SINGAPORE Asia's largest air show ended its four-day trade portion on Feb. 9 with a break from tradition -- and not a good break. The news conference usually held to announce new aircraft deals was canceled.
Both Boeing and Airbus announced no major deals from the Singapore Airshow. Brazil's Embraer and Canada's Bombardier, both of which focus on smaller aircraft, also did not disclose any new commercial jet orders.
This quiet reflects caution by regional airlines toward fleet expansion and oversupply, despite the strong growth outlook in air travel demand.
The show ran from Feb. 6 until Feb. 11, with the last two days being open to the public. Though some deals were made during the trade portion of the biennial show, Experia Events, the show's organizer, did not reveal the total deal count.
Companies "are becoming confidential on transaction values. The number we have will not be meaningful," managing director Leck Chet Lam told the Nikkei Asian Review regarding the deal count.
The show "recorded very low new commercial jet aircraft sales," said Rajiv Biswas, Asia-Pacific chief economist of IHS Markit. Announced deals in 2014 totaled $32 billion, boosted by aggressive orders from budget airlines such as Vietjet Air. The 2016 amount came to $12.7 billion, and observers agree that this year's figure did not match even that.
The low sales numbers contrast with the bullish outlook in Asia's aviation market. Airbus has estimated that more than 14,000 airplanes are needed, including cargo planes, in Asia between 2017 and 2036. This represents 42% of world demand, the European manufacturer says.
"Many Asia-Pacific airlines placed large orders for new commercial jet aircraft in the past five years, and Airbus and Boeing have large backlogs of new orders yet to be filled," Biswas said. This is especially true of budget carriers such as AirAsia, which is expected to expand its fleet size from 204 in 2017 to over 300 in 2021, according to Australian aviation think tank CAPA.
Shukor Yusof of the research company Endau Analytics said weak profitability was to blame for the declining appetite among Asian airlines.
"Although the traffic numbers in Asia point to huge growth, the reality is that profit margins are thin," he said. "It's harder to make money."
Compared with cash-rich Middle Eastern carriers that splurged on orders at the Dubai Airshow in November, Yusof said, "major airlines in Asia such as Singapore Airlines, Cathay Pacific Airways and others are facing intense competition from [low-cost carriers]."
SMALL SUCCESSES Though large commercial jet makers at the Singapore show suffered a dearth of new orders, manufacturers of smaller planes fared better. Franco-Italian turboprop maker ATR sold a total of six planes to two Southeast Asian customers -- Bangkok Airways and Berjaya Hotels & Resorts -- for about $120 million. Japan's Honda Aircraft clinched an $80 million deal -- according to catalog price -- to sell 16 HondaJets to French air taxi operator Wijet.
A bright spot at the show came from the maintenance, repair and overhaul segment, or MRO. Boeing announced more than $900 million in service orders, including landing gear exchange contracts for Malaysia Airlines and Tokyo-based ANA Holdings' All Nippon Airways.
"The rapidly growing airline commercial fleet requires significant ramping up of MRO capacity," Shukor said. Singapore Technologies Engineering announced plans to invest $20 million for a joint venture with British company SatixFy UK to develop and provide a satellite antenna system, which would give airlines lower-cost internet connections.
Drone technology and related services were another focus at the show. Airbus announced the start of Asia-Pacific operations headquartered in Singapore for its new commercial drone service business called Airbus Aerial. The business, started in 2017, gathers and analyzes data from drones, satellites and aircraft for customers such as insurance companies and governments.