Anshuman Daga and Siva Govindasamy Singapore
Top plane maker Boeing expects nearly half of the world’s air traffic growth will be driven by the Asia-Pacific region over the next 20 years, but is monitoring local currencies to assess airlines’ ability to meet orders.
On the eve of the Singapore Airshow, Boeing forecast the fleet of aircraft in the region would triple in size over the next two decades, sparking demand for close to 13 000 more planes valued at $1.9 trillion (R21 trillion).
Air travel has surged in the region, driven by a rise in disposable incomes and low airfares offered by budget carriers, notably in south-east Asia.
But Randy Tinseth, the vice-president of marketing at Boeing Commercial Airplanes, sounded a note of caution, saying market conditions were being monitored closely for any signs of overcapacity.
“We are watching what’s happening here in terms of currencies and in terms of economic growth,” he said.
After years of explosive growth, the region’s budget carriers now face the possibility of overcapacity as deliveries accelerate, airlines expand into each other’s markets and currency weakness threatens to dent economic growth.
By the end of the year, airlines in south-east Asia will have 1 800 planes, while their order book is set to surpass the 2 000 mark.
This week’s Singapore Airshow, Asia’s biggest aerospace event, attracts the world’s major commercial and defence manufacturers, as well as buyers in the form of airlines and military top brass.
A spat between hosts Singapore and Indonesia has cast a slight pall over the event, and a series of meetings between their military leaders over the naming of a new Indonesian frigate have been cancelled.
Carriers in south-east Asia are due to take delivery of about 230 aircraft worth over $20 billion this year.
Tinseth said a boom in low-cost carriers and demand for intra-Asia travel had fuelled a substantial increase in orders for single-aisle airplanes.
Boeing estimated Asia-Pacific’s fleet size would blow out to 14 750 over the next 20 years, from 5 090 in 2012.
“Asia Pacific economies and passenger traffic continue to exhibit strong growth.
“Over the next 20 years, nearly half of the world’s air traffic growth will be driven by travel to, from or within the region,” Tinseth said.”
Similarly, rival Airbus sees the Asia-Pacific region as a lucrative market. It says planes on order in the region make up 36 percent of the world total and the figure is rising.
Both Airbus and Boeing have committed to record production rates for their most popular models, but executives are closely watching the financial turmoil in key aviation markets, such as Indonesia and Thailand.
Asia-Pacific is home to some of the biggest long-haul carriers, and budget carriers AirAsia and Lion Air have placed orders valued at billions of dollars and are among the biggest customers of Boeing and Airbus.
Full service carriers are also getting in on the act. Singapore Airlines was weighing a potential order for up to 40 wide-body jets as it compared Boeing’s revamped 777X against the Airbus A350, sources familiar with the matter said.
Garuda Indonesia was looking to tie up a long sought deal with Airbus for around 10 A330 aircraft, a source familiar with the matter said. – Reuters