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Singapore Airshow touts no big commercial jet deals

Appetite for new planes remains weak amid oversupply worries

Airbus new A350-1000 wide-body jetliner on display at the Singapore Airshow

SINGAPORE -- The trade portion of the Singapore Airshow, Asia's largest event of its kind, closed this year on a subdued note after aircraft makers Boeing and Airbus failed to announce any new commercial jet orders during that four-day segment ended Friday.

This quiet reflects caution by regional airlines toward fleet expansion due to concerns about oversupply, despite the strong growth outlook in air travel demand.

Smiling faces after a signing ceremony for new aircraft orders -- the highlight of any air show -- were a rare scene this year in Singapore. Brazil's Embraer and Canada's Bombardier, which focus on producing smaller aircraft, also announced no new commercial jet orders.

Experia Events, the biennial show's organizer, decided not to reveal the total deal count, breaking with the norm of previous shows. The regular closing news conference was canceled.

"[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 low-cost carriers 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 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 low-cost 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.

Weak profitability was to blame for the declining appetite among Asian airlines, Shukor Yusof of research company Endau Analytics argued.

"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 AirlinesCathay Pacific Airways and others are facing intense competition from [low-cost carriers]."

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 Motor 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 a landing gear exchange contract 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 gives airlines a low-cost internet connection option.

Drone technology and related services were another focus at the show. Airbus said it formed an Asia-Pacific headquarters in Singapore for its new commercial drone service business called Airbus Aerial. The business, started in 2017, gathers data from drones, satellites and aircraft to analyze and sell to customers such as insurance companies and governments.

The air show closes Sunday after a two-day public program.

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