Asia’s aviation industry is entering 2026 with confidence, underpinned by a solid rebound in passenger demand and a steady cargo market. Carriers across the region, according to data from the Association of Asia Pacific Airlines, transported more than 390 million international passengers in 2025, up 9.4% year on year. Revenue passenger kilometres rose an even stronger 11%, reflecting the continued recovery of long-haul services, alongside robust intra-Asia travel.

Impacted by US tariffs air cargo has been less spectacular, but remained resilient with international freight traffic growing 5.6% as airlines adapted to shifting trade routes and continued e-commerce demand.

Despite higher fuel costs, supply-chain friction and persistent geopolitical uncertainty, Asia-Pacific airlines have shown discipline in capacity management and cost control, while selectively expanding networks to match demand.

It was against this backdrop that industry leaders, financiers and defence planners gathered at the Singapore Airshow 2026. Confidence, rather than caution, was the prevailing tone.

Asia-Pacific is expected to remain the global aviation growth engine, according to Airbus’ latest long-term outlook, accounting for nearly half of worldwide aircraft demand over the next two decades. The region is forecast to require around 19,560 new passenger aircraft, with traffic growth of 4.4% per year, well above the global average.

Yet, while the show delivered a familiar mix of aircraft orders, defence hardware and futuristic concepts, it also exposed an imbalance: commercial and military aviation are accelerating, while practical and meaningful action on decarbonization remains stubbornly slow.

Vietnam moves centre stage

One of the most eye-catching announcements did not involve aircraft at all. Vietnam used the Singapore Airshow to stake a claim as a future aviation finance hub, unveiling plans for the Asia-Pacific Aviation Financial Hub ( AAFH ).

Backed by Vietjet and the Vietnam International Financial Centre, the initiative aims to position Ho Chi Minh City as a regional centre for aircraft financing, leasing, capital markets and maintenance-linked investments.

The ambitious pitch envisions liberalized capital flows, flexible cross-border structures, competitive tax treatment and a “one-stop” ecosystem linking finance, logistics, training and free-trade services.

The goal is to facilitate US$50 billion in aviation-related transactions by 2035, effectively inserting Vietnam into higher-value segments of the regional aviation value chain. Both Airbus and Boeing have been granted honorary strategic AAFH memberships, while engine makers and lessors are being invited to join the new business hub.

For Vietnam, it no longer wants to be seen solely as a fast-growing aviation market, but as a financial and structuring bridge between global capital and Asia’s expanding fleets.

Commercial deals: no mega-orders

The commercial aircraft announcements at Singapore did not reach the blockbuster scale seen at some Middle Eastern shows, but they were strategically significant, particularly for Southeast Asia.

Boeing led early with an order from Air Cambodia, which committed to 10 737-8 aircraft, with options for a further 10. For the Phnom Penh-based carrier, this represents its first move into Boeing aircraft and a decisive step towards longer-range, higher-efficiency, single-aisle operations.

At list prices, the deal would exceed US$1 billion, but industry-standard discounts for a first-time customer of this size suggest a realistic firm order value in the range of US$540 million to US$610 million. If all options are exercised, total commitments could push beyond US$1.1 billion. While modest by global standards, the order underlines Cambodia’s ambition to deepen regional connectivity and compete more effectively on medium-haul routes.

Vietnam’s low-cost carrier Vietjet was also active, signing a series of agreements valued at roughly US$6.1 billion. These included engine deals with Pratt & Whitney to power 44 A321neo and A321XLR aircraft, alongside financing arrangements with Pacific Investment Management Company.

Vietjet’s scale matters. With one of the largest order books in the world, the airline is expected to act as an anchor client for Vietnam’s proposed aviation finance hub, providing early deal flow and credibility with global investors.

Elsewhere, Tigerair Taiwan placed a firm order for four Airbus A321neo aircraft, marking its first acquisition of the type. Based on a list price of around US$130 million, the deal is estimated at US$260 million to US$310 million. The order reflects a broader regional trend among low-cost carriers towards higher-capacity narrowbodies that deliver lower unit costs and improved fuel efficiency.

Regional connectivity also featured with Air Borneo, Sarawak’s newly formed state-owned airline, confirming an order with ATR for eight turboprops, five ATR 72-600s and three ATR 42-600s, with options for four more. The aircraft will support Malaysia’s Rural Air Services network across East Malaysia, with deliveries beginning in 2027. While financially smaller, such deals are critical in reinforcing air links to underserved communities in Southeast Asia.

Defence aviation: geopolitics drives agenda

If commercial aviation reflected confidence, the defence side of the show was shaped by caution and competition with the event taking place amid intensifying geopolitical tensions across the Indo-Pacific, and that reality was evident both in what was announced and what quietly fell away.

Boeing confirmed that Indonesia’s planned acquisition of Boeing F-15EX fighter jets had been cancelled, ending a high-profile programme discussed since 2023. The decision underscores the increasingly complex calculus facing Southeast Asian defence planners – balancing budget constraints, operational needs and geopolitical alignment.

At the same time, the show floor highlighted Asia’s appetite for diversified defence suppliers. With China’s AVIC showcasing its J-35A fighter concept as a lower-cost alternative to Western fifth-generation platforms. European players, including Saab, emphasized integrated air defence, counter unmanned aerial systems ( drones ), and intelligence, surveillance and reconnaissance solutions, rather than traditional fast jets.

The focus was less on immediate big-ticket contracts and more on future capability pipelines – unmanned systems, surveillance, maritime security and air defence – reflecting regional concerns over contested airspace, sea lanes and great power rivalry.

For many Asian governments, flexibility and interoperability now matter as much as allegiance to any single supplier.

Sustainability: rhetoric ahead of reality

For all the deal-making and strategic signalling, one area remained conspicuously underwhelming: green aviation. Sustainable aviation fuel ( SAF ) was widely discussed, but concrete commitments to increase its use are still moving at a glacial pace.

SAF can reduce lifecycle carbon dioxide emissions by up to 80% compared with conventional jet fuel, and several Asian governments have introduced blending mandates or targets. Yet, in practice, global SAF production is still expected to account for well under 1% of total jet fuel demand this year, with availability at only about 10% of airports in Asia.

The problem is economics. High feedstock costs and immature supply chains mean SAF often costs several times more than conventional kerosene. Airlines in Asia, it seems, are still reluctant to absorb that “green premium”, while passing it directly to passengers risks damaging competitiveness in Asia’s price-sensitive markets.

While incremental technologies offer some progress with solutions, such as Lufthansa Technik’s AeroShark, a sharkskin-inspired surface film that reduces aerodynamic drag, and can cut fuel burn and emissions by up to 1% per flight without redesigning aircraft, such innovations are still marginal compared with what is needed to meet aviation’s ambitious net-zero targets.

Without stronger policy intervention, whether through subsidies, tax incentives or long-term offtake guarantees, most carriers are going to remain stuck at the pilot-scale usage of SAF, even though greener fuel is ready and works.