was supposed to start on Jan. 15 the short-term lease for a domestic route of two C909 regional jets operated by crew from China's Chengdu Airlines, according to documents seen by Reuters that provide insight into its strategy.
But Vietnam's aviation regulator has yet to authorise the deal, cautious about greenlighting a plane currently certified only by China and Indonesia, the two people and a third person said.
The lease had been reported by Vietnamese media, however the approval delay, VietJet's longer-term strategy for COMAC jets and the planemaker's efforts to win regulatory approval, including offering favourable financial terms and training, have not been previously reported.
The up to 90-seat C909, until November known as the ARJ21, was China's first jet engine-powered plane to reach commercial production and entered service in 2016, with around 160 delivered so far.
The regional jet is not as high-profile as COMAC's more advanced narrowbody C919 plane, but it would allow the planemaker to gain a foothold in one of the world's fastest-growing aviation markets and boost its visibility outside China ahead of a C919 production ramp-up.
It would also send a message to rivals.
VietJet had been talking to a foreign lessor for months to rent two E190 regional jets built by Brazil's Embraer (EMBR3.SA), the top global maker of 90-seat jets, separate sources familiar with the discussions said, with one adding pilots had been in the process of being hired for those planes.
But the talks collapsed late last year, Vietnamese media reported. VietJet intended to use either the Embraer or COMAC planes to connect Vietnam's main cities to the tourist archipelago of Con Dao, where larger jets cannot land.
The two people with knowledge of VietJet's talks with COMAC said the Chinese offer was under very attractive financial terms that one of the people said were "too good to resist."
The people declined to be named because the talks were not public.
VietJet, one of Asia's largest low-cost carriers with a fleet of around 100 Airbus jets and around 200 Boeing 737 MAX jets on order, declined to comment.
COMAC, Vietnam's civil aviation authority and Chengdu Airlines did not reply to requests for comment.
CHARM OFFENSIVE
China and Vietnam have deep economic ties and in recent months have embarked on cooperation in sectors such as defence and transport infrastructure that had previously been seen as non-starters due to a history of conflict between the communist-run neighbours that still occasionally clash over South China Sea boundaries.
As it became clear VietJet would not receive a regulatory nod in time to start the C909 lease last week and benefit from the busy Lunar New Year travel period beginning next week, Chinese authorities launched an apparent charm offensive.
COMAC Board Director Tan Wangeng visited Hanoi last Wednesday and China's President Xi Jinping had a call with Vietnam's leader To Lam the same day, in which he urged the countries to "step up connectivity," Chinese state media reported.
Regulatory and VietJet staff were scheduled to be at COMAC's Shanghai facilities from Jan. 14 for a 10-day training on C909 standards, operations and maintenance, VietJet documents show.
It is unclear when Vietnam could authorise the deal, but shortly after the Xi-Lam call, Vietnam's government said publicly it was working to remove regulatory hurdles to allow COMAC aircraft to operate in the country.
Rob Morris, global head of consultancy at Cirium, said the leasing deal may not need a full certification review of the C909 jets by Vietnam's regulator.
"Hence, I think this agreement can potentially be made quickly," he said.
GLOBAL PLANS
VietJet's short-term lease of two COMAC jets is a small deal that industry sources said does not make traditional commercial sense for a large low-cost airline.
But after that, VietJet would eventually look to introduce more planes, including possibly for routes to China, a VietJet document dated Dec. 17 said.
VietJet's talks with COMAC included the ultimate objective of using C919s in the future, according to a separate source familiar with the matter.
The C909 and C919 are currently flown only by Chinese airlines with the exception of one Indonesian carrier operating the C909.
Both planes have solid safety records with no known accidents, but they have far fewer flying hours compared to rival models and have not been certified by Western regulators.
COMAC displayed its planes last February for the first time outside China in Singapore, including a stop in Vietnam, marking a changed approach from previously limited public engagement outside China.
In January, Brunei-based startup GallopAir chartered a China Southern Airlines (600029.SS) C909 to Brunei as a stop-gap measure while the country's regulator considers certifying the plane, CEO Cham Chi said.
GallopAir in 2023 ordered 15 C909s and 15 C919s, in the first non-Chinese C919 order.
COMAC has been reaching out to airlines, regulators and aerospace firms around Asia and beyond, and said this month it wants the C919 flying to Southeast Asia by next year.
Around 16 C919s fly with Chinese airlines, while COMAC aims to produce 30 this year.
COMAC is pursuing EU certification for the C919, but the lack of certification for its planes by regulators outside mainland China remains a crucial hurdle for COMAC to gain acceptance by foreign airlines.
Vietnam's regulator wants to make sure any authorisations would not jeopardise compliance with foreign aviation regulators, including the U.S., the first two people said.
