06-Feb-2018 5:06 PM

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

Analysis

As the 2018 Singapore Airshow kicks off on 6-Feb-2018, it may seem at first sight to have a relatively minor role, at least as measured by attention grabbing order numbers. They are few.

Competition from other airshows, most notably Dubai, has been compounded by the fierce competition between Airbus and Boeing to get runs on the board in 2017. So, for example, instead of waiting till a major airshow to make announcements, the big two went to great lengths to hustle in a rush of orders in Dec-2017.

However, the Singapore Airshow is still the biggest airshow in Asia Pacific and provides an opportunity for suppliers from around the world to promote opportunities in this exciting and high growth market.

Summary

The Singapore Airshow is the biggest airshow in Asia Pacific and provides opportunities for suppliers in the high-growth market.
Singapore Airshow has historically seen fewer commercial aircraft orders compared to other major airshows like Dubai.
The show lacks pre-show excitement due to its timing, which is less than four months after Dubai and early in the year when order activity is generally low.
Major manufacturers like Airbus and Boeing have already made significant order announcements in 2017, reducing the likelihood of big orders at the Singapore Airshow.
The show is expected to generate smaller orders, particularly from smaller airlines and new airline ventures, as well as engine orders and other contracts.
The aviation outlook in Asia is positive, with increasing demand for travel driven by economic growth, emerging economies, and an expanding middle class.

Singapore lacks pre-Show pzazz

Singapore managed 52 commercial aircraft sales at the last biennial show in 2016. In 2014 only 41 commercial aircraft orders had been announced.

The Dubai Airshow consistently captures more orders. In Nov-2017, a whopping USD113 billion in aircraft orders was announced at the show.

Although few saw it coming, Airbus managed a massive order at the end of the Dubai Airshow for 430 A320 family aircraft from Indigo Partners for four airlines. Emirates and half sister flydubai also announced orders with Boeing for 40 787-10s and 225 737 MAX aircraft.

Singapore has the disadvantage of taking place less than four months after Dubai. It is also early in the year, when order activity is generally low.

For a full list of 2017's orders, see the CAPA Fleet Database illustrated summary (please click on the image below for full interactive graphics):

Singapore Airshow could have been used to announce the recent Emirates A380 deal

There was a rare opportunity this year for Airbus and Emirates to make a splash at Singapore with an A380 order. However, rather than hold it for a few weeks (a very short period of time in terms of holding news for an airshow), Emirates on 18-Jan-2018 announced it would save the A380's future from shutdown by ordering another 20 of the type. The order followed a high level game of poker between two industry figures not known for being pushovers, Sir Tim Clark and Airbus' outgoing commercial sales chief John Leahy.

The Singapore Airshow will be Mr Leahy's last public appearance. Announcing the Emirates order would have made for a nice farewell party for Mr Leahy. However, Emirates and the Gulf carriers typically do not use the Singapore Airshow to make a splash.

Several Southeast Asian airlines always attend Singapore Airshow along with some airlines from other parts of Asia. However, the Singapore Airshow has not typically attracted airlines from outside Asia as is the case with Dubai, Farnborough and Paris.

Singapore Airshow could have been used to showcase 787-10 and 737 MAX 9

Several airlines from the region are also not generally interested in airshow announcements. For example Singapore Airlines (SIA) never places orders at the Singapore Airshow - or any other show.

SIA and Boeing are not even using the show to showcase the 787-10, which will be delivered to launch customer SIA in Mar-2018.

Boeing also did not bring the 737 MAX 9 although the type is about to enter service and has a Southeast Asian launch customer (Indonesia's Lion Air). Lion already operates the 737 MAX 8 as does SIA regional subsidiary SilkAir and Garuda Indonesia.

A350-1000, E190-E2 and CS300 should generate some buzz

The A350-1000 and E190-E2 are at the show and there should be significant buzz around these new aircraft types, which are also about to enter service. However, orders for either type are not likely.

The Bombardier CSeries is on display for the second time; a test aircraft was in Singapore for the 2016 show and this year the airBaltic CS300 is on display. Bombardier enters the show with new confidence following its partnership with Airbus and the US FTA overruling in the Boeing dispute.

