Scoot, a subsidiary of Singapore Airlines, now has a long-term deal with Boeing for both aircraft and personnel training. Image: Scoot.

The Boeing Edge in Southeast Asia

ASEAN

The importance of Southeast Asia’s aviation sector to America was recently underscored by a deal inked by Scoot, a budget airline that is a subsidiary of Singapore Airlines, under which its pilots will be trained to fly Boeing 787 Dreamliners over the next five years. The training agreement was signed with Boeing in May, and will see 32 B-787 pilots being trained this year at Boeing’s Singapore training campus. Their pool is expected to grow in the next five years, to keep pace with the expansion of the airline’s fleet. Scoot will begin to take delivery of 20 B-787s later this year.

The airline’s expansion plans are part of the buoyant aviation scene in Southeast Asia. Boeing reports that air travel to, from, and within the region is projected to grow at an average annual rate of 6.7% over the next 20 years, led by 7.5% annual growth in the intra-regional sector. About 70% of new airplane deliveries will be single-aisle aircraft to serve regional destinations.

Pilot training will become increasingly important as a result of these trends. According to projections for the next two decades, there will be a need for 498,000 new commercial airline pilots and 556,000 new maintenance technicians. In Southeast Asia itself, 51,500 pilots and 64,700 technicians will be required.

To be sure, this is where Boeing is making the American difference clear with what it calls the Boeing Edge. This is a comprehensive portfolio of commercial aviation services that include advanced flight, maintenance and cabin safety training.

Travellers will expect higher standards as the aviation sector develops. News agency Reuters said in February that by the end of the year, airlines in Southeast Asia would have 1,800 planes, while their order book is set to exceed the 2,000 mark.

Boeing’s contribution to those standards will help sustain its reputation for reliability. The aircraft manufacturer enjoys a prominent profile in Southeast Asia. At the November 2011 East Asia Summit, when President Barack Obama visited Asia, Boeing clinched a record $22.4 billion deal with Lion Air of Indonesia. The deal was firmed up in February 2012.

Sales to Southeast Asia contribute to Boeing’s ability to create jobs back home. For example, the company announced last year that it would invest $1 billion and create 2,000 new jobs over eight years at its manufacturing complex for the 787 Dreamliner in North Charleston, SC. That is same aircraft that will be joining the Scoot fleet.

However, Boeing does face challenges. Its 2012 annual report notes that the commercial jet aircraft market and the airline industry remain extremely competitive. The company faces “aggressive international competitors who are intent on increasing their market share”, such as Airbus, Embraer and Bombardier, and other entrants from Russia, China and Japan. The persistence of competition is seen in airline deals signed in February by Southeast Asian carriers VietJetAir and Myanmar Airways. According to Aviation International News, while GE Capital Aviation Services and the Myanmar flag carrier signed a $1 billion leasing agreement for 10 Boeing 737-800 and 737 Max models, Vietnam’s VietJetAir entered into a $6.4 billion contract with Airbus. Such competition should potentially spur Boeing on to greater heights, benefiting consumers.

Airline and training deals are an essential part of the economic infrastructure of travel and tourism between the United States and Southeast Asia. More than three million Americans visit ASEAN every year, and visitors from ASEAN countries spend over $4 billion in the US. Thailand, the Philippines, Singapore and Vietnam are the top four ASEAN destinations for American visitors.

Asad Latif is a fellow at the Institute of Southeast Asian Studies (ISEAS) in Singapore.