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Fewer major deals at Singapore Airshow reflect global slowdown: Analysts

The trade segment of the six-day airshow has concluded on Friday with 11 deals worth S$17.9 billion, down from the 20 deals worth S$40.5 billion that the previous edition of the show garnered. 

SINGAPORE: Amid a global slowdown and an order binge by regional airlines in previous years, there were fewer major deals inked at this year’s Singapore Airshow.

The trade segment of the six-day airshow has concluded on Friday (Feb 19) with 11 deals worth US$12.7 billion (S$17.9 billion), down from the 20 deals worth US$32 billion that the previous edition of the show garnered in 2014.

These numbers apply to deals with disclosed values, according to event organiser Experia Events. It said on Friday that there were 51 deals in total this year, up from 44 in 2014; and there were more deals with undisclosed values - 41, compared to 24 in 2014.

The real star of the airshow has always been “the big, headline-grabbing aircraft numbers”, which this year’s airshow had fewer of, compared to in 2014, said Mr Greg Waldron, Asia Managing Director of Flightglobal.

This year’s show saw only two 'billion-dollar' aircraft deals - one each to Airbus and Boeing, and several multi-million dollar deals for engines, maintenance, repair, and overhaul (MRO) services, and defence-related services.


Visitors on the exhibition floor of the 2016 Singapore Airshow on the show's last trading day. The show opens to the public on Feb 20 and 21. (Photo: Linette Lim)

A TRIPLE WHAMMY

Mr Shukor Yusof, founder of aviation consultancy Endau Analytics, said he had expected the 2016 airshow to be “less successful” than the previous edition.

He told Channel NewsAsia that this is due to a triple whammy - “weaker sentiment due to a tepid global economy, over-spending on aircraft in recent years by airlines” and weariness setting in with the Dubai Airshow having just concluded last November.

Another industry watcher - Mr Brendan Sobie, from the Centre for Asia Pacific Aviation (CAPA) - suggested that one potential problem could be the Singapore Airshow’s positioning relative to the other major airshows in Paris, Farnborough and Dubai.

Compared to the other airshows which are “more global”, the Singapore show “typically only sees deals from airlines in Asia, particularly Southeast Asia”, and it is precisely the Southeast Asian carriers - like AirAsia, Lion Air, and VietJet - which have a diminished buying appetite now due to a “huge surge in orders” in recent years, said Mr Sobie, who is chief analyst at CAPA.

He added that what could have compounded the problem for the Singapore show is that the other airshows “have the benefit of being later in the calendar year where there are generally more orders”.


Al-Fursan aerobatics team of the United Arab Emirates Air Force performs at the Dubai Airshow. Airshows around the world, including the Dubai show, compete with the Singapore Airshow to whip up deal-making activity. (Photo: AFP PHOTO/MARWAN NAAMANI)

COMMERCIAL SALES DOWN, DEFENCE SALES UP

Although Boeing and Airbus, the world’s top two planemakers, have dismissed fears of a slowdown, the fact remains that there is a lack of new major deals announced, and a sense that this year's airshow is indeed more subdued than before.

However, analysts said there some bright spots, including MRO and defence.

“The number of support, MRO and training deals seems to be holding steady, reflecting a maturing of the industry away from simple aircraft sales into a more established base,” said Mr Jeremy Torr, Southeast Asia bureau chief of Aviation Week.

Meanwhile, Mr Waldron from Flightglobal said he noted a "significant" amount of announcements and briefings at the airshow in the area of "intelligence surveillance reconnaissance and maritime patrol".


U.S. Air Force Boeing P-8 Poseidon (R) is displayed at the Singapore Airshow at Changi Exhibition Center on Feb 18, 2016. The plane is regarded as the most advanced marine spy plane on the market. (Photo: REUTERS/Edgar Su)

"We saw a lot of people talking about that area. I think it’s because of the issues in the South China Sea, people are getting a little bit more concerned about maritime security," he said. He added that there was potential for regional governments - especially Malaysia, the Philippines and Indonesia - to boost capability in monitoring of their coastlines and maritime environment.

The biennial Singapore Airshow is Asia’s largest airshow, and among the top three airshows in the world together with Paris and Farnborough. More than 1,000 companies, including more than 60 of the top 100 aerospace companies in the world, participated in this year’s airshow.

Its next edition is scheduled from Feb 6 to 11 in 2018, and Experia Events has said that potential areas of focus are on virtual and augmented reality, and the unique capabilities of Asian countries.