SINGAPORE – The Asia-Pacific aviation industry’s slow recovery from the pandemic amid government restrictions will cast a shadow over the Singapore Airshow next week, though there are nascent signs of improvement as concerns over the Omicron variant recede.

The biennial event has bookended the pandemic, with the 2020 edition disrupted by the virus emerging from China and the latest show coming as the industry attempts to plot a way out of its biggest-ever crisis.

International passenger travel in the region was down 93% from pre-pandemic levels last year, leaving airlines heavily reliant on freight for revenue, and the Chinese outbound tourism market remains closed.

But there are signs of a rebound this year, Skyscanner booking data shows, as countries such as Singapore, Thailand, the Philippines, Vietnam and Australia reopen to more vaccinated tourists without quarantine.

Military purchase intentions are also picking up as regional economies recover from pandemic-induced slumps and countries look to bolster their capabilities, as highlighted by Indonesia’s $8.1 billion order for 42 Rafale fighter jets on Thursday.

SMALLER SHOW

Major manufacturers such Airbus, Boeing and Lockheed Martin will send senior executives to the Singapore Airshow from Feb. 15-18, using it as an opportunity for now-rare face-to-face meetings with key commercial and defence customers.

But there will be around two-thirds fewer exhibitors than 2020 at Asia’s biggest aerospace gathering, with the challenges of holding the show mirroring travel difficulties.

Some industry executives decided not to attend, concerned about restrictions including daily testing, no intermingling during mealtime, mandatory masks in the tropical heat as well as hotel isolation if they test positive.

Singapore-based aviation analyst Brendan Sobie said he expected a quiet, locally oriented gathering with many of the overseas executives holding meetings in the city centre rather than at the more distant show site.

“The concern from many exhibitors is a lack of customers visiting,” Sobie said of the show.

FEW ORDERS

The Asia-Pacific region accounts for 35% of the world’s commercial aircraft fleet but only 4% of order announcements at air shows over the last decade were made in Singapore, according to broker Jefferies, partly because the event is held before shows in Europe and Dubai.

During the pandemic, most Asian airlines have focused on deferring deliveries and handing back planes to lessors rather than placing fresh orders, though Singapore Airlines in December signed a preliminary deal with Airbus for 7 A350 freighters that would involve reducing orders for passenger planes.

Boeing last month launched a freighter version of its 777X widebody that will compete against the A350 freighter.

The new generation planes will help cut carbon emissions, an important focus for the industry as it targets “net zero” emissions by 2050 through biofuels and improvements in engine technology.

U.S.-CHINA RIVALRY

The show comes as Southeast Asia is a key stage for a rivalry between the United States and China, the world’s two biggest economies.

China’s extensive territorial claims in the South China Sea, which it says are based on historic maps, have put it at odds with Brunei, Malaysia, the Philippines, Taiwan and Vietnam, which have competing claims to islands and features.

Collin Koh, a research fellow at Singapore‘s Institute of Defence and Strategic Studies, said there was interest from military buyers in big-ticket purchases such as new generation fighter jets, though costs could be a mitigating factor after the pandemic-related economic slump.

“Drones, fixed- and rotary-winged transports, maritime patrol and reconnaissance aircraft, for example, would be more sought after given the utility of these assets for a whole range of peacetime purposes,” he added. – Reuters

MOSCOW/KYIV – Russia and Ukraine said they had failed to reach any breakthrough in a day of talks with French and German officials aimed at ending an eight-year separatist conflict in eastern Ukraine.

The lack of progress marked a setback for efforts to defuse the wider Ukraine crisis in which Russia has massed more than 100,000 soldiers near Ukraine‘s borders, raising fears of a war.

Russian envoy Dmitry Kozak told a late-night briefing after Thursday’s talks in Berlin that it had not been possible to reconcile Russia and Ukraine‘s different interpretations of a 2015 agreement aimed at ending fighting between pro-Russian separatists and Ukrainian government forces.

“We did not manage to overcome this,” he said.

Ukraine‘s envoy Andriy Yermak said there had been no breakthrough but both sides agreed to keep talking.

“I hope that we will meet again very soon and continue these negotiations. Everyone is determined to achieve a result,” he said.

The conflict in the breakaway Donetsk and Luhansk regions, known together as the Donbass, simmers on despite a notional ceasefire. Observers from the Organisation for Security and Cooperation in Europe (OSCE) record frequent violations, sometimes running into hundreds of incidents daily.

Ukraine says some 15,000 people have been killed since 2014.

Representatives of Russia, Ukraine, the OSCE and the two separatist regions signed a 13-point agreement in February 2015 in Minsk, that was also backed by the leaders of France and Germany.

Russian Foreign Minister Sergei Lavrov accused Ukraine on Thursday of trying to rewrite the agreement and cherry-pick only the elements most advantageous to it.

Ukraine says it is committed to the accord.

“The Ukrainian side is set on constructive dialogue. Everyone confirmed today that we have the Minsk agreements and they need to be fulfilled,” Yermak said.

