Market Trends of Southeast Asia Aviation Industry
The Commercial Aircraft Segment is Expected to Dominate the Market
Southeast Asia houses an immense population with a considerable share of the untapped passenger market for the commercial aviation industry. With the airlines gradually increasing their market penetration and the high use of the Internet, air travel is slowly becoming the preferred mode of transport. It is expected to grow extensively over the coming years. The growth in passenger traffic was primarily due to the increase in the disposable income of the people in the region and the growth in the tourism sector of various countries, like Indonesia, Thailand, the Philippines, and Singapore. Airlines such as Vietnam Airlines, Garuda Indonesia, and Singapore Airlines have planned aircraft deliveries for the forecast period as part of their expansion and fleet modernization plans.
As part of the fleet modernization plan, during 2018-2022, Thai Airways announced plans to phase out some of the Boeing B747-400s and Boeing B777s and ordered 15 newer generation aircraft. Such fleet expansion and modernization plans are anticipated to boost the segment's growth during the forecast period. Post the pandemic, travel and tourism have become an essential gateway for recreation, so several travelers are choosing to fly to their destinations. This is driving regional airlines to invest in improving their customer experience.
For instance, in April 2022, Malaysia Airlines announced the expansion of its partnership with Amadeus Altea Passenger Service System. With this expansion, the airline aims to provide high-end customer service to its flyers and offer numerous retail services to customers on board. Due to significant fleet expansion/modernization plans and airline investments in various parts of the market, the commercial segment is expected to witness the highest growth rate during the forecast period.
Singapore is Anticipated to Experience Significant Growth During the Forecast Period
Singapore is one of the major aviation hubs in Southeast Asia. The country's Changi airport is one of the world's busiest and most technologically equipped airports to handle huge aircraft like Airbus A380 and Antonov AN-225 Mriya. Furthermore, the country's homegrown airline and flag carrier, Singapore Airlines, is one of the leading carriers operating in the region and offering several long-haul flights, driving a significant passenger influx into the country. Owing to its proximity to China and Taiwan, the country has also been upgrading its defense capabilities to counter any unprovoked military aggression from the Chinese forces. Singapore's military spending was 3% of the country's overall GDP in 2022. The country's military spending as a percentage of GDP has been falling over time.
However, Singapore continues to invest more in its military than Malaysia and Indonesia. It declared a nominal increase of 3% over the allotment for 2022, at USD 11.3 billion. The country's defense strategy focuses on maintaining a solid and capable military to safeguard its sovereignty and national interest. For instance, in February 2022, the Republic of Singapore Air Force (RSAF) upgraded its Fokker-50 maritime patrol aircraft fleet; it is working closely with the navy to review the country's security threats. This is expected to drive the government to invest in multiple fleet modernization programs, creating market growth opportunities during the forecast period.
