The Asia-Pacific aviation industry’s slow recovery from the pandemic amid government restrictions will cast a shadow over the Singapore Airshow next week, despite signs of improvement as concerns over the Omicron variant recede.
The biennial event has bookended the pandemic, with the 2020 edition disrupted by the virus arising from China and the latest show reaching as the industry attempts to plot a way out of what evolved its most significant and most expensive crisis.
International Passenger Travel
International passenger travel in the region was down 93% from pre-pandemic levels last year, leaving airlines heavily reliant on freight for payment, and the Chinese outbound tourism market stays closed.
But there are movements of a rebound this year, Skyscanner booking data displays, as countries such as Singapore, Thailand, the Philippines, Vietnam, and Australia reopen to more vaccinated travelers without quarantine.
The head of Finnair, which specializes in serving Asia from its Nordic hub, said optimism about a recovery towards a regular business later this year.
The military need is also picking up as regional economies recover from pandemic-induced slumps and countries look to bolster their capabilities, as highlighted by Indonesia’s $8.1 billion order for 42 Rafale fighter jets on Thursday.
Planemakers Airbus (AIR.PA), Boeing (BA.N), and Lockheed Martin (LMT.N) will send senior executives to the Singapore Airshow from Feb. 15-18, using it as a chance, for now, rare face-to-face meetings with customers.
But there will be about two-thirds fewer exhibitors than 2020 at Asia’s biggest aerospace gathering, with the challenges of holding the show mirroring the travel problems that have pushed some of the region’s airlines to the brink.
Some industry executives have pulled out, concerned about restrictions including everyday testing, no intermingling during mealtime, mandatory masks in the tropical heat as well as hotel isolation if they test positive.
Singapore-based aviation analyst Brendan Sobie told he expected a quiet, locally oriented gathering with many of the overseas executives holding meetings in the city center.
“The concern from many exhibitors is a lack of customers visiting,” Sobie told.
Airbus A350 freighters
The Asia-Pacific region accounts for 35% of the world’s commercial aircraft fleet but only 4% of order statements at air shows over the last decade were made in Singapore, according to broker Jefferies, partly because it is held at the beginning of the year when purchasing activity is usually light.
During the pandemic, most Asian airlines have focused on deferring deliveries and handing backplanes to lessors rather than placing fresh orders, though Singapore Airlines (SIAL.SI) in December signed a preliminary agreement for seven Airbus A350 freighters.
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That agreement, which also affects reducing orders for passenger planes, could be set up the following week along with announcements from both Airbus and Boeing for new services agreements.
Boeing last month established a freighter version of its 777X widebody that will compete against the A350 freighter.
PR actions at the show will focus on the advantages of new planes in cutting carbon emissions as the industry targets “net-zero” emissions by 2050 through biofuels and engine technology. Environmentalists say the industry is not doing enough.
United States and China
The show – which typically features displays of military hardware and aerobatics – comes as Southeast Asia remains a key stage for a rivalry between the United States and China.
China’s extensive territorial claims in the South China Sea, which it says are based on historic maps, have put it at chances with Brunei, Malaysia, the Philippines, Taiwan, and Vietnam, which have competing claims to islands and features.
Collin Koh, a research fellow at Singapore’s Institute of Defence and Strategic Studies, said there was interest from military buyers in big-ticket purchases such as new-generation fighter jets, though pandemic-strained budgets stayed tight.
“Drones, fixed- and rotary-winged transports, maritime patrol, and reconnaissance aircraft, for example, would be more sought after given the utility of these assets for a complete range of peacetime purposes,” he counted.
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