Ukraine rejects Moscow’s assertion that it has nothing to do with the conflict, saying Russia has forces inside Ukraine fighting alongside the separatists.

Kyiv refuses to negotiate with the heads of the breakaway regions but President Volodymyr Zelenskiy has proposed direct talks with Russian President Vladimir Putin, which the Kremlin has so far rejected.

Russia denies planning to invade Ukraine but says it wants to enforce “red lines” to make sure that its former Soviet neighbour does not join NATO and that the alliance does not set up bases and missiles there. – Reuters

LONDON – Britain’s government is failing to put enough effort into finding fraud in some of its COVID-19 support programmes as taxpayers face losing at least 4 billion pounds ($5.43 billion) to criminals and mistakes, a parliamentary report said.

The Public Accounts Committee, which scrutinises state spending, said the lenient approach will encourage future criminal activity because the government risks “rewarding the unscrupulous” and officials seen to be “soft on fraud“.

After coronavirus shut much of the British economy in early 2020, the government provided hundreds of billions of pounds to businesses, hoping to keep them and their staff afloat. At the time, the government described the support as one of the most significant economic interventions in British history.

The Coronavirus Job Retention Scheme, widely known as furlough, cost 70 billion pounds – the most expensive single piece of UK economic support during the pandemic. At its peak, the programme paid a third of British workers’ wages.

The government also spent 28.1 billion pounds on a parallel scheme for the self-employed and 840 million pounds offering discounted meals at restaurants, cafes, and pubs.

But the government has since found that some employers claimed money for workers who did not exist, and others took cash while their staff continued to work.

The committee criticised the government’s “unambitious” plans to only recover about 2 billion pounds of the estimated 6 billion pounds lost to criminals or given out incorrectly.

“Every taxpayers’ pound lost to a fraudster will lead to honest ordinary people feeling the post-pandemic pinch harder and harder,” said Meg Hillier, chair of the committee. “With the current parlous state of the public finances we can ill-afford to be so cavalier over so much taxpayers’ money.”

A government spokesperson rejected many of committee’s statements and said the support was created quickly to support people in desperate need. He said no fraudulent payments have been written off and the government was taking action to recover over-payments.

“The vast majority of payments in the schemes were made correctly to employers, and most error and fraud was legitimate claimants making mistakes or inflating their claims, often small per case,” the spokesperson said.

“The cost of inaction would have been far greater than the cost of fraud and error in the support schemes.”

But Theodore Agnew, a junior minister who was responsible for government efforts to counter fraud, resigned in protest last month. He said the oversight of a separate business loan programme was “nothing less than woeful” and accused the government of making “schoolboy errors”.

Britain’s public spending chief last month urged those who swindled billions of dollars of COVID support money from the state to give the cash back.

“We will now pursue anybody who has taken this money fraudulently,” Chief Secretary to the Treasury Simon Clarke said. “And I would urge anyone who’s taken that money and didn’t really need it to make contact.” – Reuters

CULPEPER, Va. – U.S. President Joe Biden on Thursday touted his plan to bring down the cost of prescription drugs as an antidote to high inflation on a day when government data showed consumer prices posted their biggest annual gain in 40 years in January.

Speaking at an event in Virginia, Biden said that proposals in his Build Back Better legislation would help bring down prices for families. The roughly $1.7 trillion bill, which includes social spending and climate change provisions, is stalled and Biden has said previously that chunks, rather than the full package, could pass.

U.S. stock indexes dropped on Thursday after hot consumer price data raised fears of a hefty interest rate hike by the Federal Reserve. Consumer prices in the 12 months through January rose 7.5%, the biggest jump since February 1982, according to the Labor Department.

Biden‘s plan, contained within the Build Back Better legislation, would give the federal government’s Medicare program for seniors authorization to negotiate drug prices for the first time.

“The fact is that if we are able to do the things I’m talking about here, it’ll bring down the cost for average families,” Biden said.

Noting that Build Back Better had already passed the House of Representatives, Biden said, “Now we just have to get it through the United States Senate. And we’re close.

“We can do even more to lower out-of-pocket prescription costs,” he said. “Under my proposal, we will hold drug companies accountable for the absurd price increases.”

The Democrats hold a razor-thin majority in the Senate, providing little leeway given that Republicans have been opposed to allowing the government to negotiate prescription drug costs.

High inflation and fatigue over the ongoing pandemic have hurt Biden‘s popularity with Americans, causing concern for his fellow Democrats, who risk losing control of both houses of Congress in the November midterm elections.

Biden was joined by Democratic Representative Abigail Spanberger of Virginia, who could face a tough re-election fight in November, and Xavier Becerra, his secretary of Health and Human Services, who has faced criticism for a low-profile role in the administration’s fight against COVID-19. Biden praised Becerra for “how much he’s helped us make so much progress in getting people vaccinated” and making healthcare affordable. – Reuters

BRUSSELS/MOSCOW – Britain said on Thursday the “most dangerous moment” in the West‘s standoff with Moscow appeared imminent, as Russia held military exercises in Belarus and the Black Sea following the buildup of its forces near Ukraine.

