Boeing boosts Asean order forecast on strong demand

Boeing boosts Asean order forecast on strong demand

Asean airlines seen buying 4,210 planes over 20 years

An aircraft flies over a Boeing 777-300ER aeroplane of China Airlines during the 51st Paris Air Show at Le Bourget airport near Paris on June 16, 2015. (Reuters file photo)
An aircraft flies over a Boeing 777-300ER aeroplane of China Airlines during the 51st Paris Air Show at Le Bourget airport near Paris on June 16, 2015. (Reuters file photo)

SINGAPORE - Boeing Co said on Friday it had increased its 20-year forecast for Southeast Asian demand by 460 aircraft, the largest jump of any global region, as low-cost carriers make travel more accessible.

Boeing sees demand for 4,210 new aeroplanes worth $650 billion in Southeast Asia over the next two decades, based on an estimate of annual traffic growth of 6.2%. That is up from last year's forecast of 3,750 aircraft valued at $550 billion.

"Look at countries like Vietnam, Thailand and Indonesia -- that infrastructure has to grow and will grow," said Dinesh Keskar, Boeing's vice president for Asia-Pacific and India sales. "Aviation is the biggest source of tourism for the countries, it is the biggest source of moving people and moving cargo."

Southeast Asia, home to rapidly growing low-cost carriers like Indonesia's Lion Air, Vietnam's VietJet and Malaysia's AirAsia Bhd, is taking on greater importance for Boeing and Airbus SE as North American and European markets are more mature with far lower growth rates.

Mr Keskar said single-aisle aeroplanes like the 737 MAX and Airbus SE A320 were set to account for more than 70% of new deliveries as most travel in the region is expected to to be short-haul.

China is also trying to compete in this market. The C919 narrowbody, which took its first test flight in May, has received 730 orders to date.

"Certainly we watch that, we watch our competition," Mr Keskar said of the C919. "We try to bring products which are superior, with lower seat mile cost, better fuel burn and a better passenger experience."

The Boeing forecast does not include any deliveries to Myanmar, Cambodia or Laos, which have less developed aviation sectors than neighbouring countries like Thailand and Vietnam.

Airbus has not released a specific order forecast for Southeast Asia but a spokesman said the European manufacturer expected annual passenger growth of 7% a year over the next 20 years.

Boeing sees worldwide demand at 41,030 new aeroplanes over the next two decades. While it sees demand jumping the most in Southeast Asia, it has not yet given breakdowns for each global region.

Bloomberg News also reported from Chicago on Friday Turkish Airlines intended to purchase 40 of Boeing’s 787-9 Dreamliners, a long-awaited deal that signals the carrier’s rebound following a terrorist attack on its Istanbul hub last year.

When finalised, the order would be valued at almost $11 billion before the customary discounts for large aircraft purchases. The pact, unveiled during a brief signing ceremony in New York on Thursday, came after years of market studies and negotiations for wide-body planes as the airline plotted its expansion.

Boeing’s carbon-composite Dreamliners will help upgrade Turkish’s fleet of long-range aircraft as it competes with other Middle Eastern airlines amid slowing growth in the region. The carrier’s expansion would hasten President Recep Tayyip Erdogan’s goal of making Istanbul one of the world’s premier air travel hubs. The airline already has 75 Boeing 737 Max jets on order, according to the planemaker’s website.

Turkish plans to shift operations from Istanbul’s Ataturk Airport to a new hub, which is due to open at the end of the year. “It’s very exciting for them and it’ll open so many new gateways,” said Marty Bentrott, Boeing vice-president of sales for the Middle East, Russia and Central Asia. “These aeroplanes are part of that growth plan.”

The deal underscores continued interest from the airline industry in mid-sized twin-aisle aircraft even as sales taper for planes that seat more than 400 travellers. Boeing has landed 82 firm orders for the 787 so far this year. The total could swell if the Chicago-based manufacturer formalises additional commitments such as the one for eight 787 Dreamliners announced by Malaysia’s Prime Minister Najib Razak during a White House visit this month.

Citing the sales pick-up, Boeing CEO Dennis Muilenburg recently announced plans to speed production of its Dreamliner by 17% in 2019. The 14-jet monthly pace would be a record for complex twin-aisle aircraft like the 787, which is Boeing’s most advanced.

It would also give Boeing a competitive advantage over rival Airbus SE by opening more delivery slots for the sold-out jet. The European planemaker has been gradually stepping up output of its A350 after early deliveries were disrupted by late cabin equipment.

Turkish, officially known as Turk Hava Yollari AO, has sought to take advantage of Istanbul’s historic role as a global crossroads linking east and west. Persian Gulf carriers such as Dubai’s Emirates Airline and Doha-based Qatar Airways have pointed the way with international networks built on connections through their home hubs.

The Istanbul-based carrier for a time mulled ordering Airbus SE’s A380, the superjumbo favoured by Emirates, or Boeing’s humpbacked 747-8 jumbo. Those four-engine planes have fallen out of favour as airlines bypass large hubs to connect smaller cities directly.

With the Dreamliner agreement, Boeing also pledged to work with the Turkish government to accelerate the growth of the country’s aerospace industry. The initiative outlines a strategic framework aimed at bolstering research, engineering and skills development for Turkish carriers, service companies and suppliers.

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