Boeing Co. expects Southeast Asian carriers to place more plane orders in 2018, Dinesh Keskar, senior vice president of Boeing's Asia-Pacific and India sales, told Bloomberg News at the Singapore Airshow on Feb. 5.
Keskar, however, said infrastructure is the top risk to demand in Southeast Asia.
More than $1 trillion is expected to be spent on airport expansions by 2069, with about half of that to be spent in Asia, Bloomberg reported separately Feb. 5, citing the Sydney-based CAPA Centre for Aviation. But even as major airports in Asia are investing to expand capacity, these investments are still not enough to match the growth in aviation, said Shukor Yusof of aviation consulting firm Endau Analytics in Malaysia.
Airlines will also be squeezed by rising oil prices and a ticket price war, added Keskar. But the market will be able to bear jet fuel prices if they remain at about $70 and load factors rise, he said.
Asia-Pacific is likely to have 3.5 billion passengers by 2036, adding more than double the forecast for North America and Europe combined, the International Air Transport Association, or IATA, estimated.
To meet that demand, Boeing estimates carriers will need 16,050 new aircraft worth $2.5 trillion by 2036.
Airlines in the Asia-Pacific make up the biggest proportion of orders for Airbus Group SE and Boeing. U.S.-based Boeing said the region will account for 39% of total projected global demand for 41,030 aircraft by 2036 as carriers in China, India and Southeast Asia expand their operations.
China will add 921 million passengers by 2036, followed by India with 337 million and Indonesia with 235 million, the IATA said.
China is likely to surpass the U.S. as the world's biggest air travel market by 2022, two years quicker than a previous prediction, Bloomberg said.
However, stiff competition from budget operators and carriers is crimping passenger yields, the IATA said. The average operating profit margin for Asia-Pacific airlines is likely to drop for a second year to 8.1%, compared with North America's 12.7%. Even though Europe trails at 6.6%, it is set for the sixth year of improvement in a row, said the IATA.
