France is this year’s guest of honor (“Feature Country”) here at the 2016 Singapore airshow. It’s a great opportunity for the French aerospace industry to present its achievements to visitors from around the Asia Pacific region and address the biggest growth market for civil aviation, and an important one for defense.
About 50 French companies will display at the France pavilion during the airshow, including many small suppliers, and in particular, defense Tier 1 suppliers. French industry is led by Gifas, a trade association of 353 French companies in total.
Marwan Lahoud, the current Gifas president, who is also chief strategy and marketing officer for Airbus Group, explained how Gifas planned to help French suppliers enter the Asia Pacific market. “[This market] represents one quarter of the civil market, and the weight of this market is colossal,” Lahoud said during a meeting with the press at the beginning of January.
In order to help develop connections in the region, the smaller French companies are being introduced directly
by the big ones, to help them into the market. This is a group effort, backed up with some help from the French government through their embassy here.
In September, Gifas chose Malaysia’s capital Kuala Lumpur as the hub for a South East Asia French Aerospace Network (SEAFAN), which will, in particular, help smaller companies benefit from the growth in air transport (5.8 percent in 2014). Kuala Lumpur was chosen for its geographical position but also because it will allow the French defense industry to reinforce its strong links with Malaysia’s armed forces. Malaysia represents France’s fourth largest defense market, based on published figures for the past 10 years.
The challenge is crucial for the French suppliers that are currently going through some turbulence, brought on by the ramp-up of Airbus 350 production and the industrialization of the new CFM Leap. (CFM is a joint-venture between GE of the U.S. and France’s Safran).
The French aerospace industry derives 82 percent of its revenues through exports, but only 25 percent of all the suppliers are exporting directly, explained Bertrand Lucereau, president of the Aero PME (small company grouping) of Gifas. He is hoping that SEAFAN activities out of Kuala Lumpur, along with the existing network of French companies in south-east Asia, should help the smaller companies reach a target of 50 percent exporting by 2018. Lucereau also said that he expected a new wave of consolidation among the small French suppliers would start this year (2016).
Singapore itself has been an outstation for the French industry for many years. More than 180 people are working in the city for the “big three” – Airbus Group, Safran and Thales. Meanwhile more and more small companies and suppliers are sending workers to the city-state, spurred by the strong representation of Airbus in the fleet of Singapore Airlines (60 percent of its fleet is European-built). Expanding presence in MRO will also be a major focus for French concerns in coming years.
But ambitions for the French aerospace industry don’t stop in the Lion city-state. Huge contracts have demonstrated that the entire region has need of a strong industry. The regional aircraft manufacturer ATR, whose market here is booming, has installed a pilot training center in Bangkok and the turboprop manufacturer opened a commercial office in Tokyo in 2015, along with an MRO center in Singapore.
For a company such as ATR, co-owned by Airbus and the Italy’s Finmeccanica, Asia has become its biggest market. The manufacturer signed its first ever contract with ANA of Japan during the Paris Air Show. There are currently more ATR aircraft in the Asia-Pacific region than in Europe, consisting of about 350 aircraft operated by 60 airlines. The last frontier for success is China, a complex market for Western companies.
The growing aviation market in the region is whetting industrial appetites. China has been a difficult market to break into, although Airbus has sold many aircraft there over the years. Since the first letter of intent in 2005, Airbus has expanded its footprint in China, with the Tianjin assembly line for A320 family aircraft opening in 2008.
In July 2015, an agreement to extend the Tianjin facility was signed, and a new interiors assembly line for A330s will be installed. All aircraft are destined for the Chinese market. Thanks to this investment, and the technology transfer since the beginning of the collaboration, Airbus has now achieved a 49 percent market share in China, up from 27 percent on 2005.
The latest success is the installation of an assembly line for Airbus Helicopters in Shandong, south of Beijing. The letter of intent was signed in October 2015. Representing an investment of approximately 1 billion euros, the plant will assemble H135 helicopters and provide maintenance for the Chinese fleet. The easing of helicopter regulations since 2013 has convinced the industry that China is the next big market, with demand estimated at between 3,000 and 5,000 rotorcraft over the next 10 years.
Once there is a significant fleet in place and a strong demand, pilots and maintenance technicians will need to be trained. The French national school for civil aviation, ENAC (École Nationale de l'Aviation Civile, based in Toulouse) already has 10 years of experience teaching Chinese students to become pilots and engineers, in collaboration with Tsinghua University. More than 1,000 students have already graduated from the school.
Everyone seems to agree on the likely rate for development of commercial aviation in the region, mainly driven by the annual 14 percent growth of traffic in China. By itself, China is expected to acquire about 1,500 aircraft in the next decade. But the current economic situation in China has cast shadows on the bright prospects. Marwan Lahoud said, “There has been no impact so far from the first market crisis”, but that the industry remains “very careful.” Though the financial and market crises have not affected the backlog and the deliveries so far, the importance of China on prospects for the region could constitute a high level of risk for the industry.