Search Here

Airbus Group SE and Boeing Co. expect to increase their market in South East Asia. The aircraft manufacturers will be participating in the Singapore Air Show this week. However, tight competition between low-cost operators in the South East Asia has been one of the issue.

The biggest airshow in Asia will begin this week and aircraft manufacturers are expecting Asian market to grow amidst global financial market rout. However some delays in the South East Asia nations for plane delivery have raised concern regarding the market.

As competition between budget carriers in the South East Asia region is so tight, the profitability of carriers is low. Director General of the International Air Transport Association (IATA) Tony Tyler told journalist as cited by CNBC, "The budget carriers have captured a lot of market share but one has to ask how profitable are they and are the growth plans that some of them have realistic."

IATA is the trade association of worldwide airliners and represents almost 260 airlines from 117 countries. Members of IATA is accounting for 83% of global air traffic, and most of them are legacy flag carriers. Therefore a competition and price-war between low-cost carriers in South East Asia will affect its members in the region.

Meanwhile Airbus and Boeing, as reported by Aviation International News, expected the increase of demand from the entire Asia Pacific. Boeing's Current Market Outlook (CMO) predicted airlines in Asia Pacific will need 12,500 to15,000 new aircraft in the coming 20 years. This increasing demand marked the rapid growth in the air travel industry with double in size of the jetliner fleet from 2,900 aircrafts to 5,850.

Boeing also see a 50% of increase in jet operators from 150 to 225 airlines in Asia Pacific within the next 20 years. While airliner's capacity, in term of available seat-miles/kilometres (ASM/ASKs) has grown annually by 7%, as the number of routes to, from and within Asia has increased by 57% from 2,200 to 3,800.

One of the hotspot in the market is China, with its two leading airlines China Southern Airlines Co. and Air China Ltd. followed by other carriers. In the next two decades, China will require about 6,330 new planes which will be worth $950 billion and that takes about 17% of global market. Last year, airlines and aircraft leasing companies put order of 780 planes at value of $102 billion.

"China's aviation outlook is not just bright, but arguably the strongest it has been in its history," Will Horton, a Hong Kong-based analyst at CAPA Centre for Aviation told Bloomberg, "Chinese airlines are waking up to their potential."

Singapore Air Show will begin this week. Aircraft manufacturers expect to see a growth of market in the region, amidst a slowdown in economy and tight competition between budget carriers in South East Asia.