Deep Politics Forum

Singapore air show eyes military sales


By Juliana Liu
Asia Business Report, BBC World, Singapore air show


Aircraft makers are doing their best to attract airlines back into the market


Singapore's taxis are queuing under the searing tropical sun to enter a sprawling complex hosting the Singapore air show - and the event has not even started yet.
But they are not looking for rides.
At the entrance, drivers are given free bottles of mineral water and bumper stickers promoting Asia's largest air show, where some 800 companies from 40 countries are to display their products.


Taxi drivers are stocking up on air show promotional material

Its organisers are enticing drivers to visit the site early, so they will be ready to escort some 40,000 visitors and 90,000 locals to the remote site when the trade show begins on Tuesday 2 February.
The detailed planning is part of efforts to ensure the 2010 air show is a success, in a year when airlines across the world are expected to suffer losses to the tune of $5.6bn (£3.47bn), with subsequent hits expected for aircraft makers, engine manufacturers and other companies that support them.
But last year was even worse for airlines globally. In 2009, their losses came to $11bn after they suffered the largest decline in international air traffic in more than 50 years, according to the International Air Transport Association (Iata).
"The industry starts 2010 with some enormous challenges," says Giovanni Bisignani, chief executive, Iata.
"The worst is behind us, but it is not time to celebrate."
Military spending
Walking through the entrance to the main exhibition area, an enormous booth belonging to Singapore Technologies Engineering greets visitors.
Military hardware budgets have not yet been hit by the downturn

The company is the biggest exhibitor at the air show.
Along with life-size model soldiers in camouflage, its armoured personnel carrier, the Terrex, dominates the demonstration area. Other items being promoted include the 3GL semi automatic firearm, and ammunition of different sizes.
Another reason for optimism is that Singapore is now largely known as a trade show for military hardware.
The show is roughly evenly split between military and civilian exhibitors, but with civilian airlines still struggling the manufacturers have higher hopes for their business dealings with governments and military procurement officers.
They will be wowed by a two-hour aerial display that is said to include a fly-over by the B-52 Stratofortress, the largest United States Air Force bomber, as well as the USAF A-10 Thunderbolt II, Swiss PC-21 trainers and Australian F-111 fighter jets.
No deals
Airlines are always the first to go [into recession] and the last to come out


Alex Glock, managing director, Embraer Asia Pacific

Military budgets in Asia are growing, even as governments in the United States and Europe cut their spending.
Over the next 10 years, Asian countries are believed to need more than 500 fighter jets, according to one industry estimate.
Shukor Yusof, an aviation analyst at Standard & Poor's, expects the military equipment on sale to appeal particularly to Chinese, Indian and Indonesian buyers.
Though he does not expect major commercial contracts to be negotiated during the air show itself.
Cautious optimism
In Singapore, air show visitors will also be taking the pulse of the tentative global recovery that has lifted the mood in the airline industry.
Much of that recovery is being driven by Asia, where the aviation sector is expected to grow faster in the Asia Pacific than anywhere else.
Globally, passenger demand rose 4.5% in December 2009, compared with a particularly dismal December 2008. Asian airlines recorded an improvement of 8% in the same period.
With Asian carriers well represented at the show, the mood is more buoyant than at other recent industry gatherings.
"I think there's a feeling of greater optimism now," says Alex Glock, managing director, Embraer Asia Pacific.
But he also pointed out that although there are signs of sales recovering, any progress will be slow.
"The worst is over, but the road to recovery, no one knows how long it will take.
"Airlines are always the first to go [into recession] and the last to come out."
Last year, Boeing and Airbus landed orders for aircraft worth some $62bn during the show. Nobody expect this year to match those results.
"While we don't expect any major announcements in terms of orders, there's renewed appetite," says Shukor Yusof, analyst with Standard & Poor's in Singapore.

http://news.bbc.co.uk/2/hi/business/8486831.stm