Airline growth hit as virus depletes Singapore Airshow

SINGAPORE (Reuters) - Asian airlines warned of “drastic” cuts in 2020 growth plans because of the coronavirus crisis, adding gloom to an already depleted Singapore Airshow as more firms dropped out.

Asia’s top aerospace event is going ahead. But a purpose-built aero exhibition centre is pockmarked with empty spaces reserved for Chinese companies and others skipping the show because of the outbreak, whose death toll exceeds 900.

Major suppliers Honeywell HON.N and Leonardo LDOF.MI joined a list of 70 no-shows on Monday amid concerns related to the new coronavirus, which first erupted in China.

Although riddled with hype and pre-packaged announcements, air shows are widely seen as a litmus test of confidence in the aerospace industry and bring together tens of thousands of people to network around cabin mock-ups and arms stalls.

But few deals are expected at the Feb 11-16 Singapore event, where the epidemic has triggered new safety measures and cast a shadow over airline profits and demand for airplanes.

Fresh evidence of the impact emerged on the eve of the show as UK-based consultancy Ascend by Cirium said the number of flights scheduled to operate to, from and within China had dropped by 24% compared with expectations before the crisis.

Worse, the number of flights actually operated was down by half compared with normal seasonal levels as many airlines continued to slash flights below their newly adjusted schedules.

That means Asian airlines are bracing for a turbulent 2020. Cancellations bring costs in lost revenue and ticket rebates.

“All bets are off in terms of traffic forecasts for this year,” Andrew Herdman, the director general of the Association for Asia Pacific Airlines, said in an interview.

China's People's Liberation Army Air Force (PLAAF) Ba Yi aerobatics team perform an aerial display during a media preview of the Singapore Airshow in Singapore February 9, 2020. REUTERS/Edgar Su

Before the crisis, the International Air Transport Association, which represents global airlines, saw passenger traffic rising by 4% in 2020 and cargo traffic 2% higher.

“If you look at the schedule cuts and the actual operations they have been cut by 50%, 60%, 70% within China. It is pretty drastic,” Herdman said.

A key question on delegates’ minds is whether the virus will tip the aviation industry into a long-anticipated downturn. So far growth has been resilient to shocks such as the 2003 SARS virus.

“One of the lessons from SARS was that traffic was affected but also that it rebounded in 6-8 months,” Randy Tinseth, vice-president of marketing at Boeing Commercial Airplanes, said.


Brazil’s Embraer is preparing to ride the crisis out.

“I am hopeful that we will see the coronavirus peak in the next 2-3 weeks and then taper off, but until we do on the passenger travel side the impact is profound and immediate,” commercial aviation head John Slattery said.

Embraer is attending the show as part of a marketing blitz for its E195-E2 against the Airbus A220. Slattery lamented delays in European Union approval for a tie-up between Embraer and Boeing that echoes Airbus’s purchase of the Canadian A220.

The air show’s organisers said on Sunday they still expected more than 930 companies from 45 countries and 45,000 trade attendees - down from the 54,000 at the last show in 2018.

The lobbies of major hotels, usually bustling with attendees, were noticeably quiet, however. Privately, some delegates have expressed surprise the show is going ahead after the government advised against large-scale non-essential events.

Organisers say they have a duty to those still wishing to attend a show that has grown in importance over the years.

Reflecting the financial and strategic stakes involved in aerospace, such biennial events are not cheap to organise.

One exhibitor who has planned air shows worldwide said supporting an aircraft flight display would typically cost $1 million or more and big manufacturers could spend $2 million to $5 million in total on a show of this size, including travel.

Cancelling the show would lead to refunds running into tens of millions of dollars, a source at one exhibitor said on condition of anonymity because of the sensitivity of the matter.

Organiser Experia Events, partly owned by ST Engineering STEG.SI and government agencies, charges at least S$1,550 per square metre for space in the show, according to its website.

Experia on Sunday declined to comment on cancellation terms.

Reporting by Jamie Freed and Tim Hepher. Editing by Gerry Doyle, Louise Heavens and Mark Potter