Ukraine also staged war games and the United States urged Americans in the country to leave immediately due to increased threats of Russian military action. But leaders on all sides signalled they hoped diplomacy could still prevail in what British Prime Minister Boris Johnson called Europe’s biggest security crisis for decades.

In a new round of talks, Britain’s foreign minister sparred publicly with her Russian counterpart in Moscow, Johnson visited NATO headquarters in Brussels and Germany’s leader met his Baltic states counterparts in Berlin, where officials from Russia, Ukraine, Germany and France were also holding discussions.

Russia, which has more than 100,000 troops near Ukraine’s borders, denies Western accusations it may be planning to invade its former Soviet neighbour, though it says it could take unspecified “military-technical” action unless demands are met.

“I honestly don’t think a decision has yet been taken” by Moscow on whether to attack, Johnson told a news conference with NATO Secretary-General Jens Stoltenberg. “But that doesn’t mean that it is impossible that something absolutely disastrous could happen very soon indeed.”

“This is probably the most dangerous moment, I would say, in the course of the next few days, in what is the biggest security crisis that Europe has faced for decades.”

The way forward was diplomacy, Johnson later told reporters in Poland.

Stoltenberg also said it was a dangerous moment for European security, adding: “The number of Russian forces is going up. The warning time for a possible attack is going down.”

In a new point of friction, Ukraine criticised Russian naval exercises that it said were part of a “hybrid war” and had made navigation in the Black Sea and Sea of Azov “virtually impossible”.

Nearly nine hours of talks between Ukraine and Russia on Thursday failed to produce a breakthrough on signing a joint document, but both sides agreed to keep talking, the chief of staff to Ukraine’s president said after the talks in Berlin.

Russia said the talks with Ukraine, France and Germany on the conflict in eastern Ukraine fell short of any new agreement, and criticised what it called a lack of clarity in the Ukrainian position.

‘THINGS COULD GO CRAZY QUICKLY’

The U.S. State Department urged Americans in Ukraine to leave immediately due to what it called increased threats of Russian military action.

“American citizens should leave now,” President Joe Biden told NBC News in an interview. “We’re dealing with one of the largest armies in the world. It’s a very different situation and things could go crazy quickly.”

Asked whether there was a scenario that could prompt him to send troops to rescue fleeing Americans, Biden replied: “There’s not. That’s a world war when Americans and Russia start shooting at one another. We’re in a very different world than we’ve ever been.”

Visiting Moscow, British Foreign Secretary Liz Truss was upbraided by Russian Foreign Minister Sergei Lavrov, who accused her of refusing to listen.

“I’m honestly disappointed that what we have is a conversation between a mute person and a deaf person,” the 71-year-old veteran diplomat told a news conference.

“Our most detailed explanations fell on unprepared soil .. numerous facts that we produced bounced off (the British delegation.”

Truss, who warned of tough Western sanctions if Ukraine was attacked, challenged Lavrov over his assertion that Russia‘s build-up of troops and weaponry was not threatening anyone.

“I can’t see any other reason for having 100,000 troops stationed on the border, apart from to threaten Ukraine. And if Russia is serious about diplomacy, they need to remove those troops and desist from the threats,” she said.

Lavrov said Moscow favoured diplomacy to resolve the crisis.

DE-ESCALATION EFFORTS

Truss’s talks in Moscow follow shuttle diplomacy from French President Emmanuel Macron, who visited Moscow and Kyiv this week. In contrast to U.S. and British leaders, Macron has played down the likelihood of a Russian invasion soon.

As part of U.S. efforts to “reduce chances of miscalculation”, the Chairman of the Joint Chiefs of Staff, General Mark Milley, spoke on Thursday with his Belarusian counterpart, a Pentagon spokesman said.

Urging de-escalation, Chancellor Olaf Scholz said Germany and its allies were ready for dialogue with Moscow and wanted peace.

However further military aggression against Ukraine “would have very serious political, economic and strategic consequences for Russia,” Scholz told reporters in Berlin.

Moscow has used the tensions to seek security concessions from the West that would include a promise never to admit Ukraine to NATO and halt the military alliance’s expansion.

The EU said on Thursday it had delivered a single letter in response to Russia‘s proposals on European security, NATO and the United States having earlier portrayed Russia‘s main demands as non-starters.

Stoltenberg said last week that Russia was expected to have 30,000 troops in Belarus as well SU-35 fighter jets, S-400 air defence systems and nuclear-capable Iskander missiles.

Russia held a briefing for military attachés that lasted just eight minutes, and gave notice of an exercise that was already under way, a senior U.S. State Department official said.

“That’s highly inconsistent with agreements for transparency for large military exercises in Europe. That’s bad news,” the official said.

Ukraine launched its own war games on Thursday which, like Russia‘s joint drills with Minsk, will run until Feb. 20.

The Ukrainian forces, whose numbers have not been disclosed, are set to use Bayraktar drones and anti-tank Javelin and NLAW missiles provided by foreign partners. Kyiv was due to receive a further shipment of U.S. military aid later on Thursday. – Reuters