Panellists:Lim Kok Kiang, assistant managing director, engineering cluster group, Singapore Economic Development BoardRichard A Bitzinger, senior fellow & co-ordinator of the Military Transformations Programme at the S Rajaratnam School of International Studies, Nanyang Technological UniversityDavid Stewart, vice-president, ICF SH&EModerator: Nisha Ramchandani, reporter, The Business TimesTHE Business Timesengaged some Asia-Pacific aviation industry experts on the key issues facing the industry today and on ways to overcome some of these challengesBT: How has Asia's role in the aviation industry evolved over the years? From a global perspective, how is Asia important today?Lim Kok Kiang: Clearly, Asia-Pacific is a growth market no one can ignore.迷你倉 By 2030, some two-thirds of the global middle class is anticipated to be from the Asia-Pacific region. With more entering the consumer class, the demand for travel will increase. Asia-Pacific carriers carried a combined total of 220 million international passengers in 2013 - that's 6 per cent higher than the previous year. To tap this growing market, low cost carriers (LCCs) have been emerging and ferociously expanding. The overall strength of Asian economies and the growing wealth in the region is likewise giving good reason for traditional full service carriers to expand their fleets. Over the next two decades, one in every three new aircraft deliveries is anticipated to be made to this part of the world. That is exactly how important the Asia-Pacific market is today, and how it will be, in the coming years.Richard Bitzinger: From a security perspective, Asia is obviously a much more critical region than it was in the past. Of course, the global war on terror is a never-ending one, although at a low, if sustained tempo. However, as European security has stabilised since the end of the Cold War, and as military operations in Iraq and Afghanistan wind down, Asian security concerns have correspondingly risen. This is not simply a matter of relative criticality - it is also a reflection that Asia will likely be the setting for the next great-power competition - that is, between China and the United States. And this will not simply be a bilateral contest; dealing with the rise of China as a great power to be reckoned with - militarily and diplomatically, as well as economically - will involve nearly every nation in Asia.David Stewart: Asia has clearly gained much greater significance as an air travel and aviation hub relative to Europe and North America and continues to do so. It's a real driver of demand and therefore vital to the health of the aerospace supply chain. The generally strong economic growth in the region has meant it's a commercial imperative for the aerospace supply chain to globalise and establish presence in Asia. This globalisation means that it has become a centre of excellence for engineering and technical services (for example, India), for lower cost manufacturing (such as Malaysia and China), and for aftermarket support (such as Singapore). This growing critical mass of aerospace activity has led to the situation today where importantly, both China and Japan are seeking to establish an indigenous aircraft manufacturing capability. Finally, courtesy of a number of acquisitions by China, Asia is becoming a vital part of business aviation manufacturing.BT: What are the major challenges facing your sector of the aviation industry?Mr Bitzinger: The critical question is how the new emerging security situation in Asia will affect the defence and aerospace industrial sectors. The modernisation of regional militaries is a priority for many countries in Asia, and this will drive a whole host of issues: defence budgets, arms acquisition policies, arms transfers, and the like. The impact will be both regional and global. Defence industries in North America and Europe increasingly depend on arms sales to Asia, and they and their governments will be watching closely how the whole process of regional military modernisation will be playing out to their benefit or detriment. In addition, many countries in Asia have ambitions to build and expand their own defence and aerospace sectors, not simply for self-defence, but to break into the lucrative commercial aircraft industry, to export arms, and for reasons of national pride and prestige.Mr Stewart: For the aerospace sector, the key challenge is managing the supply chain as the OEMs ramp up the production of new models over the next five to eight years. For the maintenance sector, it's again the supply chain to support growing demand, but in particular it's ensuring adequate supply of skilled technicians as well as depth of management. Also, the growth in both aerospace and the aftermarket has led to escalating labour costs in some regions such as coastal China and Singapore, which threatens Asia's traditional comparative advantage of lower labour costs. This is particularly so in labour-intensive manufacturing and airframe heavy maintenance.BT: What can be done to tackle some of these pressing issues?Mr Lim: With order books at record highs, the most critical thing for aerospace manufacturers now is to deliver. There needs to be ready capacity to meet demand on schedule.We are working closely with manufacturers to support their execution and delivery to customers. Rolls-Royce, for instance, has established a Trent engine assembly and test plant and wide chord fan blade manufacturing facility in Singapore's Seletar Aerospace Park. OEMs are similarly feeling the heat in the aftermarket. The growth of Asia-Pacific fleets is placing increasing pressure on OEMs to establish a larger in-region presence. Singapore provides an ideal location for aerospace multinationals to establish their aftermarket operations to support their growing customer base in the Asia-Pacific market. We are also building talent across all education levels - universities, polytechnics and at the Institute of Technical Education - that will enable aerospace companies to deliver for their customers. Our schools have been active in forging partnerships with the industry, and in upgrading supporting facilities and equipment to facilitate hands-on learning.Many of the aircraft coming into the market are also new generation platforms that employ new materials and new technologies. And with all things new, there will be teething problems, and new repairs will need to be developed. Leveraging our comprehensive base of nose-to-tail MRO capabilities, we are working with the OEMs on developing solutions for repairs to help improve the lifecycle costs of their products.The availability of trained pilots is another challenge. Here, we are strengthening our base of pilot training activities to support the demand for pilots in and around the region.The development of a pilot training cluster further serves as a building block as we develop Singapore as a home for aftermarket activities. Aerospace OEMs are displaying keen interest to expand their aftermarket portfolio by providing a full suite of aftermarket services bundled and offered together as a package at the point of sale. Airbus' Flight Hour Services and Boeing's Goldcare are prime examples of this.As OEMs seek to provide value-adding services and total support solutions, they will need the requisite capabilities in fleet and asset management, aviation financing, maintenanc新蒲崗迷你倉, supply chain, research, engineering