Source: Straits Times - 15 Oct 2008
THE development of Seletar Aerospace Park will proceed as planned despite the challenges facing the aviation industry.
This is because Singapore is confident of the long-term prospects of the aerospace sector, which deals mainly with the maintenance, repair and overhaul (MRO) of aircraft and parts, said Mr S. Iswaran, Senior Minister of State for Trade and Industry.
‘In spite of the near-term slowdown in the industry, we are committed and determined to proceed with infrastructure works at Seletar and with the extension of the runway,’ he said.
‘This will position us well for the upturn, when it comes.’
Indeed, the slowdown offers Singapore a good opportunity to ‘prepare the infrastructure and manpower capabilities needed for future growth’, added Mr Iswaran, who was speaking at the opening of MRO Asia 2008, which has attracted a record turnout of about 2,000 delegates from around the world.
The decision to transform Seletar Airport and its surroundings into a 300-ha aerospace hub was announced in 2006 and work has already started on Phase I of the project. Some of the biggest industry players are involved. Engine-maker Rolls Royce is building a $320 million engine assembly and test facility.
Rival Pratt & Whitney is also building its own facility while Singapore Technologies (ST) Aerospace has expanded its existing premises.
As part of the development, which will be completed by 2018, the Civil Aviation Authority of Singapore is extending the runway to accommodate bigger business jets and planes like the Airbus 320 and Boeing 737.
Singapore’s aerospace sector has a strong growth record, with a 13 per cent annual compounded growth rate since 1990. Output hit a record $6.9 billion last year, 10.4 per cent up on a year earlier.
Experts said it will be a while before the actual impact of the slowdown in the air traffic sector on the MRO industry can be assessed.
SIA Engineering Company (SIAEC) for one, remains upbeat. President and chief executive William Tan, who spoke on the sidelines of the conference at Suntec City, said the company does not expect to be significantly hit by the financial crisis.
‘We are reasonably comfortable that we can respond under any circumstances. For the moment, there is still a very strong demand for MRO services and I do not see, certainly not for the near term, any reason for concern,’ he added.
SIAEC is to some extent ’sheltered from this current turmoil’ because of the profile of its customers and a good mix of aircraft models that it can service.
A key customer is Singapore Airlines, which operates a fleet of modern aircraft including the Airbus 380 and Boeing 777-300ER.
Mr Tan said: ‘In a downturn, when airlines cut capacity and ground planes, it is the older less-efficient aircraft that end up getting parked.’
What also gives SIAEC an edge over rivals is that there are few service providers that have the capacity and capabilities to work on new-generation aircraft.
The 50 per cent fall in the firm’s share price this year is also not worrying Mr Tan: ‘We have always taken the approach that we will focus on just doing the business right and then I’m sure in time, people will understand the strength of the business and it (the share price) will pick up.’
SIAEC closed three cents up at $2.25 yesterday.
NO WORRIES YET
‘We are reasonably comfortable that we can respond under any circumstances. For the moment, there is still a very strong demand for MRO services and I do not see, certainly not for the near term, any reason for concern.’ - SIA Engineering Company president and chief executive William Tan
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