Singapore Airshow 2018: Deals for big planes in small supply at the Singapore Airshow

The Airbus A350-1000 at the static aircraft display area of the Singapore Airshow 2018 on Feb 8, 2018. ST PHOTO: KUA CHEE SIONG

SINGAPORE (THE BUSINESS TIMES) - Despite robust growth in passenger traffic, blockbuster commercial aircraft deals were missing in action at the Singapore Airshow this week.

The world's biggest plane-makers Boeing and Airbus did not unveil any plane orders, even as global passenger traffic is projected to expand at 6 per cent this year.

No major deals were announced on the defence side either.

Instead, the first commercial aircraft order inked this week was from turbo-prop manufacturer ATR, which signed a contract with Bangkok Airways for four new ATR 72-600s worth over US$100 million.

The European plane-maker also announced another deal worth between US$15 million and US$20 million with Berjaya Hotels & Resorts for two pre-owned ATR 42-500 aircraft.

Meanwhile, light business-jet maker Honda Aircraft unveiled its largest order so far for 16 aircraft, estimated to be worth up to US$80 million, from European air taxi company Wijet.

A string of deals were also signed for components such as Pratt & Whitney engines, as well as for maintenance, repair and overhaul (MRO) works and services.

Boeing landed nearly US$1 billion worth of services orders, while ST Aerospace subsidiary, Elbe Flugzeugwerke (EFW), secured a contract to convert 10 A321 passenger aircraft to freighters.

Business was brisker at the 2016 Singapore Airshow. Among the orders announced was one from Philippine Airlines for six Airbus 350s worth US$1.85 billion; Beijing-based Okay Airways committed to 12 B737s for US$1.3 billion.

Fifty deals were signed that year, many for undisclosed amounts; the 11 deals disclosed were alone worth a total of US$12.7 billion.

Analysts that The Business Times spoke to pointed to the order boom in recent years, especially for models such as the B737 MAX and the A320neo, as one potential reason for the lack of billion-dollar plane deals; the recent close of plane-makers' order books in December and the overcapacity in markets such as South-east Asia were also cited as factors.

UOB Kay Hian analyst K Ajith said: "Orders have been at record levels in recent years and there's a huge order backlog for the two plane-makers. Airlines might also be a bit more cautious about placing new orders amid rising interest rates."

Another analyst, who declined to be named said: "A lot of airlines rushed to order (the B737 MAX and A320neo) in recent years and the two plane-makers filled up their order books pretty fast.

"Now, you have to wait at least three years for a delivery slot, which is not that attractive."

At the Airshow, Airbus' new chief salesman Eric Schulz told reporters that the plane-maker was looking to boost its production of the A320 family even beyond 60 planes per month, a rate it said previously it would hit by mid 2019.

Reuters reported that Boeing said there was "upward pressure" on production rates for its 737 MAX, which now comes with a five-year wait.

Saj Ahmad, an analyst at Dubai-based StrategicAero Research, suggested that the more modest tally for this year's Airshow could be put down to the mega-busy Dubai Airshow, which took place just 11 weeks ago and which netted US$114 billion in deals.

And then there is the Farnborough Airshow, scheduled for July, where the bigger deals and announcements are traditionally made. "Some deals will be 'stored' to be announced at Farnborough," he said.

Nonetheless, aircraft manufacturers at the Singapore Airshow continued to trumpet their bullishness on the region's prospects, citing an emerging middle class and growing travel demand.

Iata estimates that by 2036, this region will clock 3.5 billion trips, with nearly half the 7.8 billion people expected to travel worldwide.

Orders aside, though, the Singapore Airshow also serves other purposes, such as bringing together industry heavy-hitters, senior government officials and military chiefs to explore disruptive technologies and startups, and to discuss pressing issues facing the industry.

Showcases around the digital-data revolution included Airbus' Skywise Predictive Maintenance Services for advanced predictive analytics, and Rolls-Royce's IntelligenceEngine.

Richard Brown, principal at ICF International, said: "By focusing on next generation technologies, encouraging start-ups to exhibit for the first time and promoting the capabilities and offerings around South-east Asia and beyond, the show provides a time-efficient way to develop new business."

It also features high-level conferences and business forums and reaps spin-offs for the local economy.

For example, six hotels under Millennium Hotels and Resorts (MHR) racked up occupancy rates of more than 95 per cent this week, thanks to the event.

Organiser Experia Events said the Airshow welcomed more than 10 per cent more trade visitors, as well as 287 VIP delegations. More than 70 per cent of exhibitors have committed to returning to the Singapore Airshow 2020.

Leck Chet Lam, managing director of Experia Events, said: "We are encouraged by the continuous support of our stakeholders, exhibitors and visitors for the Singapore Airshow as the strategic platform for key industry players and emerging startups to come together and pave the way to transform the future of the aviation industry."

Meanwhile, stealing some of the headlines at the show this year was the crash on Tuesday afternoon, involving a plane from The Black Eagles from South Korea; the aerobatic team was forced to pull out of the remaining flying displays. The T-50 military aircraft skidded while taking off at Changi Airport, ploughed into the grass verge by Runway 1 and caught fire. The pilot escaped with minor injuries, but Changi Airport was forced to shut down one of its two runways for a number of hours, resulting in flight delays.

With the close of the trade segment on Friday, the Singapore Airshow, held at Changi Exhibition Centre, will be open to the public this weekend.

Join ST's WhatsApp Channel and get the latest news and must-reads.