*

China trying to get foothold in Vietnam in push for

foreign

buyers of its homegrown jets

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VietJet has agreed to lease two COMAC C909 regional jets,

but

needs Vietnam's regulatory approval-sources

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Key obstacle for COMAC sales is getting foreign regulators

to

recognise its C919, C909 planes

By Phuong Nguyen, Francesco Guarascio and Lisa Barrington

HANOI, Jan 21 (Reuters) - 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

and Boeing ( BA ).

After months of talks, Vietnam's top private airline VietJet

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 ( ERJ )

, 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 ( ERJ ) 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 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.