Farnborough Airshow and the prospect of aircraft competition
Ekelem Airhihen, a trained mediator, chartered accountant, certified finance and IT consultant, certified in policy and public leadership, and an airport customer experience specialist, has an MBA from the Lagos Business School. He is a member, ACI Airport Non-aeronautical Revenue Activities Committee; and is certified in design and implementation of KPI for airports. He can be reached on ekyair@yahoo.com and +2348023125396 (WhatsApp only)
August 14, 2024395 views0 comments
The Farnborough International Airshow is one of the world’s leading aerospace events. It puts on display the latest advancements in aviation, aerospace, and defence industries. It also provides a platform for industry leaders to connect, engage, and pioneer change.
Each year, aircraft manufacturers such as Airbus and Boeing, which constitute the two halves of the global aircraft duopoly, put their product offerings on display at this very prestigious airshow. Despite the formidable barriers to becoming a maker of large passenger planes, China’s determination to become an aerospace superpower may signal the entry of another manufacturer that would present new opportunities for the aviation sector in Africa.
Also, African countries and companies have increasingly participated in the Farnborough Airshow to showcase their capabilities, explore partnerships, and attract investments. The Airshow offers African nations an opportunity to highlight their growing aerospace sectors and engage with global industry leaders.
The Chinese government has reportedly handed over around $70 billion in subsidies to COMAC (Commercial Aircraft Corporation of China), which is the country’s state owned aerospace champion, to develop the C919 which is a narrowbody rival to the 737 MAX and A320 family. This model made its first flight in 2017, and COMAC has now reportedly delivered six of the planes to customers with orders for over 1000 more.
There are further reports that it is developing the C929, a model that was on display at Farnborough. This long- haul plane is expected to compete with Boeing’s Dreamliner and Airbus’s A330. The Chinese Aircraft Corporation is also said to be developing the C939 to meet with the larger Boeing 777 and Airbus A350. There is also the Russian MC-21, which is a narrowbody jet from the United Aircraft Corporation of Russia, and which is reported to possibly begin commercial service next year. The Embraer, a Brazilian aerospace company is also being rumoured to be having plans towards its own planes. So the stage is being set for competition.
The rising demand for air travel has provided a stage for this competition. Reports from Boeing point to the fact that over the next twenty years the global fleet of passenger planes will need to double to meet the growing global inclination towards air travel such that about 44,000 new aircraft will be required.
Increased competition can lead to better pricing and innovation. African airlines battling with the challenges of aircraft acquisition will now fathom the prospects of increased competition into their negotiation strategy. Negotiation with a monopolist offers less options as when there are other competitors to deal with. It increases the possibility of other fall back options as a best alternative to a negotiated agreement. Innovation resulting from competition improves the global aerospace industry.
For airlines, especially in emerging markets, they are provided with cost-effective options for fleet acquisition. However, acquiring new fleet maintenance facilities as well as the economies of scale required are a major consideration for all stakeholders involved in the acquisition decision. This will lead to more opportunities for business as well as employment in Africa. Opportunities for cost reduction are levers that African airlines will find useful in the emerging global competition for passengers as well as the need to deepen the market penetration of air travel intra Africa.
Diversifying the global aerospace supply chain as a result of competition, reduces dependency on a few major suppliers and as such provides resilience against disruptions. Supply chain challenges have resulted in delays to aircraft deliveries. For instance, at current production rates, experts estimate that it will take Airbus nearly twelve years to produce the 8600 planes which it has on its order books, and, same applies to Boeing to be able to meet 6,150 unfilled orders.
Chinese manufacturers are targeting emerging markets in Africa and Asia, providing these regions with access to modern aircraft. This helps in the development of aviation infrastructure and connectivity in these areas. Also, the new movement into Africa by the Russians is a pointer that there would be opportunities for collaboration with the continent on improving the aviation sector in Africa. This will enhance economic growth by creating jobs, fostering innovation, and attracting foreign investments. This growth will have positive ripple effects on the economy of African states.
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