Ready for Take-off: Learnings from the Singapore Air Show 2024

With over 1,000 participating companies and 60,000 attendees at this year’s Singapore Air Show, it truly felt like the aerospace industry has returned to, and even crossed, its pre-pandemic levels, especially on the civilian front. A trade event such as the Singapore Air Show is a true reflection of the level of activity across the entire value chain of the industry – ranging from new technological innovation, shifts in supply chains, as well as the direction of future demand and upcoming markets.

We want to highlight a handful of key observations from this year’s Singapore Air Show:

1. Urban Air Mobility: The display of cutting-edge technological innovations across various sectors of the aerospace industry, such as urban air mobility and advancements in electric vertical take-off and landing (eVTOL) aircraft which were showcased, promise more sustainable and efficient modes of transportation within urban areas. Ventures such as Embraer’s sustainable, zero-emission air taxi initiative, EVE, showcase innovative approaches to urban air mobility, creating a new niche and solutions that can benefit millions of travellers and cities. Of course, questions arise such as the readiness of cities and their existing infrastructure for projects such as air taxis, operating costs, passenger price points, etc. Are we ready to adopt such innovations yet, and are they truly sustainable in the long run?
2. Supply Chain Resilience: Tractus’ discussions with the larger players involved in aerospace manufacturing from jet engines to smaller (but critical aerospace components – especially in the MRO segment) all had one common theme: how do they strengthen their existing supply chains and be able to (i) meet increased customer demand now that market demand has really picked up post-Covid, and (ii) be able to mitigate any potential market shocks (such as the two on-going conflicts) that could negatively impact material sourcing or component supplies?  Considering other factors such as the global MRO market expected to grow by 33% on average till 2033 and passenger traffic growth, especially in APAC, set to grow at over 4% yearly beyond 2040, existing supply chains across the global aerospace ecosystem will come under pressure. During the Singapore Air Show, Tractus observed that players focusing on solutions bolstering existing supply chains are experiencing a significant uptick in demand. A small yet relevant indicator of this was seeing firsthand Tractus’ clients who make special materials/coatings used in aerospace component manufacturing and machinery enjoying a significant number of walk-in meetings and new clients.
3. Shifts in the manufacturing landscape:
   • China’s new aircraft manufacturing capabilities were at the fore during the Singapore Air Show, casting light on a newcomer in the landscape of commercial aircraft manufacturing and giving customers a potential option outside of the traditional dominance of Airbus and Boeing. Chinese aerospace companies have made significant strides in the industry. COMAC’s showcase of its newly launched commercial aircraft is aimed at challenging the market share of the established giants. However, this will be long journey. Although initial orders for its narrow-body aircraft like the C919 to the larger ARJ21 have started from domestic airlines such as Tibet Airlines, COMAC will need to get certifications from North American and European regulators before it can start challenging Airbus or Boeing.
   • The elephant in the room at the moment are the safety issues that have plagued Boeing’s 737 aircraft segment – providing Airbus the perfect opportunity to pounce on existing Boeing customers and their requirements. According to Reuters, Airbus has already secured 60+ orders for its A350 and A320 aircraft from JAL and Korean Air – key Asian accounts for Boeing. Although orders for Boeing’s 787 Dreamliners continue to come in, quality/safety issues and manufacturing process scrutiny from regulators will leave Boeing at a disadvantage and turn their customers’ heads towards Airbus to fulfil orders.
4. What does the crystal ball say? India is the next big market. With over 500 million passengers expected in India’s civil aviation market by 2030, there is, naturally, a buzz about the upcoming opportunities that market will present. The Indian Government has pledged to invest over $12 billion by 2025 to improve its airports. So, from airport infrastructure and MRO to aircraft orders and materials, India is being keenly looked at by players both big and small from across the civil aviation value chain.

From Tractus’ interviews with Singapore Air Show exhibitors, India is where their attention will be over the next 15-20 years given its promises. However, challenges will persist. Despite India making large strides in moving up the ranks of being an easier place to do business under its current government, there are still various regulatory complications for it to simplify. One of the best examples of this is how many companies/investors wanting to do business or invest in India in the aerospace sector still find its offsets requirements and regulations complex and confusing – especially when it comes to co-production or technology transfer. Moreover, there is the added test of finding the right strategic partner in the country.

How Tractus Can Help

For over 25 years, Tractus has empowered companies to navigate the complexities of Asian expansion. Our partners and senior management leverage their experience running successful manufacturing and service businesses, bringing this commercial perspective to our client work. We have proven experience advising companies on their location strategies, helping them select the optimal partners, and equipping them with the information and tools to reduce risk and make their next investment decision as success.

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Authored by

Udai Panicker is Tractus Country Manager and Pei Wen Ng is Senior Research Analyst based in Singapore.