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Singapore Airshow 2018 CAPA TV: opportunities for suppliers, no major orders, but CSeries interest

The 2018 Singapore Airshow did not generate any aircraft orders from any of the four main commercial jet manufacturers. However, Asia’s biggest airshow attracted record visitor numbers, significantly with trade visitors up more than 10% compared to 2016.

The Singapore Airshow inevitably has an important role in the world’s biggest growth market, facilitating meetings and attracting hundreds of VIPs, including airline CEOs. It is a venue for suppliers to showcase their products and discuss the huge growth opportunities in the Asia Pacific region.

CAPA TV interviewed five major suppliers exhibiting at the Singapore Airshow to get their thoughts on market conditions and opportunities.

CAPA TV also interviewed airBaltic CEO Martin Gauss, who was at the show with one of the airline’s new Bombardier CS300s. Interest for the CSeries is growing in Asia, boosted by a new partnership with Airbus, with several airline delegations using the Singapore Airshow to tour the aircraft and meet Mr Gauss, along with Bombardier executives.

The Singapore Airshow is rarely about orders

In recent years the Singapore Airshow hasn't been about blockbuster orders, being hampered by its timing early in the year when order activity is low. The show comes just three months after Dubai, which typically generates significantly more orders. Manufacturers also tend to push to complete deals at the end of the calendar year, leaving little in the pipeline for the first quarter.

See related report: The Singapore Airshow - subdued sales, but in the heart of the world's most vibrant market

New commercial aircraft sales at the 2018 Singapore Airshow consisted of only four ATR 72-600s (to Bangkok Airways). The last show in 2016 did only slightly better, with 52 commercial aircraft sales. In 2014 there were 41 commercial aircraft sales. 

There were several commercial aircraft-related announcements involving engines and aftermarket deals. For example, Boeing's service unit announced nearly USD1 billion worth of deals at the Singapore Airshow.

Boeing VP Marketing Randy Tinseth told CAPA TV that the services market is growing rapidly, and Boeing is eager to increase its share of this important segment beyond the current 7%. While there were no aircraft orders, the Boeing Services announcement was significant, and Boeing also used the Singapore Airshow to hold high level meetings with suppliers and airline customers. “I think this has been a really active, really exciting show”, Mr Tinseth said.

Boeing is bullish on Asia

Rapid fleet growth in Asia is driving rapid growth in the aftermarket services market. Boeing expects Asian airlines will require 16,000 aircraft over the next 20 years, including 4,200 aircraft for airlines from Southeast Asia.

Mr Tinseth pointed out that while narrowbody orders have dominated the Southeast Asian market over the past several years, there are forthcoming widebody opportunities as a replacement cycle starts. Widebody aircraft currently account for one third of the fleet in Southeast Asia, compared to more than 50% in 2005. “It’s been fantastic growth in single aisles. A lot of that has been LCCs. A lot of those LCCs have been profitable, changing the network of the airlines”, Mr Tinseth said.

Boeing expects average seat density for narrowbody aircraft will increase 1% per annum as airlines in Asia increasingly opt for larger aircraft. High demand for large narrowbody aircraft contributed to Boeing’s decision in 2017 to launch the 737 MAX 10. Mr Tinseth said about 25% of total narrowbody demand is expected to be in the 737 MAX 10 category. At the Singapore Airshow Boeing announced the configuration for the 737 MAX 10, which will seat up to 230 passengers.

In the CAPA TV interview, Mr Tinseth provided an update on the 737 MAX 10, as well as the 737 MAX 9, which will enter service soon with launch customer Lion Air. He also provided updates on the 777X and the 787-10, which will enter service at the end of Mar-2018 with launch customer Singapore Airlines.

Boeing VP Marketing Randy Tinseth discusses market conditions and trends in Asia-Pacific, particularly in the dynamic Southeast Asia region

Airbus is equally bullish 

Airbus VP Marketing Asia and North America Joost van der Heijden has a similar bullish outlook for the Asian market. Airbus projects Asian airlines will require over 14,000 aircraft over the next 20 years, representing 42% of global demand. Mr van der Heijden pointed out that Asia accounts for two thirds of the current backlog at Airbus.

Mr van der Heijden also provided updates on the A350-1000 and A330neo, both which will enter service later this year. The A350-1000 was on static display at the Singapore Airshow and visited by several potential airline customers. So far, three airlines in Asia have ordered the A350-1000 and the first delivery to an Asian customer is expected in mid-2018, to Cathay Pacific Airways.

Mr van der Heijden also discussed opportunities in Asia for the A321neoLR. The new long range narrowbody aircraft will enter service in 2019 and be used to open up new routes within the vast Asia Pacific region, as well as across the Atlantic.

Airbus VP Marketing Asia and North America Joost van der Heijden discusses market conditions, trends and opportunities in Asia

For CAE: surging demand in Asia for new pilots and pilot training 

Given the huge number of aircraft to be delivered to Asian airlines over the next several years, there are understandably questions about whether there will be enough pilots.

CAE is helping to address this issue by expanding its presence in Asia and working closely with airlines to ensure there will be enough pilots. In addition to training and assessing pilots, CAE helps some airlines in Asia advertise and promote pilot careers, recognising the need to get ahead of the growth curve.

“This part of the world doesn’t have a pool of pilots. They will all have to be grown and developed”, CAE Group President Civil Aviation Training Solutions Nick Leontidis told CAPA TV. “We are more involved than I would say years ago. The reason why we are doing this is the industry is looking for pilots. They don’t exist if you were put out an ad tomorrow to try to hire experienced pilots in this part of the world, you wouldn’t find a pilot; they just don’t exist. The industry is growing pilots at a rapid pace.”

