Airbus says military demand to grow amid Asia tensions

Airbus Group expects to see growing demand for military aircraft in Asia amid simmering tensions in the South China Sea and other areas.

The Asian market for defense and space-related business could grow to about $50 billion a year within the next five years, from $45 billion now, said Christian Scherer, executive vice president for marketing and sales at Airbus Defense &Space, the planemaker’s defense unit.

Countries across Asia are stepping up military spending as China asserts claims to disputed territories and resources. Japan has also boosted its defense budget for three years straight as the government seeks to ease pacifist constraints imposed by the country’s post-World War II constitution.

Asia’s market for defense-related aircraft “is not only the second-largest in absolute numbers, but also the fastest- growing” in the world, Scherer said in an interview Wednesday in Langkawi, Malaysia. Needs range “anywhere from surveillance aircraft, small surveillance aircraft, maritime patrol aircraft, electronic warfare-type airplanes – all the way up to big logistic aircraft, fighters, tankers.”

In recent years, Asian countries including Singapore and South Korea have ordered fighter jets, submarines, transport aircraft and patrol vessels to strengthen their defenses.

Last week Airbus delivered the first of four A400M transport planes to Malaysia, the first country outside Europe to have them. The aircraft has been on display this week at The Langkawi International Maritime &Aerospace Exhibition.

Airbus soon will deliver the first of three C295 aircraft to the Philippines, Scherer said.

South Korea plans to buy as many as six military transport planes, with a decision on exactly what to buy expected by mid- year, Scherer said. Airbus hopes to sell its A330 multi-role tanker transport plane, but is competing for the bid against Boeing Co. So far, in the Asia-Pacific region only Australia and Singapore have bought this Airbus plane.

The company also is partnering with Korean Air Lines Co. on its bid to develop a South Korean jet fighter, Scherer said, with Airbus set to provide engineering assistance on the project. Korean Air, the country’s largest carrier, provides components for Airbus’s A320 and Boeing’s 777 commercial planes.

Airbus also expects demand to grow for observation and communications solutions using its satellites, after the disappearance of a Malaysian Airlines System Bhd plane a year ago intensified calls for better tracking systems, Scherer said.

The company is in “very advanced discussions” with several countries to equip their armed forces with observation and communications solutions, Scherer said.

Earlier this week, Airbus said it will move one of its satellites over the eastern Asia-Pacific region, which includes Australia, providing a secure communications capability in the region.