Boeing’s cargo push and flying taxis: Singapore Airshow update

Boeing Co. will add capacity to turn aircraft into freighters in the southern Chinese city of Guangzhou amid strong demand for air cargo and because many passenger jets aren’t being used due to Covid-19.

Boeing has 22 lines worldwide that convert traditional aircraft into freighters, up from 12 at the start of the pandemic, Ted Colbert, the U.S. planemaker’s head of global services, said in an interview with Bloomberg News at the Singapore Airshow on Tuesday.

In a separate interview, Avolon Holdings Ltd. Chief Executive Officer Dómhnal Slattery said cargo has boomed during the pandemic and will continue to be a significant growth driver for airlines over the next 10 to 20 years.

Slattery said demand for electric vertical takeoff and landing aircraft, or eVTOLs, is “exceptionally high” and that Avolon plans to make a “very significant announcement” Wednesday with a “major Southeast Asian player” that could help the leasing company sell out the 500 eVTOL aircraft it ordered last year.

There’s plenty of pent-up demand for aircraft in Asia, which is about two or three months behind the U.S. and Europe in terms of recovery, Slattery said. China’s reopening to international travel could happen in the third or fourth quarter this year, he said.

Earlier Tuesday, Subhas Menon, director general of the Association of Asia Pacific Airlines, said governments in the region need to remove curbs such as pre-flight Covid tests and quarantine to help the aviation industry get back on its feet.

This year “should mark the start of the end of many of the closed borders in Asia Pacific,” Menon said in an interview with Bloomberg Television. While domestic travel in the region is probably already back to pre-pandemic levels, it could take until around 2024 for international travel to recover, he said.

Budget carrier Cebu Pacific is seeing a surge in domestic demand and should be back at pre-Covid levels by the second quarter, Chief Executive Adviser Michael Szucs said.

Held every two years, the Singapore event is billed as Asia’s most influential airshow. More than 13,000 delegates are expected to attend this year, with almost 600 companies participating, including Boeing, Airbus SE and Rolls-Royce Plc. That’s down from the 930 companies and almost 30,000 delegates at the 2020 show, before the pandemic decimated global aviation.

Key Developments

• Lockheed sees overseas income growing on helicopters, fighters
• Airbus sees boom in Asia-Pacific plane demand as virus eases
• Boeing doubles down on converting jets into freighters
• Rolls-Royce to help power electric planes as soon as 2025
• Europe dumping Covid curbs puts its travel rebound ahead of Asia
• Airline plans new squeeze on legroom with record number of seats
• Volocopter aims to have electric flying taxis in Singapore in 2024
• Singapore looks into hydrogen for sustainable aviation fuel

Capital A, formerly known as AirAsia Group, plans to build maintenance, repair and overhaul facilities at Kuala Lumpur International Airport, Chief Executive Tony Fernandes said at a briefing.

The company’s unit Asia Digital Engineering expects to complete construction of the facilities, capable of handling 14 aircraft, within the next two years. It also plans MRO operations in countries such as Thailand and the Philippines.

Fernandes added that the unit aims to raise about 400 million ringgit ($95 million) to help it expand beyond Malaysia.

Airbus, Rolls-Royce, Safran and Singapore Airlines signed a global sustainable aviation fuel declaration in a bid to accelerate the industry’s decarbonization.

They called on the aerospace, aviation and fuel industries to work together on increasing development, production and use of so-called SAF over the next 10 years. Airbus aircraft are certified to fly with 50% SAF, rising to 100% by 2030, according to a statement released at the Singapore Airshow.

Volocopter GmbH plans to start flying electric air taxis in Singapore within two years, and is in talks to offer flights to nearby destinations in Indonesia and Malaysia.

The German firm plans to operate a fleet of 10 to 20 air taxis around the popular tourist destinations of Marina Bay and Sentosa, Chief Commercial Officer Christian Bauer said in an interview at the Singapore Airshow on Tuesday.

As part of its Asian expansion, Volocopter also plans to set up maintenance operations in Singapore and is carrying out a feasibility study on manufacturing the electric vertical take-off and landing aircraft in Asia, including in the city-state.

Sri Lankan Airlines Ltd. is open to bringing in an outside partner considering it “definitely needs to raise some money,” Chairman Ashok Pathirage said during an interview with Bloomberg News Tuesday.

