Aerospace industry leaders gathering for this week’s Singapore Airshow face conflicting pressures as they juggle growing concerns over aircraft demand while keeping production plans on track.
Worries about the effects of a faltering global economy and tensions in the South China Sea overshadow the two-yearly event in Singapore. For now, airline traffic continues to grow rapidly, spurred by continued growth in Asian household incomes, while airline profits also benefit from low oil prices.
After a quiet show in Dubai in November, the industry’s expo bandwagon rolls into the crucial Southeast Asian region without the carnival atmosphere of previous years.
“All the thoughts that this is no longer a cyclical industry have disappeared. We are due for a down-cycle,” said aerospace consultant Jerrold Lundquist, of Lundquist Group. “I don’t think there will be any impact in the next 18-24 months. It is when you get beyond 24 months that you might see some softening.”
Southeast Asia is one of the industry’s major drivers and has placed large orders in recent years, leading to speculation of overcapacity. Some carriers, including Philippine Airlines, are expected to acquire new aircraft this week.
Rather than counting up new orders though, analysts say investors’ main concern this week will be to check for signs of waning travel or aircraft demand and whether an overloaded supply chain is in danger of breaking as manufacturers work to turn a record backlog of orders into a smooth flow of deliveries.
“We will be keeping a close eye on traffic this year to see if we can detect emerging signs of weakness,” said Rob Morris, head of consultancy at Flightglobal Ascend.
Doubts over economic conditions have not stopped Airbus and Boeing pursuing a battle over new designs.
Airbus, anxious to close the gap between its new 369-seat A350-1000 and the 406-seat Boeing 777X, is seeking an influential champion such as Singapore Airlines for a potential bigger version of its A350 series.
Boeing has said it will decide soon on a potential new “mid-market” jet with about 240 seats to retrieve lost market share for relatively small jets – a project that could lead to a small twin-aisle with an unusual, oval-shaped cross-section.
Industry experts will scour comments from both manufacturers for clues to what products they intend to launch ahead of July’s premier aviation event at Farnborough, southwest of London, coinciding with Boeing’s centenary.
At a pre-show gathering on Monday, airline executives will debate the economy, threats to airliner safety from drones, and efforts to cut jet emissions after the Paris climate summit.
