Thursday, December 22, 2016

Bridgestone to build new aircraft tire plants in Thailand

TOKYO—Bridgestone Corp. will expand its aircraft tire business substantially in the coming years, committing $150 million through 2019 to build two aircraft tire plants in Thailand—one for new tires and one for retreading.
The two plants, scheduled to start production in late 2019, will support the group's worldwide aircraft tire solutions system.
Bridgestone did not disclose the location, size, capacity or expected employment for the plants.
Bridgestone has four other tire plants in Thailand: a passenger/light truck tire plant in Nong Khae; a multi-product plant in Ransit; a radial truck tire plant in Chonburi; and an earthmover tire plant in Amata City. Combined, the four plants employ more than 5,000 workers and produce more than 56,000 units daily.
Bridgestone only recently disclosed plans to increase capacity for radial aircraft tires at its 85-year-old plant in Kurume, Japan, to meet what it terms projected "strong medium-to-long-term global demand" for these tires.
Bridgestone also produces radial aircraft tires at its 56-year-old plant in Tokyo, which is dedicated solely to that product, and retreads aircraft tires at plants in China, Belgium, Japan and the U.S. and maintains sales and service companies in those countries as well.
Bridgestone is considered one of five major producers of radial aircraft tires worldwide, along with Dunlop Aircraft Tyres, Michelin, Goodyear and Yokohama Rubber Co. Ltd. China's Sentury Group is also growing in the sector.
Goodyear also recently announced expansion plans for aircraft tires in Thailand, budgeting $162 million through 2018 to add capacity for radial aircraft tires at its car and truck tire plant in Phathumthani, Thailand. The capacity will enhance existing bias-ply aviation tire capacity at the plant.

Friday, November 18, 2016

Aircraft Leasing In Asia - A Tale Of Three Cities

Last Updated: 18 November 2016
Article by Sue Yong
Asia Pacific is gaining prominence in global aviation. Here's what three major hubs – Hong Kong, Labuan and Singapore can offer to lessors.
Amid the gloomy economic outlook on the collapse of oil prices, the global aviation industry is bucking the trend. Over the next two decades, world passenger traffic is expected to grow 4.8% annually. Boeing is forecasting more than 39,600 new aircraft valued at US$5.9trillion will be required to meet growing demand. Airbus is also forecasting the growth in passenger traffic to be at an average annual rate of 4.5%, with passengers to more than double from today's 2.9 billion to 6.7 billion in 2032.
Total air traffic for the Asia Pacific region is predicted to grow at an average of 6%. By 2035, passenger traffic throughout Asia will constitute 48.7% of global passenger air traffic, and an estimated 15,130 aircrafts valued at US$2.35 trillion will be needed to meet this demand. As a result, the number of aircraft in Asia will triple from 6,350 in 2015 to 16,970 by 2035. This represents approximately 38% of all new aircrafts being delivered to airlines that will be based in the region. By 2035, Asia will lead the world in air traffic overtaking Europe and North America.

Aircraft leasing

In order to meet this rapidly growing demand for aircraft, there will be a significant need for aircraft leasing, financing and investment. Among the various types of aircraft financing, lease financing has grown substantially over the years. Currently approximately 35% of the global air fleet are financed with leases, compared to less than 1% 40 years ago.
Such an increase in aircraft demand and reliance on lease financing has presented an attractive opportunity for many aircraft lessors to consider using aerospace and leasing hubs in Asia Pacific.
Let's take a look at the three hubs of Hong Kong, Singapore and Labuan.

Hong Kong

Hong Kong holds the prominent position of international financial, trading and transportation centre, with a well-developed legal system. With its unique relationship with China, Hong Kong is well positioned for aircraft leasing companies to set up operations.
Currently a Hong Kong-based aircraft lessor is generally taxed on any lease rentals derived from the lease of aircraft entered into. The lessor is not entitled to claim tax depreciation on the cost of the aircraft, if it is leased to non-Hong Kong-based airlines. Therefore the Hong Kong lessor is taxed on its gross rentals rather than profits arising from the leasing transaction at a rate of 16.5%, which is deemed to be unattractive.
However, Circular No. 108 (Opinions on Accelerating the Development of the Aircraft Leasing Industry issued by the State Council of the People's Republic of China in 2013) provides specific policy measures to promote the development of the Chinese aircraft market. It is expected that the government will revise the tax rules and create conditions more conducive to the development of aircraft leasing, financing and investment businesses in Hong Kong.

