Aircraft orders fall to six-year low

Aircraft orders fall to six-year low
Boeing facilities are seen in Los Angeles, California, U.S. April 22, 2016.

The number of new aircraft purchases around the globe fell to a six-year low last year and is unlikely to pick up strongly any time soon, analysts said.

After record orders, airlines will be focused on inducting and operating planes to be delivered in the next few years, they said.

The slowdown in purchases recorded by American plane-maker Boeing and its European rival Airbus comes as airlines face too many empty seats. They have cut fares to fill seats as supply consistently outstrips the demand for air travel.

Photo: The Straits Times

Closing its books for last year, Boeing reported that it sold 668 planes, 100 fewer than the number sold in 2015 and less than half the number of planes sold in 2014.

Airbus has not disclosed its final annual tally but between January and November, the firm sealed just 410 plane orders, compared with 1,080 for the full year before.

Last year, Boeing delivered 748 planes, four of which went to Singapore carriers Scoot and SilkAir.

Scoot, Singapore Airlines' (SIA) long-haul budget arm, which operates an all B-787 fleet, intends to spread its wings further this year. In June, it will launch flights to Athens, its first service to Europe.

An Airbus A350-1000 takes off during its maiden flight event in Colomiers near Toulouse, Southwestern France, November 24, 2016.Photo: Reuters

Airbus customers - including SIA, which is growing its A-350 fleet - collected 577 planes in the first 11 months of last year, compared with 635 in all of 2015.

SIA is expected to take delivery of more A-350s this year and will also start collecting the first of five new A-380s it has ordered. The fresh batch of A-380s will feature an all-new configuration set to be unveiled in the middle of the year.

Mr Saj Ahmad, chief analyst at StrategicAero Research, said the slowdown in orders was expected.

"To expect annual record orders each year is a fallacy... Airlines can only order so many planes at a time because they have to induct and operate them first before looking to make repeat buys," he said.

Clearing a massive backlog of more than 12,000 between the two of them is now a key focus for Boeing and Airbus, said Mr Saj.

"It is likely that Boeing's and Airbus' sales trends will taper off between now and 2021, particularly as both start to ramp up deliveries of their new A-320neo and 737-MAX families - both of which account for almost half, if not more, of their respective current backlogs," he added.

For travellers, the impact of slowing orders is minimal, analysts said.

On the contrary, with such a strong backlog, mainly from budget carriers that have bought the single-aisle A-320neo and 737-MAX, passenger choice has never been better, they said.

The expansion of airline fleets has caused "airfare wars and driven down pricing", which benefits passengers able to harness far lower prices, particularly with oil prices still trending below US$60 (S$86) a barrel, Mr Saj said.

This article was first published on Jan 10, 2017.
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