Aircraft manufacturers stake out Asia-Pacific battleground

Aircraft manufacturers stake out Asia-Pacific battleground

SINGAPORE (AFP): The Asia-Pacific skies are emerging as the crucial battleground for aircraft manufacturing giants desperate to cash in on an estimated US$500-billion market, industry players said.

Growing passenger demand, boosted by the region's rapid recovery from the 1997 financial crisis, has pitted European consortium Airbus Industrie against U.S. rival Boeing in a vicious dogfight to meet demands for larger aircraft in newer fleets.

"The reason why this region is attractive to aircraft manufacturers is self-evident," said Richard Stirland, the Association of Asia-Pacific Airlines director-general.

"It has the highest rates of growth, and the majority of wide- bodied aircraft are ordered by Asia carriers.

"Carriers would not order these aircraft if they did not believe that traffic growth in the future will justify the purchase."

Industry forecasts show demand for air cargo space and passenger seats in Asia-Pacific will mushroom much faster than anywhere else in the world over the next 20 years.

Airbus stole the advantage over Boeing last month when blue chip Singapore Airlines Ltd. (SIA) committed to purchasing 25 of the revolutionary double-decker A3XX superjumbos worth $8.6 billion.

The 555-seater, new generation aircraft -- aiming to offer "fantasy flights" with onboard gyms, casinos and shops -- will be delivered to SIA from early 2006, making the carrier the first to fly the biggest civilian plane ever built.

The order dealt a blow to Boeing which had doggedly courted SIA with its 747X, a stretched version of the venerable B747.

SIA chief executive Cheong Choong Kong described the bidding as "a hard-fought contest," adding that in the end there could be only one winner and it was Airbus.

But aviation analysts said the true winner was SIA, benefiting from extremely competitive pricing between Airbus and Boeing.

In a move seen as a consolation for Boeing, SIA on Thursday placed firm orders for six 747-400 freighters worth $1.3 billion, plus an option for nine more which would raise the value of the deal to $3.4 billion.

Australia's biggest carrier, Qantas, is looking closely at the A3XX superjumbo as it plans a multi-billion dollar fleet upgrade, although airline officials say they are also considering the Boeing option.

Thailand's cabinet last week approved Thai Airway's purchase of five new Boeing planes, and Hong Kong flag carrier Cathay Pacific has three Boeing 747-400 freighters coming in the next year.

Cathay has also set aside a "rough figure" of $2.6 billion for new planes which "may include" the A3XX.

Boeing has forecast the air cargo business will grow faster than passenger travel in the next 20 years, with the global freighter fleet doubling from 1,676 to 3,200 -- and more than 90 percent of the capacity provided by widebody jets.

Airbus, in its forecast, said Asia-Pacific airlines will lead demand for jumbo sized aircraft in the next 20 years, taking 42 percent of all new 300-plus seat aircraft.

This would include 1,000 aircraft with between 300 and 400 seats, and over 700 with more than 400 seats.

Airbus estimated the total value of the market for new passenger and freighter aircraft in the region at some $490 billion during the 20-year period.

It foresees a lucrative market for freighters, with cargo traffic continuing to grow faster than anywhere else in the world -- at around 6.6 percent a year.

Asia-Pacific passenger traffic would continue to grow at around 6.1 percent annually -- significantly higher than the world average of 4.9 percent -- and the number of seats required would more than triple to 1.2 million by the end of 2019, according to Airbus.