Deals take off at Hong Kong airshow

By Sharanjit Leyl
Business reporter, BBC News, Hong Kong

From the manufacture of wing tips to the upholstery that goes on to the seats, planes mean big business - and it is getting even bigger.

Asia's biggest airshow is a newcomer to Hong Kong

Five hundred companies from more than 20 countries, as well as 10,000 trade visitors, are at Hong Kong's Asian Aerospace show this week to strike deals that will shape the future of Asia's aviation industry.

And much of it seems to be focused on China. One of the mainland's big three carriers is already celebrating a $1bn deal with Singapore Airlines signed earlier in the week.

It will bring finance and know-how to China Eastern Airlines, which is based in Shanghai. It also shows the direction the industry's big players are looking.

According to Vincent Liu, the manager of service standards at China Eastern, there is increasing demand for travel within China and more foreigners are flocking to the mainland.

It means the airline business is "increasing vastly, especially for China Eastern", he says.

One of the supporting organisers of this year's Asian Aerospace is also keeping a keen eye on the mainland.

Martin J Craigs, president of Aerospace Forum Asia, says: "The centre of gravity has moved north over the last 20 years.

"China is a big market that's growing - 180 million passengers right now and 780 million in 20 years. That's a new aircraft delivered every two-and-a-half days for 20 years."

Eastern gateway

But the market is not without risks. Already the Chinese government is placing limits on the number of flights over the mainland, because of fears that too much demand could overwhelm the existing infrastructure.

That is perhaps partly why Asia's biggest airshow has chosen to move to the relatively new surroundings of Hong Kong's international airport, after having spent nearly two decades in Singapore.

Tony Tyler - the newly-installed chief executive of Hong Kong's biggest airline, Cathay Pacific - is trying to turn Hong Kong into a stronger hub and gateway to China.

Cathay Pacific has been extending its routes in mainland China

He contends there are still challenges to rival Shanghai, which is quickly becoming a vital business destination.

"Shanghai's a huge city, it's clearly going to be a major city," he says.

"But as an aviation hub, it has disadvantages, as the domestic and international operations operate out of essentially two different airports. That prevents it from being an effective hub for mainland China."

Still, many of the plane manufacturers and suppliers who have come from countries as far afield as Romania and Canada have one thing on their minds - courting China.

Hong Kong, in its role as gateway to the world's fastest-growing economy, may provide an essential link now.

But critics predict that the Asian Aerospace show may well move again, to Beijing or possibly even Shanghai.