CAE has several joint venture pilot training facilities in Asia. At the Singapore Airshow it announced a new training system, CAE Rise, with AirAsia as the launch customer.

“The aviation business in Asia is booming. A lot of aircraft are being delivered here and with that comes a lot of challenges – pilots, infrastructure, etc.”, Mr Leontidis said. “Certainly there is big demand for new pilots to be put into the system to handle all this growth in Asia.”

CAE Group President Civil Aviation Training Solutions Nick Leontidis discusses the outlook for the pilot training sector in Asia and CAE’s role in meeting the region’s fast-growing need for pilots

For MTU: surging demand in Asia for engine maintenance 

Maintenance providers are also gearing up for the anticipated rapid expansion of the Asian fleet. For example, MTU is planning to double capacity of its joint venture engine repair shop in Zhuhai, China.

“The biggest challenge in this region is to cope with the growth. This region is going to grow from around about USD10 billion engine MRO revenue in the next 10 years to about USD20 billion in engine MRO revenue, and by 2035 will probably be bigger than the United States and Europe engine MRO market together”, MTU Senior VP MRO Programs Leo Koppers told CAPA TV.

“The challenge that companies such as ourselves have is to grow with that growth and make sure we have capacity available to serve that market.”

Mr Koppers pointed out that the fleet in Asia is not only growing, but ageing. He said MTU is working closely with its customers in the region so that they understand at an early stage what will be required in terms of engine shop visits.

MTU’s Zhuhai shop, a joint venture with China Southern Airlines, has expanded twice since it opened in 2000 and will be expanded a third time this year. MTU is also expanding its joint venture engine component repair facility in Kuala Lumpur with Lufthansa Technik.

“For the next four, five years our focus is serving market with existing expanded facilities rather than building new facilities or new joint ventures”, Mr Koppers said. “When the opportunity opens up with another major airline to look at it again we will look at again, but so far the plan is to grow with what we have and to double the size of our existing facilities.”

MTU Senior VP MRO Programs Leo Koppers discusses growth in Asia’s engine MRO sector and MTU’s plans for expanding its facilities in the region

Bombardier confident of Asian aircraft sales

Bombardier was the only commercial aircraft manufacturer to showcase two aircraft types at the 2018 Singapore Airshow. An airBaltic CS300 and PAL Express Q400 were on static display, with the CS300 particularly capturing significant attention.

Bombardier expects growing demand for both turboprops and small jets in Asia Pacific. “Generally speaking the Asia market is the growth market of the industry. There is a very, very big demand”, Bombardier VP Sales Southeast Asia and Australasia Francois Cognard told CAPA TV. “For us it’s a very important market and we see a very large opportunity for our product line.”

The Dash 8 turboprop already has a large customer base in Asia, which will be expanded later this year as India’s SpiceJet takes its first high-capacity Q400. The CSeries is brand new to Asia, with Korean Air having started operating the CS300 in Jan-2018. So far Korean Air is the only Asian customer for the CSeries, but a new joint venture with Airbus should improve Bombardier’s ability to sell the aircraft and support customers in Asia.

The CS300 initially entered service in late 2016 with launch customer airBaltic, while the smaller CS100 entered service in mid-2016 with launch customer Swiss. “The customer response is just like anywhere else in the world – it is very, very positive, so we see a big opportunity for the aircraft in the region”, Mr Cognard said.

Bombardier VP Sales Southeast Asia and Australasia Francois Cognard discusses market conditions in Asia and opportunities for regional aircraft

AirBaltic helps sell the CS300 in Asia 

AirBaltic has become the posterchild of the CSeries, bringing one of its CS300s to three major airshows over the past eight months (Paris, Dubai and Singapore).

While airBaltic has helped Bombardier sell CSeries to new potential customers, the airline has also benefitted, as participating in the three airshows has raised its global profile. In Singapore, Mr Gauss joined Bombardier executives in showing several airline delegations the CS300 and discussing how the aircraft had performed in the first 15 months of service.

“It’s a very good opportunity to show the CSeries together with Bombardier to this part of the world”, Mr Gauss told CAPA TV, adding that there had been “lots of attention” from Asian airline CEOs.

“As a global brand, it strengthens our brand position. To show our aircraft even not operating on a daily basis here helps our brand. It is win-win for everyone and it’s also a lot of fun.”

Mr Gauss also talked to CAPA TV about how the CS300 has enabled airBaltic to open new routes and grow passenger traffic by over 20% in 2017. AirBaltic currently operates eight CS300s and plans to add another six aircraft by the end of 2018, enabling the launch of more than 10 new routes, including Riga to Lisbon and Almaty. Riga-Almaty will be its second longest route after Riga-Abu Dhabi, which was launched in Oct-2017.

“We are very happy in the first year of introducing CSeries to our operations”, Mr Gauss said. “We have carried about 800,000 passengers on CSeries now. We are growing with this aircraft. We are opening new routes. We are taking longer sectors. We are flying Riga-Abu Dhabi, which is 6hr 15mins on the way back. We will be opening Almaty in Kazakhstan as a new long route. So the aircraft is enabling airBaltic to go well beyond what we did so far.”

AirBaltic CEO Martin Gauss discusses how the CS300's role in enabling the airline to open new routes and accelerate growth

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