and so on. Singapore can offer these and more as we continue to enhance our building blocks to support total support solutions. We are deepening our base of MRO capabilities, growing our pilot training and aircraft leasing clusters, and enhancing our overall business environment through free trade, efficient customs and great connectivity.Mr Bitzinger: In many ways, players both on the supply and demand side of military modernisation are already tackling the challenges facing them. Arms producers outside Asia are already predicating many of their arms-manufacturing decisions based on prospective sales to the region; certainly they are aggressively expanding their arms sales efforts to the region, as evidenced by their presence at the Singapore Airshow. On the other side, regional militaries are becoming increasingly demanding when it comes to buying sophisticated weapons systems, and they are asking for - and getting - better arms at better terms. Additionally, more resources are being poured into modernising local arms industries and into making them more technologically competitive. In this respect, China has made great strides in upgrading and expanding its defence industry, and many of its domestically produced arms are increasingly giving traditional Western arms suppliers a run for their money.Mr Stewart: It's going to take intelligent investment by the governments and OEMs, in the right capabilities and right locations with the right people/training, to facilitate and assure the ability to support the growth. To combat the threat posed by increasing wages, Asian suppliers must focus hard on productivity and supply chain management.BT: What is the outlook for your sector in the short to medium term? What are the factors contributing to this?Mr Lim: The outlook for the aerospace industry remains bright. Airlines are growing their fleets to meet rising demand. At the same time, the high cost of fuel is prompting them to replace ageing aircraft with more fuel efficient ones that will reduce operating costs. These signs point to growth, so we do anticipate the demand for aircraft to remain strong, particularly in the Asia-Pacific for the reasons above. With the expansion of fleets, demand for aftermarket services will follow.Mr Bitzinger: The outlook is very good. Asian defence expenditures are rising, overall (as they have been for at least a decade,) and they are likely to continue to grow until at least the end of the decade, barring any regional economic crisis. This means that the wherewithal to buy arms - which in turn drives the arms industry - will continue to be present. In the second place, Asian ambitions to become players in the global aerospace industry - including designing and building commercial airliners, integrating their aerospace industries into the global supply chain to aircraft builders like Boeing or Airbus, and even offering space launch services - will all continue to increase and mature. Already China is attempting to break the Boeing-Airbus duopoly on large passenger airplanes, while countries like Japan, Singapore, and South Korea are trying to expand their role in the global aerospace business.Mr Stewart: In Asia, the short-medium term prospects are very strong in particular sectors. Fundamentally, there's a lot of aircraft that will continue to be delivered into the region in the coming years, driving support needs such as logistics and line maintenance. And the growth of the fleet over the last decade means that activities such as engine overhaul and component maintenance will be growing at almost 10 per cent per annum. Finally, the potential liberalisation of the air space in China is a real "wild card". If this actually happens, then China will become a major business and general aviation market, and will spark significant growth in the region.BT: What part can Asia play in shaping the future of the global aviation industry?Mr Lim: Singapore is a small country, but we are big in aviation. As a member of the global aviation community, we are committed to do our part to shape the future of the industry. The Singapore Airshow, for example, is the largest in the Asia-Pacific, and provides a platform for Singapore to build mindshare and thought leadership in the global aerospace arena. During the Airshow, we organise an Aerospace Technology Leadership Forum where the top technology officers from leading aerospace companies converge to discuss the most pertinent technology challenges of the day. We also hold the Singapore Airshow Aviation Leadership Summit. This is probably the only event of its kind in the industry today that brings together high-level participants from regulators, private sector, government and airline operators to address a wide range of issues facing the broader aviation industry.Singapore is also an active participant of International Civil Aviation Organization (ICAO). Since joining in 1966, we have participated in some 70 ICAO panels, committees, working groups and task forces to shape international standards in the areas of aviation safety, aviation security, air traffic management, aviation environmental protection, aviation law, aviation medicine and airport operations.Last year, we announced the 1,080 hectare expansion of Changi Airport that will enable us to double our passenger handling capacity from the current 66 million to 135 million passengers per annum. New industrial zones will also be created through this expansion to support airframe MRO and air cargo activities to support the continued growth of the aerospace industry. Our commitment to creating a conducive business environment for companies to thrive can also be seen through our development of Seletar Aerospace Park.These investments in talent, infrastructure, and our continuous drive towards improving our business environment strengthen Singapore's position as the leading aviation and aerospace hub in the region, and enhance our ability to serve as Asia-Pacific's nexus where aerospace multinationals can establish their regional homes to support their growing client base in this part of the world.Mr Bitzinger: Asia has two great strengths as a customer and as a supplier. Its sheer size as a market gives it significant clout when it comes to demanding terms of purchase, particularly when it comes to asking for (and getting) industrial participation in aviation projects. Japan, for example, has long been a partner in various Boeing airliner projects, including the 787 Dreamliner, while China has secured licensed-production rights for the Airbus A320 to be bought by Chinese airlines. More important in the long term, however, the growing technological modernisation and maturation of the Asian aerospace sector means that eventually it could offer serious competition to already established players in the global aviation industry, both on the defence and commercial sides.Mr Stewart: More manufacturing will be based in the region as the critical mass of aviation shifts eastwards. In the longer term, China will have its own air transport aircraft design, development and production capability, and so will Japan. This means that ultimately Asia will be an integral part of the global aerospace supply chain. And per the example set by Singapore as a global hub for maintenance, there will be more MRO centres of excellence in the region.迷你倉
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