The carrier’s catering and ground-handling services are very profitable and Sri Lankan Airlines, which is controlled by the government, would consider selling parts of those or maybe finding a partner, Pathirage said, adding that the company isn’t talking to anyone at the moment.

Sri Lankan Airlines has also been focused on restructuring and cutting costs, particularly jet leasing costs, which were “enormous,” Pathirage said. The last one to two months have been profitable ones for the carrier, he said.

Because Sri Lanka has such a promising tourism sector, Sri Lankan Airlines is looking at expanding its route network over the next 12 to 24 months as Covid ebbs. The carrier plans to increase its fleet of 24 aircraft to 35 within three years, Pathirage said.

Avolon expects to make a “very significant announcement” on electric vertical takeoff and landing aircraft with a “major Southeast Asian player” on Wednesday, Chief Executive Officer Dómhnal Slattery said in an interview with Bloomberg Television at the airshow, without elaborating.

There is strong global demand for eVTOL aircraft, Slattery said, noting that Avolon has signed deals with American Airlines, Brazil’s Gol and Japan Airlines. The technology is ready for four-seaters with a pilot, but probably a decade or decade-and-a-half away for larger aircraft. “We will definitively get there,” he said. “Demand is exceptionally high relative to supply.”

Boeing is considering adding more capacity to convert passenger jets into freighters, including in China, as demand for air cargo extends into this year.

The 767 freighter conversion line at contractor ST Engineering’s facility will be added in the second half of 2022, Boeing said. The Chicago-based planemaker forecasts 1,720 freighter conversions will be required over the next 20 years. The 767-300BCF, short for Boeing Converted Freighter, has more than 100 orders and commitments from customers, the company said.

“There could be additional lines in the Asia region,” said Ted Colbert, head of Boeing’s global services division. “I see that as a strong place of demand, without a doubt.”

Worldwide, Boeing has 22 lines that convert traditional aircraft into freighters, up from 12 at the start of the pandemic. Seventeen lines are for Boeing 737s and five are for 767s.

The Philippine budget carrier is flying at about 60%-65% pre-pandemic levels this month, and should reach 100% in the second quarter, Chief Executive Adviser Michael Szucs told Bloomberg Television at the airshow.

“That’s a massive change compared to where we were certainly in the early parts of the pandemic,” Szucs said. “It’s a huge relief now that domestic and indeed international is starting to turn.”

“We’re disappointed that the Aerojet deal fell through, we thought there were some great synergies there and benefits for the U.S. government and our international partners,” Lockheed Martin Corp. Senior Vice President Tim Cahill said, referring to the end of a $4.4 billion bid for Aerojet Rocketdyne Holdings Inc.

There are still many other opportunities around, not necessarily through mergers and acquisitions, Cahill said, citing partnerships with companies in Japan, South Korea as well as the Australian government and India.

“We don’t necessarily have to rely on these big mergers,” Cahill said in an interview with Bloomberg Television.

He also said the time is right for an aerial tanker for the U.S. Air Force made in America in partnership with Airbus, calling it a “tremendous opportunity.”

Subhas Menon, the director general of the Association of Asia Pacific Airlines, urged Asian governments to start lifting travel restrictions, which he said have been some of “the most stringent” in the world.

“If you don’t have any restrictions in the domestic economy, why do we have restrictions for international travel,” Menon asked in an interview with Bloomberg Television on the first day of the Singapore Airshow.

“You don’t have to do a test before you step into a shopping center, so why do we need to have Covid tests before we travel? Quarantine should definitely not be there, so these restrictions have to be removed.”

With China and India—two of Asia’s biggest sources of tourists—not yet having announced plans to open their borders, it will probably take until around 2024 for international travel in the region to return to pre-pandemic levels, Menon said.

Boeing said it’s not racing to resume deliveries of its 787 Dreamliner as the company played down the risk that customers waiting for the jet might switch to rival planemaker Airbus.

Stan Deal, president and chief executive officer of Boeing Commercial Airplanes, said the company is in talks with all the affected airlines and indicated he doesn’t expect to lose their orders.

“We hope the power of the product is going to get us through,” he said Monday in Singapore ahead of the air show. “But we don’t take that for granted.” Deal declined to specify when deliveries might restart, adding “we’re not going to rush the process.”