October 7, 2024
BANGKOK – The two-day event, which concluded on Thursday (October 3), showcased how this expansion is expected to create numerous investment opportunities across the aviation sector, from infrastructure to technology and services.
With more than 300 public and private sector officials attending from Asia and Europe, the summit highlighted the region’s aviation sector as a prime opportunity for global investors, particularly in ASEAN countries.
Magnet for investment
The summit highlighted how the region’s robust aviation growth is creating numerous investment opportunities across the value chain, from aircraft manufacturing to airport infrastructure and support services.
Benoît de Saint-Exupéry, Airbus executive vice-president of commercial aircraft sales, emphasised the region’s investment potential.
“Aviation is a growth sector,” he stated, forecasting that the global aircraft fleet will more than double to 48,000 by 2045, with Asia Pacific leading this expansion.
“Our aircraft have provided the wings for economic growth and development in the country,” de Saint-Exupéry noted, citing the Philippines as an example of the region’s potential.
He highlighted how new infrastructure, such as Manila’s new airport, serves as “an essential enabler of this growth” that will attract further investment and economic activity.
Economic impact and growth forecasts
Yuli Thompson, Area Manager for Southeast Asia at the International Air Transport Association (IATA), presented compelling data supporting the region’s investment case.
“There is never a dull moment in the airline industry,” she noted, highlighting the significant momentum in the post-pandemic recovery.
Thompson reported that “The ASEAN region’s average recovery has hit more than 90%, with Vietnam being the only country to fully recover both domestic and international travel.” This rapid recovery signals the region’s resilience and growth potential to investors.
Despite cautioning that full recovery might extend to 2025, Thompson emphasised the long-term investment opportunity.
“In Asia Pacific, we project a modest profit of US$2.2 billion for 2024,” she explained, suggesting significant room for growth and investment returns as the market matures.
Infrastructure development opportunities
The summit identified infrastructure development as a key area for foreign investment. With passenger traffic expected to grow well above 5% annually in many ASEAN countries, significant investment in airports, maintenance facilities, and supporting infrastructure will be required.
Currently, several airport development projects are underway in the ASEAN region.
U-Tapao Airport is being transformed into a major international gateway as part of Thailand’s Eastern Economic Corridor (EEC) initiative, which aims to boost high-tech industries, logistics, and tourism by establishing new industrial zones and upgrading infrastructure.
In Vietnam, the Long Thanh International Airport project aims to relieve congestion at Tan Son Nhat International Airport, with the new facility capable of accommodating 100 million passengers per year.
Meanwhile, Indonesia’s New Capital City project aims to relocate the capital from Jakarta to East Kalimantan, with government buildings, residential areas, and supporting infrastructure.
Additionally, Malaysia’s Melaka Gateway project includes a deep-sea port, an international cruise terminal, and a maritime industrial park, while the Philippines is expanding Clark International Airport to accommodate more international flights and passengers, as well as accelerating the upgrade of Ninoy Aquino International Airport (NAIA) through a Public Private Partnership.
While these airline developments require FDI support for infrastructure and facilities, Thompson advocated for viewing digitalisation as an investment opportunity.
“Digitalisation will improve passenger experience while increasing operational efficiency without the need for new terminals or airports,” she said, citing potential returns from technology investment in the sector.
Business aviation: Growing niche for investors
Kurt Edwards, Director General of the International Business Aviation Council, highlighted the investment potential in business aviation, particularly in archipelagic ASEAN nations.
“One size does not fit all. It’s imperative that global standards reflect the unique contexts of small aircraft operators and businesses,” Edwards stated, emphasising the diverse investment opportunities within the sector.
The Philippines, holding 19% of Southeast Asia’s business aircraft fleet, exemplifies the growing business aviation market in ASEAN.
“Business aviation has consistently been a leader in striving for efficiency and lower emissions long before it became a mainstream topic,” Edwards noted, suggesting potential investment opportunities in sustainable aviation technologies.
The three experts also agreed that the industry’s expansion presents significant opportunities for workforce development investment.
According to projections, the Asia Pacific region will require nearly one million new skilled professionals over the next two decades, including pilots, technicians, and cabin crew members.
De Saint-Exupéry stressed, “We must focus on developing and nurturing the talents that will lead our industry into the future,” highlighting potential returns for investors in aviation training and education facilities.
Sustainability: the next investment frontier
Despite aviation contributing only 2-3% of global emissions, the sector’s commitment to sustainability presents another investment opportunity.
“We have a duty to ensure that future generations can experience the joy of travel,” de Saint-Exupéry affirmed, noting that “Every aircraft we replace today is an instant contribution to the sustainability goal we all share.”
This focus on sustainability, including investments in sustainable aviation fuel (SAF) and modern, fuel-efficient aircraft, represents a significant opportunity for environmentally conscious investors.
Outlook for investors
As the Asia Pacific aviation sector navigates post-pandemic recovery and addresses various challenges, the investment outlook remains highly positive. The consensus amongst summit attendees was clear: whilst obstacles remain, aviation in the region presents compelling opportunities for foreign direct investment.
However, the disparity in GDP per capita makes it challenging for Asian markets to pass on higher costs to consumers, which can discourage investment and stifle growth.
Thompson and Edwards emphasised the importance of prudent investment in infrastructure and industry to ensure long-term growth while keeping prices affordable for consumers.
They agreed with other key speakers that maintaining this balance is critical, as rising operational costs must not exceed the spending capacity of the region’s price-sensitive markets.
Furthermore, it was suggested that governmental policies be clarified and aligned to foster a more favourable investment environment, as this will encourage both domestic and foreign investments required for ASEAN’s aviation industry to advance.
Success will depend on collaborative efforts between governments, airports, and industry stakeholders to ensure this growth is both smart and sustainable. As Thompson concluded, “With great power comes great responsibility,” suggesting that responsible investment in the sector will yield both financial returns and contribute to the region’s economic development.