Singapore

Singapore has grown as a global transportation centre and a leading international maritime centre, largely due to the general features of the tax system, extensive double tax treaties with more than 75 countries, as well as the targeted tax incentives such as the Aircraft leasing Scheme (ALS).
Under the ALS incentive, an approved aircraft leasing company may be granted a concessionary tax rate of 5% or 10% on qualifying income (headline rate is 17%) and an automatic withholding tax exemption for interest and qualifying payment on loans obtained before March 31, 2017 to finance the purchase of aircraft or aircraft engine. Furthermore, depreciation of aircraft can be made over any number of years from of 5 to 20 years.
However, as the ALS is a concessionary scheme up to 31 March 2017, it will be interesting to see whether the scheme will be extended or further enhancement will be made.

Labuan

Labuan, a mid-shore jurisdiction in Malaysia that was established as an international business and financial centre in 1990, has gained popularity as a leasing jurisdiction for both maritime and aviation sectors.
Labuan offers a tax rate of 3% or a flat rate of RM$20,000 (approximately US$5,000) on the leasing company's net audited profit. The jurisdiction is also riding on Malaysia's double tax agreements (DTA) with 73 countries, except for certain countries which have specifically excluded Labuan from the Malaysia DTA.
Labuan requires all leasing companies to be licensed with Labuan Financial Service Authority (FSA).
To capture this lucrative aviation leasing business, each jurisdiction has been keen to make reforms and changes in taxation, and create conducive environments to attract global lessors to their shores to set up operations. Stay tuned for developments in the near future and to see how the competition will pan out.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Tuesday, September 13, 2016

Boeing Forecasts Demand in China for 6,810 Airplanes, Valued at $1 Trillion

China becomes world's first trillion dollar aviation market
Single-aisle demand accounts for 75 percent of new deliveries
China's wide-body fleet to triple in size over the next two decades
BEIJING, Sept. 13, 2016 /PRNewswire/ -- Boeing (NYSE: BA), China's leading provider of commercial airplanes, projects a demand for 6,810 new airplanes in the country over the next 20 years. Boeing released its annual China Current Market Outlook (CMO) today in Beijing, estimating the total value of those new airplanes at $1.025 trillion. China becomes the first trillion dollar aviation market in Boeing's forecast.
"As China transitions to a more consumer-based economy, aviation will play a key role in its economic development," said Randy Tinseth, vice president of Marketing, Boeing Commercial Airplanes. "Because travel and transportation are key services, we expect to see passenger traffic grow 6.4 percent annually in China over the next 20 years."
Boeing predicts China will need 5,110 new single-aisle airplanes through 2035, accounting for 75 percent of the total new deliveries. Low-cost carriers and full-service airlines have been adding airplanes and expanding new point-to-point services to cater for both leisure and business travel demand from a rising middle class in China and throughout Asia.
Tinseth said the backlog from Chinese customers demonstrates that the new 737 MAX 8 and the current Next-Generation 737-800 are at the heart of the single-aisle market.
Boeing forecasts the widebody fleet will triple in size, requiring 1,560 new airplanes such as the 787, 777 and 777X.  This year's forecast reflects a continued shift from very large airplanes to efficient new small and medium widebody airplanes.
China's single-aisle fleet currently accounts for about 18 percent of global single-aisle aircraft; however, China's widebody fleet only represents approximately 5 percent of the global widebody segment.
"The continuing expansion of China's middle class, coupled with new visa policies and a wide range of widebody airplanes with new technologies, capabilities and efficiencies, gives us every reason to expect a very bright future for China's long-haul market," said Tinseth.
Driven by China's growing e-commerce business – already the largest in the world – air cargo is expected to become a key driver for the continuous growth of aviation in China, with the need for 180 new freighters and 410 converted freighters.
New Airplane China Deliveries Through 2035

Airplane type
Seats
Total deliveries
Dollar value
Regional jets
90 and below
140
$10B
Single-aisle
90-230
5,110
$535B
Small wide-body
200-300
870
$240B
Medium wide-body
300-400
630
$220B
Large wide-body
400 and above
60
$20B
Total
-----------
6,810(17% of world total)
$1.025T(17% of world total)

Worldwide, Boeing projects investments of $5.9 trillion for 39,620 new commercial airplanes to be delivered during the next 20 years. The complete forecast is available at www.boeing.com/cmo.
Today, Boeing jets are the mainstay of China's air travel and cargo system. More than 50 percent of all the commercial jetliners operating in China are Boeing airplanes.
Meanwhile, China has a component role on every current Boeing commercial airplane model – the Next-Generation 737, 747, 767, 777, as well as the world's most technologically advanced airplane, the 787 Dreamliner. Over 9,000 Boeing airplanes fly throughout the world with integrated China-built parts and assemblies.
Contact:
Yukui Wang
Boeing China Communications
+86 10 5925 5505
yukui.wang@boeing.com

SOURCE Boeing