Airports gear up for increased air traffic with ASEAN Open Skies deal

Airlines and airports in the region are gearing up for increased air traffic when the ASEAN Open Skies agreement takes off next year.

While liberalisation could mean more competitive pressure on Singapore's status as an aviation hub, analysts said this will provide a boost to the country's maintenance, repair, and operations (MRO) cluster.

ASEAN airlines are estimated to take delivery of 3,000 new commercial aircraft by 2032.

This represents a market of around S$630 billion for aircraft equipment manufacturers.

Analysts said the growth in fleet capacity is partly driven by the impending ASEAN Open Skies policy, as airlines position themselves for new routes and increased air traffic.

And this is expected to benefit Singapore's MRO cluster.

Singapore currently accounts for more than a quarter of MRO output in Asia Pacific.

Mr Rajiv Biswas, Asia-Pacific chief economist at IHS, said: "Tremendous momentum is continuing in Singapore, as a hub for the aerospace industry. We've seen the announcement of a number of new manufacturing facilities in Singapore, and also the MRO-related operations in Singapore is also going to be growing very rapidly, because of the growth of the airline industry in Asia Pacific."

Over the next 20 years, almost half of the world's air traffic will be driven by travel to, from, and within the Asia Pacific region.

This means the number of airplanes in the Asian Pacific fleet will nearly triple.

The liberalisation of the aviation market will mean keener competition among regional airlines, in particular low-cost carriers such as Lion Air, Tigerair and AirAsia.

For consumers, this could translate to lower prices.

Analysts said it could also generate greater competition among Southeast Asian airports.

Mr Chris De Lavigne, Global Vice President of Industrial Practice at Frost & Sullivan, said: "Airports in the region have to build facilities, or upgrade their current facilities, to become world-class airports, to ensure a seamless and enjoyable experience for the passengers. So there's no doubt that capacity has got to be there, and secondly, these facilities have to be top-notch to ensure that they attract the passengers to go through them."

While governments, airport operators and airlines gear up for Open Skies - there remains divisions over some issues.

Indonesia, which accounts for almost half the population in ASEAN, appears resistant to fully opening its markets.

Some analysts say the single aviation market is unlikely to be realised in substance by 2015.

SOURCE