Mart potential entices aircraft manufacturers

Mart potential entices aircraft manufacturers

By Riyadi

SINGAPORE (JP): 1996 is an aerospace year not only for Indonesia but also for the whole East and Southeast Asian region, which experienced a vigorous growth in air transport.

Around the region, no less than six major air shows will compete for a slice of the burgeoning market this year, including Asian Aerospace in Singapore, Indonesia Air Show, Seoul Air Show and Aerospace China.

And yet most of the biggest players in the industry remain supportive to the air shows because the region promises one of the most major aerospace marketing opportunities of current times.

The importance of the region, as part of the Asia-Pacific, has grown very significantly over recent years, to the extent that today it represents the world's most dynamic aerospace market.

According to the International Air Transport Association, the annual passenger traffic in the Asia-Pacific area will hit 200 million passengers by the year 2000, up from 112 million just three years ago. The region will account for more than 50 percent of the world's passenger traffic by the year 2020, compared with the present 35 percent.

The International Civil Aviation Organization has also predicted that passenger traffic in the Asia-Pacific will grow by an average of nine percent annually through the year 2001, compared to the world average of 6 to 7 percent.

Air freight traffic in the Asia-Pacific is also likely to expand by 10 percent every year.

"However, it is not necessarily going to be an El Dorado for everyone: Nothing's ever so simple and easy. We will be compelled -- all of us -- to battle for our fair share. The aviation environment will clearly be more competitive," Cheong Choong Kong, managing director of Singapore Airlines, said at the World Media Forum, held here recently.

Reflecting its strong growth in air traffic, the region is predicted to be the biggest buyer and user of aircraft and aerospace parts and components.

By 2014, the airlines in the Asia-Pacific are expected to acquire some 3,400 aircraft at a total cost of US$340 billion.

Last year, for instance, Singapore Airlines entered a $12.7 billion deal with Boeing for 34 of the newest B777s, with options on an additional 43 aircraft.

IPTN

Following Boeing's success, Indonesia's aircraft manufacturer PT Industri Pesawat Terbang Nusantara (IPTN) has recorded orders for 204 N-250 twin-turboprop regional commuters. The N-250 is IPTN's first aircraft, which took to the skies last year.

IPTN's chairman, B.J. Habibie, who is also Indonesian State Minister for Research and Technology, disclosed here last week that the new orders came mostly from local airlines, including Merpati Nusantara with an order for 100 aircraft, Bouraq with 64 aircraft and Sempati Air with 16 aircraft. Foreign buyers of N- 250 include Gulfstream Airline of the United States with 10 aircraft, Columbia with four aircraft and a number of leasing companies in Europe.

Such high demand for aircraft could spell the end of the disturbing trend in price-cutting among aircraft manufacturers, Clive Richardson, international sales and marketing manager of Asian Aerospace Pte Ltd. said at a press briefing on the Asian Aerospace 96 here last week.

This upswing will benefit not only the well-establish airframe and engine manufacturers like Boeing, McDonnel Douglas, Airbus Industrie, General Electric, Pratt & Whitney and Rolls Royce -- to name a few -- but also aerospace firms in the region, including those in Indonesia, China, South Korea and Malaysia.

The growing demand for both commercial and military aircraft in the region has helped aerospace companies in the region grow as well.

After its success with the launch of the N-250 twin turboprop, IPTN is now entering the jet industry by developing the twin- engined N-2130 commuter jet which is scheduled for roll-out in 2003.

Following in Indonesia's footsteps, Malaysia plans to develop an indigenous aerospace industry. To materialize these plans, Malaysian Helicopter Services announced recently that it would involve itself in seven aerospace manufacturing ventures.

Another Asian country wishing to be a major aircraft manufacturer is China. It has completed a co-production project with McDonnel Douglas to make 35 147-seat airliners in Shanghai.

Together with South Korea and most recently Singapore, China is looking for a Western partner in a venture to build 100-seat aircraft.

In the defense sector, China's aviation industry is currently at the forefront among Asian countries. It is now working on its Chengdu F-10 and FC-1 fighters. Its Chengdu F-10 fighter, which is expected to be test-flown this year, is reported to be equal in performance to the Euro-2000 fighter and the French Rafale.

CN-235

Indonesia has also built the CN-235 maritime patrol aircraft, Malaysia has produced the Eagle X-TS all-composite aircraft, and Korea will come up with its new KTX-II light fighter.

Indonesia's CN-235 is one of the most sought-after Asian-made military aircraft in the region. Brunei has begun to move ahead with a long-standing plan to purchase three CN-235 aircraft. Malaysia got six CN-235s in exchange for locally built MD3-160 trainers and Proton cars. The Indonesian navy has also committed itself to buying the CN-235.

The region's military aviation industry is growing in tandem with the high defense expenditure in the East and Southeast Asian region.

Asian governments have been quick to refute the suggestion that the region is in the throes of a dangerous arms race, claiming instead a measured modernization of their military forces.

The facts, however, remain the same. The area now represents one of the most lucrative weapons markets outside the Middle East.

China leads defense spending in the region with some US$7 billion per year.

In Southeast Asia, Singapore topped defense budget with $2.8 billion last year, compared to Malaysia's six billion ringgit ($2.36 million) in last year's defense spending.

Last year Indonesia released a $2 billion five-year defense procurement plan, and the Philippine government pushed through a 50 billion peso ($1.9 billion) five-year military-modernization budget.

Most of the demands for air fighters in the region, however, are still satisfied by major producers like McDonnel Douglas, Bell, Lockheed Martin, Dassault, Bambardier and Pilatus.

At a time when most developed countries are tightening their defense spending, it is not surprising that most major aircraft manufacturer are a fixture at all the major air shows in the region, because they serve as one of the most effective venues to market their products.

"In an air show, producers can meet potential buyers, and buyers can select from a wide range of products exhibited in the show. You will not find such valuable opportunities other than at air shows," Jimmy Lau, president of Reed Exhibition Singapore, told The Jakarta Post here before the opening of Asian Aerospace '96.

This year's major Air shows in the region are as follows:

* Feb. 6-11, Asian Aerospace '96, Singapore.

* March 23-26, DSA 96 5th Defense Services Asia Exhibition and Conference, Kuala Lumpur, Malaysia.

* June 22-30, Indonesia Air Show, Jakarta, Indonesia.

* Oct. 7-11, Aerospace China, Beijing, China.

* Oct. 21-27, Seoul Air Show '96, Seoul, South Korea.

* Oct. 29-31, Shanghai Aviation & Airport Expo 96, Shanghai, China.