[Avionics Today 02-16-2016] Singapore Minister for Transport Khaw Boon Wan opened the Singapore Aviation Leadership Summit outlining what he sees as opportunities for long-term growth for the Asia-Pacific region’s aviation industry. However, Wan also acknowledged that an uncertain global economy has a strong possibility of impacting the region going into 2016.
Singapore Airlines Boeing 777-200. Photo: Singapore Airlines.
Wan’s speech comes during the same week as the Singapore Air Show, Asia’s largest commercial aerospace and defense event, reflecting the region’s vibrant aviation industry.
“Since the last summit two years ago, we have seen significant changes in the aviation landscape. The global economic outlook has darkened. Global economy has become more uncertain,” said Wan, adding that while oil prices provide a boost to the airline industry, the low prices itself reflects a “highly volatile economic environment.”
International Air Transport Association (IATA) Director General and CEO Tony Tyler reported financial figures, during his speech at the Aviation Leadership Summit, that strongly support Wan’s views on the near-term volatility Asian airlines face right now. According to IATA, even though fuel prices have dropped significantly over the last 18 months with the U.S. dollar rising by 20 percent against foreign currency, Asia-Pacific carriers paying for fuel in U.S. dollars haven’t reaped any of the benefit of low oil prices that their North American counterparts have seen.
Additionally, major Asia-Pacific region carriers continue to see increased competition with Middle Eastern airlines increasing their reach in the area, as well as competition in the Low Cost Carrier (LCC) market. IATA reports that in the Asia-Pacific region, LCCs have a 54 percent market share, which is the highest in the world.
In the long term though, Wan expects the Asia-Pacific aviation industry to expand, and said individual civil aviation regulatory bodies and Air Navigation Service Providers (ANSPs) will need to modernize to support increased air traffic throughout the region. Some positive points for the region to work on are the projected future increases in passenger air travel demand as the region’s middle class continues to grow, and the strong foothold that the region has on airline Maintenance, Repair and Overhaul (MRO) services. A total of 62 percent of North America’s wide-body aircraft heavy maintenance work is contracted to providers outside of North America and 51 percent of that external labor occurs in the Asia-Pacific region, Wan said.
“Millions of Asians have yet to fly and they are eager to do so. However, with increased traffic, our skies will get much more crowded. This would pose strains on air navigation service providers. They would require not just better hardware, equipment and facilities, but also a larger, highly-trained workforce to manage the increasingly complex and busy skies,” said Wan.
The way air traffic is currently managed in the Asia-Pacific region in a segmented structure with ANSPs solely managing aircraft within their airspace will need to change significantly to support future air traffic growth as the skies there become more crowded. Wan believes the model of modernizing air traffic structure and increasing collaboration between European ANSPs under the Single European Sky project provides a model that Asia-Pacific countries could replicate.
“Governments are the key player in airspace integration, especially when ANSPs have to work across borders. As I said, a few regions have taken steps. The [European Union] EU’s Single European Sky vision is a good model and a good inspiration to all, with functional airspace blocks already established between various neighboring countries. In order to meet the growing demand for air travel, our Asia-Pacific region will similarly need to work on airspace integration. We have taken some initial steps in this direction but, clearly we can do much more,” said Wan.
Airbus released its latest forecast for the Asia-Pacific market ahead of the Singapore Airshow, which also supports the region fostering a robust aviation industry in the long term. The latest forecast from Airbus for the region expects an annual increase in passenger traffic of 5.6 percent with demand for 12,800 new aircraft valued at $2 trillion over the next two decades.
“In conclusion, friends and colleagues, as I see it, our global economy is entering uncertain territory. Many traditional economic engines are sputtering. Fortunately, some engines are doing well and one such bright promising engine is our aviation engine, which is growing well. There is strong demand. Millions of Asians are entering middle class and have never taken to the air before. They are eager to fly and that is why, when I look at development plans of capital cities in Asia, practically everyone is expanding capacity,” said Wan.