As the Airbus-Bombardier deal isn't yet completed the two manufacturers are still selling independently at the show. It could be several months before we see what kind of impact there will be from the new partnership.

Interest in Southeast Asia for 100 to 130 seat aircraft is fairly limited. However, Embraer and Bombardier are still optimistic and both the CS300 and E190-E2 will be visited by several airline delegations.

Singapore Airshow suffers from unfortunate timing

The major manufacturers have relatively few sales campaigns close to conclusion, having ended 2017 with a flurry of orders following a relatively quiet year. Boeing pulled in orders for 265 aircraft in Dec-2017, while Airbus logged 841 orders in the month - better than three quarters of its deals for the year.

Singapore Airshow organisers will still be hoping for some big orders - and there is always a possibility one of the region's ambitious LCC groups will commit to even more aircraft. However, most likely the 2018 Singapore Airshow will only generate a few smaller orders, similar to the last two editions of the show.

Smaller airlines, and in some cases proposed new airlines, will use the show to capture attention. Singapore will also be used to announce engine orders and other contracts, providing companies an opportunity to capture publicity as the large swarm of media attending the show look for deals to write about.

Asia's aviation outlook is bright

While there was calm as the Singapore Airshow approached, with no bank of rumoured aircraft sales, the show is always a good showcase for Asia and the huge opportunities in the region.

Demand for travel to, from and within Asia is on the rise, boosted by strong economic growth, emerging economies and an expanding middle class. Good times for passenger growth creates an aura of bullishness as the industry overall benefits from rapid growth.

This does not necessarily lead to orders as aircraft orders follow a different cycle. For airlines in this region, overcapacity is an issue, yields are low and competition is very intense. Suppliers participating in the Singapore Airshow this year have a better reason to be bullish about Asia than their airline customers from this region.

Outside the usual horserace between manufacturers, these are some things to watch out for in 2018

Airframe manufacturers becoming involved in after sales

The major OEMs are muscling in on aftermarket and services areas that have historically been outsourced to third parties and independent companies. Airbus estimates that the global MRO service market will double in value, to USD120 billion, in the next two decades. Boeing is similarly buoyant in expectations, forecasting spending in the wider commercial aviation support market will double to more than USD581 billion by 2036.

Both have recently added dedicated aviation support business units, and will be highlighting these units in Singapore with an eye to capturing more work in the services area. Boeing is adding a Boeing Global Services exhibition at Singapore for the first time, as the Asia Pacific represents an important growth market for the segment and capturing more value in the supply chain.

A GE announcement?

There had been rumours leading up to the airshow of an impending announcement by GE, with suggestions it could concern something as minor as new engine orders, finalisation of type certification for the GE powered variant of the Boeing 787-10 or upgrades to existing models, or even a prelude to the introduction of a new 797 engine for Boeing, which is currently working on a business case with some of its potential clients.

GE did sign a joint venture with SIA Engineering Company on 6-Feb-2018 (a few hours before the start of the Airshow) to establish a new engine overhaul centre in Singapore. It is unclear if bigger announcements are still pending.

Bizjet sales

The last several years have seen a decline in bizjet sales and delays/deferments on several major programmes, leading to difficult times for bizjet makers. However, new aircraft models are coming to the market and companies like Honeywell and Bombardier are forecasting 2018 will see the market stabilise or even start a modest recovery. Singapore could be an early indicator of the temperature of the market this year.

Airbus and the CSeries

There will no doubt be plenty of chatter about the CSeries, although much of that might turn on the surprise decision by the US FTA overruling the original dispute the Boeing dispute and with its partnership with Airbus. Both manufacturers will be conspicuous and Airbus' departing sales head, iconic John Leahy, will have plenty to say.

New aircraft in the news

The A321neoLR, which could be a game changer in enabling very long haul narrow body operations will be a popular discussion item, although the A350-1000, 787-10 and 737 MAX 9 should create more of a buzz. All are about to enter service in first half of 2018. And home carrier Singapore Airlines is launch customer of the 787-10 and Indonesia's Lion Air the 737 MAX 9.

Embraer will also be keen to spruik its E2, a competitor in the smaller end jet aircraft size.