Asean aircraft shopping list worth $330 billion

AVIATION

Airlines in Southeast Asia are forecast to spend US$330 billion to acquire more than 2,100 new aircraft over the next two decades, primarily to support the growth in air travel demand within and through the region.

Southeast Asia will be one of the high-growth markets for plane makers like the US-based Boeing, which sees carriers around the world requiring 29,000 new airplanes from now through 2028, costing them US$3.2 trillion.

A total of 1,670 new aircraft that airlines in Southeast Asia, including Thai Airways International, would order in the 20-year span would represent incremental capacity additions and 490 would be replacements of older units.

Airlines in the 10-member Asean bloc would also likely to retain 440 aircraft during the 2009-28 period.

About 52% of the new aircraft which the region needs over the period will be single-aisle units, 40% twin-aisle, 7% large and 1% in the small "regional" category.

Randy Tinseth, vice-president for marketing at Boeing Commercial Airplanes, said that Southeast Asia and the overall Asia-Pacific region appeared poised to lead the growth in air travel over the next two decades with an annual growth rate of 6.9%, exceeding the world's average of 4.9% per year.

In Southeast Asia, air traffic growth will outpace economic growth, which Boeing projects at 4.6% a year.

"Travel volumes in Asia-Pacific overall are large and growing rapidly," he noted.

"Asia-Pacific will account for 41% of travel in 20 years' time, up from around 32% today. In fact, in less than 10 years, Asia-Pacific will easily be the largest air travel market in the world."

The Boeing executive pointed out that 27% of the projected new aircraft the world needs over the next 20 year were already on order, he added.

Mr Tinseth noted that as of the third quarter of this year, Boeing had a backlog of 3,400 aircraft worth $254 billion.

Meanwhile, he expects that airlines may resume placing orders for new aircraft in good numbers in 2012 after the global economy shows a recovery next year and travel demand picks up.

"Data indicate that the economic downturn has reached bottom and recovery has begun. However, global recovery will be a long, slow process," he told the Bangkok Post.

"Airlines have to first see traffic growth, then an improvement in yields, revenue and profitability, then they order new planes. But that process takes time."

While global airlines have seen an improvement in traffic, the International Air Transport Association said they would face losses of $11 billion this year, but the losses would narrow to $3.8 billion next year.

To deal with the realities of the market created by the current economic environment, airlines adapted quickly by adjusting capacity, improving efficiency and restructuring, Mr Tinseth said.

"In the longer term, airlines will continue to invest in more efficient, environmentally progressive airplanes that also serve the travel patterns of air travellers with their ability to fly to more places more often."