On Tuesday, the second day of the 2016 Farnborough Air Show, Air Asia, the region’s biggest discount carrier, agreed to buy 100 planes from Airbus to meet burgeoning travel demand on the continent in a statement at the Farnborough Air Show outside London.
The 100 planes in this deal are A321neos, jointly valued at $12.6 billion based on list prices. Although discounts are customary in the industry, Air Bus still claimed that the purchase brings Air Asia’s total orders for A320-series planes from the European manufacturer to 575 aircraft.
Air Asia, already the biggest single-aisle aircraft customer for Airbus, is increasing its bet that economic growth from India, China and Vietnam will spawn millions of new fliers in the world’s most populous continent. Air Asia Group Chief Executive Officer Tony Fernandez, 52, has built a pan-Asian budget airline that has grabbed market share from full-service carriers like Singapore Airlines Ltd. and Malaysia Airlines Ltd.
“The Asia Pacific is going to account for at least a third of all aircraft demand over the next 20 years” based on plane makers’ forecasts, said Simon Elsegood, an analyst at CAPA Centre for Aviation in Sydney. “There’s particularly strong demand for intra-regional connectivity in Southeast Asia and North Asia, and then there’s very, very strong demand within China itself for domestic flights.”
Boeing had earlier taken a lead over Toulouse, France-based Airbus with a spate of morning accords involving carriers in China and tour operator TUI AG.
Boeing’s orders on the expo’s first day were also been dominated by China, with Xiamen Airlines agreeing to take 30 Max 200s, a high-density version of the Max 8, with a value of $3.39 billion, and Donghai Airlines signing an outline deal for 25 Max 8s worth $2.75 billion and five 787-9s priced at $1.32 billion.
Airbus’s first day was marked by Richard Branson’s Virgin Atlantic Airways Ltd. signing a long-awaited deal for 12 A350-1000s valued at $4.4 billion, including four to be sourced from Air Lease Corp. Air Lease separately announced orders for three A350-900s and an A321, and Jetstar Pacific of Vietnam signed an outline accord for 10 current-generation A320s.
However, following on from an accord to sell 72 A320neos to Go Airlines India Pvt., the blockbuster deal takes Airbus’s Farnborough tally to 223 aircraft valued at $28.3 billion. That’s more than double the 121 orders worth $13.7 billion at Boeing, excluding the signing of final terms on a 747 deal already announced.
Discount airlines in the region are expanding amid a surge in demand. Asian carriers are making the running at Farnborough as economic growth spurs demand for new routes and extra frequencies.
Home to the world’s fastest-growing major aviation market, India posted 20 percent growth in air travel last year, according to the International Air Transport Association. In comparison, passenger traffic in China rose about 10 percent and less than 5 percent in the U.S., IATA said in a December presentation.
The trend is prompting low-cost operators that have already amassed large order backlogs to add even more planes, with India’s Spice Jet Ltd. also weighing an order for as many as 100 737s or A320s, though not certain to reach a decision this week.