Arms race dominates Dubai air show

Middle East tension is driving demand for military hardware at the Dubai Air Show which opened yesterday, but recession means fewer orders for civilian jets.
Ethiopian Airlines offered a glimmer of hope on the civil side, with a $2.9 billion order for 12 Airbus A350s.
The carrier had drafted a request for 12 A350-900s in July and made its expansion plans public at yesterday’s announcement.
The confirmation of the deal is a boost for Airbus as it pushes orders for the future mid-sized jet above the 500 mark.
The European plane maker could bag up to $3.5 billion in airline orders early in the four-day show, including the first for an 840-seat version of its A380 superjumbo, the world’s biggest passenger plane.
But it was the Gulf region’s role as the world’s busiest arms market that dominated day one of the largest Middle Eastern showcase for aviation.
“With more threats and continued tensions, you will have continued demand for new systems and new capabilities, and that is why we have seen ongoing interest in upgrading and renewing fighter fleets,” Riad Kahwaji, chief executive of the Institute for Near East and Gulf Military Analysis, told Reuters.
“So long as tension is there, and the situation with Iran is not solved, and there is the threat of terrorism and so forth, I think there will be an ongoing arms race,” he added.
The UAE is in talks with France’s Dassault Aviation to buy Rafale combat jets which will be on display at the Nov. 15-18 air show. But analysts say the United States has not given up on grabbing a deal.
Raptor on show
Others reported to be looking to renew fighter fleets include Kuwait and Oman, while sources told Reuters in July that Saudi Arabia was looking to expand a recent purchase of Eurofighter Typhoons and was talking to Boeing about F-15s.
In a surprise decision, the United States displayed the world’s most advanced fighter, the Lockheed Martin F-22 Raptor, months after axing a display at the world’s largest air show in Paris.
The jet stole the show in Dubai with an exuberant display of American air power aimed at promoting US interests in the Gulf Arab region in front of military and political leaders and under the noses of rival manufacturers.
The 14-minute display by the Raptor, far longer than the three or four minutes typical of most displays, included a series of eye-popping stunts including one where the jet seemed suspended in the sky before abruptly dipping.
The jet is not on sale abroad but its only other major foreign appearance in Britain last year created a buzz and was seen as a possibly deliberate reminder, for buyers of other US hardware and potential enemies alike, of its military reach.
“It is marketing for US equipment, maybe reminding the UAE that there are alternatives to Rafale, but they are also flexing their muscles near Iran,” a European defence executive said
The biennial air show is taking place a few miles from the mouth of the Gulf and Iran, which remains locked in a dispute with the West over its nuclear programme.
Iran is under pressure to seal a nuclear fuel deal with Washington and other major world powers to help assuage concerns it is trying to develop an atomic bomb. Tehran insists it wants nuclear technology only for civilian purposes.
Tepid demand
Airbus rival Boeing sees signs of recovery in the freighter market but planemakers face two more lean years before passenger jet demand picks up in 2012, an executive estimates.
“Our view is that we are already starting to see some improvement in terms of the freighter market,” Boeing Commercial Airplanes Chief Executive Jim Albaugh told Reuters Television in an interview at the Dubai airshow.
“Our sense is that 2012 will start the uptick again (in passenger jet demand) and we should start seeing more orders coming back in 2013 and 2014.”
The US firm, which is set to make the maiden flight of its 787 Dreamliner this year, remains in front in the lucrative market for modern fuel-saving planes after notching up 840 sales of the 787, despite ongoing production delays.
Earlier yesterday, Airbus said its planned wingtip modification on its A320 aircraft would reduce fuel burn, save money and reduce carbon emissions by 700 tonnes.
Air Austral, based in France’s overseas territory of La Reunion in the Indian Ocean, confirmed an order for two Airbus A380 super jumbos yesterday, industry sources said.
It is the first airline to order a no-frills version of the world’s largest airliner, designed to carry 840 passengers when fitted only with economy seats. The A380 currently flies with fewer than 500 seats and previous buyers have focused on grabbing attention with luxury trappings for premium passengers.
Other business is expected to be sharply lower compared to the same event two years ago when the rivalry between Airbus and Boeing produced a haul of orders worth around $85 billion.
“There will be some orders, but not a lot,” EADS Chief Executive Louis Gallois told Reuters.
Aviation leasing firm DAE Capital, which has about $27 billion worth of aircraft orders from Airbus and Boeing, plans to wait until mid-2010 before placing new planes as it waits for rates to recover in the post financial crisis era, its chief executive said on Sunday. Airlines have been hard hit by the global recession and are forecast to lose a combined $11 billion this year.
Gulf heavyweights such as Dubai-based Emirates that built up massive fleets to challenge flag carriers in Europe and Asia are expected to be relatively quiet at the show, analysts said.
Still, most aerospace executives are looking to the Gulf to ease them out of recession once the economy recovers.
“It is the one civil and military aerospace market that is holding up, driven by passenger traffic, oil prices and regional tension,” said Richard Aboulafia of Teal Group in Washington.
Airbus sees 6.9 % Mideast passenger traffic growth between 2009 and 2028, faster than in any other region.