TransportBT: Aviation’s supply chain turbulence
THE intricate world of aviation is a sector that has faced unprecedented challenges in recent years. The latest episode of TransportBT by The Business Times hosted by correspondent Derryn Wong, brings you exclusive insights from the 69th Assembly of the Association of Asia Pacific Airlines, held in Brunei. The focal point? Supply chain woes that are plaguing the airline industry.
In a panel discussion moderated by Wong at the event, he highlighted that the discussion didn’t stick to the expected future of air travel - instead, it veered into a critique of supply chain inefficiencies.
Unpacking the aviation supply chain crisis
CEOs of Air Astana, Malaysia Airlines, Singapore Airlines, and Thai Airways spoke of airlines in the Asia-Pacific region grounding planes and cutting flights due to delayed deliveries or defective parts from suppliers.
Raul Villaron, the senior vice president and head of region for Asia-Pacific at Embraer, the leading Brazilian aircraft manufacturer, joined the correspondent for a deep dive into the current market conditions. Embraer stands out in a crowded marketplace for its relatively punctual deliveries and its fresh perspectives on breaking into the Asia-Pacific market.
Meeting airline demands amidst industry chaos
Dive deeper, and you’ll understand the pivotal moments in Embraer’s history, from its origins in 1969 to its significant growth post-privatisation in 1994. Villaron emphasises his company’s focus on engineering, crediting its success to a highly educated workforce of thousands of engineers who ensure the highest standards in aircraft production.
The podcast doesn’t shy away from the pressing issue - what’s wrong with the aviation supply chain? Villaron dissects the problem, attributing the turbulence to a supply-demand mismatch exacerbated by Covid-19. Small and large suppliers alike are struggling to keep pace with the sudden spike in demand, leading to widespread delays.
Strategic expansion in Asia
An intriguing aspect discussed is the concentration of suppliers in the aviation industry, which heightens the impact of any single point of failure. Villaron explains how essential components like engines and landing gears come from a handful of suppliers, posing a significant risk.
Shifting gears, the conversation moves to the burgeoning regional market within Asia. Scoot, a subsidiary of Singapore Airlines, has already begun integrating Embraer’s aircraft into its fleet, with nine aircraft ordered. The expansion includes new routes to popular destinations like Koh Samui and Phu Quoc, reflecting increasing regional connectivity.
Future of aviation in Asia-Pacific
Delving into the concept of right-sizing - airlines could be looking to use smaller planes to either increase flight frequency or optimise capacity, thereby boosting profitability.
The podcast explores the future of aviation in the Asia-Pacific region. From India’s fast-growing market led by Star Air to the extensive archipelagos of Indonesia. The region’s rapid urbanisation and the rise of low-cost carriers are expected to further drive demand for flexible, efficient aircraft.
Listen now to TransportBT, as this episode sheds light on both the challenges and opportunities in the aviation sector.
Stay tuned to TransportBT for more insightful discussions. Next week, BT Correspondents will delve into the property market. For thoughts or questions, contact us at btpodcasts@sph.com.sg.
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Written and hosted by: Derryn Wong (derrynwong@sph.com.sg)
With Raul Villaron, senior vice president and head of region for Asia-Pacific, Embraer
Edited by: Emily Liu & Claressa Monteiro
Produced by: Derryn Wong & Emily Liu
Engineered by: Chai Pei Chieh
A podcast by BT Podcasts, The Business Times, SPH Media
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