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Aircraft makers are optimistic about Farnborough despite Brexit

, July 13, 2018, 0 Comments

aircraft-aviation-brexit-marketexpress-in The Farnborough Airshow is a major trade venue for the aeronautical industry. As manufactures set up their displays their thoughts hover between anticipation of the next big order and fears of Brexit says Andreas Spaeth.

The global aviation industry will come together on Monday at the Farnborough airfield southwest of London for its biennial industry fair — the second largest in the world after the Paris Air Show.

The UK has traditionally been one of the world’s leading aviation countries and the Farnborough trade fair’s roots date all the way back to 1920. It moved to its current location in 1948.

However, this year is likely to be full of uncertainty as to the future role of the British aviation industry is called into question due to the UK’s impending departure from the EU in 2019. Airlines and manufacturers have both recently denounced the prevailing uncertainties and demanded clear post-Brexit rules.

A new hope for Airbus: The C Series plane line it acquired from Canada’s Bombardier which will morph into the Airbus A220

While airlines such as easyJet can manage things more easily, for example through workarounds such as the establishment of continental subsidiaries, manufacturers can not relocate so easily. For this reason, Airbus, which assembles wings for its commercial aircraft in Broughton, recently criticized the British government and threatened to stop investing in the UK if it came to a hard Brexit.

Joining together

Nonetheless the day-to-day business of the industry is still going strong. “We come to Farnborough building on the foundation of an exceptionally consistent and strong year,” said Boeing CEO Dennis Muilenburg with self-confidence.

Airbus too, continues to see highs, most recently spurred on by the successful acquisition of Bombardier’s C Series aircraft family. On the same day as the announcement of the new Airbus A220, the company was also able to announce a big order from US airline JetBlue which ordered 60 of the planes.

Up until now JetBlue has used 60 aircraft from Brazilian competitor Embraer — which in turn has embarked on a joint venture with Boeing. Both market leaders, Airbus and Boeing, have wanted to expand their product families by linking to the next biggest companies. At the moment, neither company has their own smaller plane in the 100- to 150-seat category.

Boeing wants a piece of the pie, too: Namely the regional jet program of the Brazilian manufacturer Embraer. Here an ERJ 190 from Copa Airlines

At the moment neither giant alone can currently handle the demand for aircraft with a single central aisle in a timely manner. “The pressure on the manufacturers in this area remains high, despite full production capacity, delivery is lagging significantly behind the needs of customers,” according to a recent study by the Munich-based consulting firm AlixPartners. “Order books reached a record high of more than 11,700 aircraft, which is 145 percent more than in 2010.”

Bigger is not always better

However, competitors outside the big two’s duopoly had a harder time last year. Before the recent takeovers, together they only had 7 percent of orders in the central aisle segment. Now it will be even harder.

“Currently, only the Chinese-made Comac C919 remains as a significant alternative to the Boeing 737 and Airbus A320 families, which currently dominate this market segment,” according to AlixPartners consultants. They also believe the aviation industry will keep experiencing continued growth. “With an average increase in air traffic of 4.5 percent over the next 20 years, the fleet of commercial aircraft could almost double from 22,300 aircraft in 2017 to just under 40,000 by 2037.”

But the time of real novelties in the airliner industry have been largely over since the last major premieres — the Airbus A350 (maiden flight in 2013), the Boeing 787 (in 2009) and the Bombardier C Series which mutated into the Airbus A220 (in 2013).

This lack of innovation is also apparent in Farnborough, since Airbus and Boeing are only presenting new upgrades to existing models and nothing really new. The future of the giant Airbus A380, which has so far proved a commercial flop, is also on the line. At the show one of the first A380s, which began service for Singapore Airlines in 2007, is now being relaunched as a second-hand aircraft under the flag of a Portuguese charter company. However, industry experts are skeptical that the giant could still experience a late renaissance.