Despite challenges, Asia's aerospace industry plots rebound at air show

Singapore Technologies Engineering

17/02/2022 05:05

* Air show attendance down from past years due to pandemic
    * Singapore Airlines, Etihad signed A350 freighter deals 
    * Labour shortages, rising costs pose risks to recovery

    By Chen Lin and Aradhana Aravindan
    SINGAPORE, Feb 17 (Reuters) - As a depleted Singapore
Airshow winds down, delegates reported growing optimism as the
hard-hit Asian aerospace market begins to recover despite
emerging concerns around labour shortages, rising costs and
supply chain challenges.
    Organisers had estimated attendance of more than 13,000
ahead of the four-day show - still a shadow of previous years -
but attendees said that even on Tuesday, the busiest day, only a
few thousand people appeared to be at the show. Final numbers
are yet to be compiled, organisers said.
    Still, repeat visitors such as Eric Noel, an executive at a
flight training centre in Arizona, said the atmosphere was
livelier than the last show in February 2020, when late
exhibitor dropouts due to the emergence of COVID-19 left empty
spaces and half-finished booths, giving an eerie feel to the
display hall at a time of significant market uncertainty.
    Attendees at the show on Thursday ventured outside into the
scorching midday sun to watch the final set of flying displays,
including a flyby of a U.S. B-52 bomber, a design that first
flew in the 1950s.
    This year's show was the largest event of any kind in
Singapore since the start of the pandemic, though the low
turnout was a prime example of the devastating effect that
strict health and border controls have had on the aviation
industry over the last two years. 
    Yet there is optimism about a reopening in Asia, with host
country Singapore on Wednesday announcing an opening to
quarantine travel from more countries after an initial pause
when the Omicron variant emerged late last year.  urn:newsml:reuters.com:*:nL1N2UR0LT
    "People want to get back face to face because we have all
figured out Zoom is fine, but it doesn't really make it happen,"
Domhnal Slattery, chief executive of aircraft lessor Avolon,
said at the show. 
    His firm on Wednesday signed a deal to lease at least 100
flying taxis to AirAsia Aviation Group, which aims to launch an
air ridesharing business in Southeast Asia.  urn:newsml:reuters.com:*:nL4N2UR0H5
    With passenger travel down during the pandemic, Asian
airlines have relied on the cargo market for survival, and
freight was the star of the show in terms of major deals. 
    Singapore Airlines  SIAL.SI  on Wednesday finalised an order
for seven Airbus  AIR.PA  A350 freighters, while Etihad Airways
placed a provisional order for seven of the same
model. urn:newsml:reuters.com:*:nL1N2UR05A  urn:newsml:reuters.com:*:nL1N2UR0HI
    Singapore Technologies Engineering  STEG.SI  also racked up
more orders for passenger-to-freighter conversions, a business
that has helped keep its hangars and workforce occupied during
the slowdown in passenger travel.  urn:newsml:reuters.com:*:nL4N2UH0SN
    On the defence side, there were no major deals but
manufacturers were hopeful of a rebound as Asian countries
emerge from the economic rubble of COVID-19 and look for
cost-effective ways to upgrade their militaries.  urn:newsml:reuters.com:*:nL4N2UR13B
    As demand begins to bounce back, there are growing concerns
about cost inflation and difficulties in the supply chain, for
both commercial and defence manufacturers.  urn:newsml:reuters.com:*:nL8N2UO0N4
    Sean Padfield, senior vice president, aerospace at seatbelt
manufacturer SCHROTH Safety Products said his lead times for
parts from his company's suppliers had doubled, making it harder
to meet customer commitments.
    "We're really trying to smooth out by adding some robustness
to our supply chain, like having multiple suppliers for the same
parts," he said on the sidelines of the show. "But one thing we
realised in the aviation space, some of these parts are so
specialised, it takes a long time to get another supplier up and
running to deliver at the same quality and quantity."
    Other industry challenges revolve around labour after major
workforce cuts made when demand collapsed in 2020, leading led
some workers to retire or change industries.
    "There is a general labour shortage and the only way to get
labour back to work is higher rates," said Kailash Krishnaswamy,
senior vice president of aftermarket services at Spirit
AeroSystems  SPR.N . "Where we have the opportunity we are
trying to pass off that pricing to the customer. We are trying
to build in automation where needed if possible."

 (Reporting by Chen Lin and Aradhana Aravindan; additional
reporting by Travis Teo and Caroline Chia in Singapore;
additional reporting and writing by Jamie Freed. Editing by
Gerry Doyle)
 ((Jamie.Freed@thomsonreuters.com;))