By Fang Yan and Matthew Miller

BEIJING, Feb 27 (Reuters) - China's AVIC Xi'an Aircraft Industry (Group) Co has applied to ground its MA-60 planes after two instances of landing gear failure this month, in a move one commentator said could damp enthusiasm for Chinese-made planes.

The mishaps of the small, propeller-powered jet add to over a dozen accidents in recent years and amount to unwelcome publicity as Commercial Aircraft Corp of China (COMAC) struggles to develop an airliner to compete with Boeing Co BA.N and Airbus Group NV AIR.PA .

Xi'an Aircraft applied to the Civil Aviation Administration of China to suspend domestic use of the MA-60 after the landing gear malfunctioned on a plane carrying 38 passengers on Tuesday, state news agency Xinhua reported.

The aircraft operated by Okay Airways Co Ltd circled Shenyang Taoxian International Airport in northeast Liaoning province for two hours while crew assessed a "faulty instrument" related to the landing gear, Xinhua reported.

The company, who on its website said it would apply for the suspension, could not be reached for comment. The authority said it may issue a statement later Thursday.

The latest incident came just three weeks after the landing gear collapsed on an MA-60 operated by China Joy Air Co Ltd, causing the plane's nose to hit the ground on arrival at Zhengzhou airport in central China.

OTHER CRASHES

The MA-60 was involved in 11 serious accidents in Indonesia, Myanmar and Bolivia from July 2010 to June 2013, according to Chinese aviation portal carnoc.com.

In May 2011, an MA-60 operated by Indonesia's Merpati Nusantara Airlines crashed several hundred meters short of the Utarung Airport runway in Kaimana, West Papua province, killing all 27 people on board.

On June 10, 2013, another Merpati MA-60 carrying 52 passengers crashed at El Tari Airport in Kupang, east Indonesia, injuring two.

On the same day a Myanmar MA-60 skidded and overshot the runway after landing at Kawthaung Airport, according to Aviation International News.

Authorities in Indonesia and Myanmar subsequently grounded the aircraft for inspection.

CHINA AIRCRAFT INDUSTRY

Xi'an Aircraft's problems not only put the future of the MA-60 in doubt, but may damp demand for other Chinese-made aircraft, said Wang Xiaohua, a senior consultant at Kent Ridge Consulting Co in Xiamen.

"The market will be in a panic about these made-in-China small jets and that might also have some spill-over effect for the home-made large commercial jet."

State-owned COMAC is developing the country's first short- and medium-range airliner to rival planes of industry leaders Boeing and Airbus.

COMAC has postponed plans to fly its C919 until the end of 2015 because of manufacturing problems, and has set a modest target of 30 orders for this year. Total orders for China's only home-grown commercial jet last year stood at 400.

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A senior official at engine maker CFM, a joint venture between GE Aviation and Snecma and the sole supplier of engines for the C919, said most of COMAC's difficulties can be put down to inexperience.

The delivery of the first C919 is scheduled for around 2016-2017, but many industry insiders expect that to slip to as late as early next decade.

(Editing by Christopher Cushing)

((yan.fang@thomsonreuters.com)(86 10 6627 1233)(Reuters Messaging: yan.fang.thomsonreuters.com@reuters.net))

Keywords: CHINA AVIC/GROUNDING