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 Worries about the effects of a faltering global economy and tensions
in the South China Sea overshadow the two-yearly event in Singapore,
which is both a major commercial travel hub and home to Southeast
Asia’s most potent and best-trained air force.
For now, airline traffic continues to grow rapidly, spurred by
continued growth in Asian household incomes, while airline profits
also benefit from low oil prices.
But as aerospace industry shares fall in step with tumbling global
markets, analysts increasingly question the durability of an
aerospace expansion cycle now in an unprecedented eighth year.
After a lackluster show in Dubai in November, the industry's expo
bandwagon rolls into the crucial Southeast Asian region without the
carnival atmosphere of previous years.
"All the thoughts that this is no longer a cyclical industry have
disappeared. We are due for a down-cycle," said aerospace consultant
Jerrold Lundquist, managing director of The Lundquist Group."(But) I
don't think there will be any impact in the next 18-24 months. It is
when you get beyond 24 months that you might see some softening."
Southeast Asia is one of the industry's major drivers and has placed
record orders in recent years, leading to speculation of
overcapacity. Some carriers, including Philippine Airlines, are
expected to acquire new aircraft this week.
But rather than counting up new orders, analysts say investors' main
concern this week will be to check for signs of waning travel or
jetliner demand and whether an overloaded supply chain is in danger
of breaking as manufacturers work to turn a record backlog of orders
into a smooth flow of deliveries.
"We will be keeping a close eye on traffic this year to see if we
can detect emerging signs of weakness," said Rob Morris, head of
consultancy at UK-based Flightglobal Ascend.
Doubts over economic conditions have not stopped Airbus and Boeing
pursuing a battle of wits over new designs.
Airbus, anxious to close the gap between its new 369-seat A350-1000
and the 406-seat Boeing 777X, is seeking an influential champion
such as Singapore Airlines for a potential bigger version of its
A350 series, industry sources said.
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Boeing has said it will decide soon on a potential new "mid-market"
jet with about 240 seats to retrieve lost market share for
relatively small jets - a project that could lead to a small
twin-aisle jet with an unusual, oval-shaped cross-section.
Industry experts will scour comments out of Singapore from both
manufacturers for clues to what products they intend to launch ahead
of July's premier aviation event at Farnborough, southwest of
London, coinciding with Boeing's centenary.
Defense remains at the forefront of the Singapore show, amid growing
tensions over Chinese maritime and territorial claims that compete
with those of several Southeast Asian nations.
A number of regional states are looking into ways to beef up their
fighter fleets and to boost their intelligence gathering,
surveillance and reconnaissance capability.
Intense competition to provide maritime surveillance equipment may
also characterize the event, along with a significant presence of
Western and Asian unmanned aircraft.
At a pre-show gathering on Monday, airline executives will debate
the economy, threats to airliner safety from drones, and efforts to
cut jet emissions after the Paris climate summit.
(Reporting by Tim Hepher; Additional reporting by Anshuman Daga,
Alwyn Scott; Editing by Eric Meijer)
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