The global aviation industry’s #1 airshow, the Farnborough International Airshow, has opened with a bang as Boeing and Airbus received $17 billion dollars in orders on the first day alone.
There’s been a clear rebound in orders, even if nobody expects this year’s show to achieve 2008’s all-time high of $88.7 billion.
Still, most are optimistic that the industry bottom is past nevertheless, according to airshow reports.
Yet what’s interesting is that Western governments are actually paring back their military budgets due to debt pressures… which means the rebound has been driven by particularly healthy commercial demand:
Commercial and military are in sharp contrast — the private sector is spending more freely than it has in the past two years, while Britain’s defence secretary, Liam Fox, was expected to outline plans to cut procurement spending and demand better value for taxpayers’ money at the Farnborough Airshow.
British business secretary Vince Cable said on Monday painful cuts in the defence budget were imminent, and other European countries have made clear their own defence expenditures were under some of the closest scrutiny ever.
It has also put more focus on commercial sales, particularly from new markets likely to be growth drivers for the sector in coming years.
Or at least emerging markets commercial demand…
“Demand from airliners as opposed to lessors is mainly coming from Asia, South America, Middle East and even Russia, which are all considered growth markets,” said Howard Wheeldon, senior strategist at BGC Partners.
“My question is, where are the European and American orders? Will they be here in the next two years? That is unlikely. The airline industry is better than it was but it is still not fit for purpose,” he said.
…which makes this airshow a microcosm of the global economy’s latest growth stage — There’s healthy demand, and there’s growth, yet emerging markets are leading the rebound.
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