As aircraft orders accumulate during the Dubai airshow, the world’s top aircraft manufacturers are issuing bullish forecasts for demand from the Middle East.
Qatar Airways today signed a US$6.5 billion deal for five Airbus A380 superjumbos and 50 A320neo jets, plus options, hours after announcing an “impasse” in negotiations.
Airbus had been counting on an order surge on day three of the Middle East’s largest air show to hit back at Boeing, which so far dominates with its US$18-billion order from host airline Emirates for 50 of its 777 aircraft.
Airbus announced the sale of 30 A320neos to lessor Aviation Capital Group for US$2.7 billion today.
Kuwaiti lessor Alafco placed a US$4.6 billion expanded order for 50 Airbus A320neo passenger jets, adding to the flood of orders.
Meanwhile Canada’s Bombardier, which has been suffering headwinds in trying to market a new model for 110-130 seats, announced a provisional deal to sell 10 of the CS300 Series aircraft to Turkey’s Atlasjet Havacilik worth US$776 million.
US carrier Spirit Airlines and Airbus at the Dubai airshow today signed a Memorandum of Understanding (MoU) for 75 single-aisle aircraft, comprising 45 A320neos and 30 A320s.
Boeing predicts that airlines in the Middle East would need 2,520 airplanes worth US$450 billion by 2030, while its European rival Airbus said it saw demand for 1,920 aircraft worth US$347 billion in the same period.
“We believe that our customers will have the ability to weather the storm in Europe and the Middle East is booming,” Habib Fekih, president of Airbus Middle East, told Reuters.
The forecasts and Emirates’ US$18 billion order for 50 wide-body Boeing jets boosted the showcase event and pushed talk of global recession to the sidelines — though analysts said getting aircraft financing was proving an increasing challenge.
The Gulf’s big three are buying wide-body aircraft to serve Asia and the United States and redraw the world’s transport and logistics map with the Gulf at the centre, thanks to its ability to reach most of the world’s population in one long-haul hop.
Middle East demand makes up 8 percent of anticipated global aircraft demand over the next 20 years but 11 percent by value.
Randy Tinseth, vice president of marketing at Boeing’s commercial division, said the UAE alone could soak up 1,000 aircraft deliveries in the next 20 years as they access foreign markets.
Alafco’s chairman Ahmad Al Zabin said he was not greatly concerned about economic turmoil in Europe derailing long-term aircraft demand, especially in the Middle East.
“We are talking long term; what is happening now is short term,” he told a news conference.
The expansion has provoked sharp exchanges between Gulf carriers and European airlines which accuse the region’s carriers of expanding on the back of subsidies, something they deny.
“The three big Gulf airlines are attacking other people’s traffic. They are converting oil wealth into an aviation market position,” said aerospace analyst Richard Aboulafia of Virginia-based consultancy Teal Group.
Gulf airlines say they simply operate a better service, but geography is also on their side.
The Gulf region is reachable from nearly every major city on earth in a single flight given the range of modern jetliners, making it a natural global hub for passengers and cargo.
Airline chiefs played down the risk of contagion from Europe’s debt crisis, but the head of Boeing’s commercial division said it was a “watch item” and Brazil’s Embraer trimmed a forecast for business jet deliveries due to the downturn.
Still, the sales chief of Airbus warned that European lenders, especially French banks, which have been major financiers for Middle East carriers’ deals, have become risk-averse because of the eurozone debt crisis.
“We are watching it carefully,” John Leahy said at a news conference. “We have done some aircraft financing in euros. Some European banks are having trouble accessing U.S. dollars … this is more of a short-term thing than anything else.”
Record sales of the Boeing 777 capped by the Emirates announcement, which was attended by the ruler of Dubai, could force Airbus to do another rework of its future A350, Aboulafia said.
Few if any A350 orders are expected at the show, but sales chief John Leahy said he felt under no pressure to drum up new sales for the aircraft, whose development has been delayed.
The biennial November 13-17 airshow takes place amid rising international tensions after a United Nations watchdog report expressed concerns over possible military dimensions to Iran’s nuclear activities, which Tehran calls entirely peaceful.
“On the military side, Iran is always a factor that is the number one security threat to the (Gulf Arab) states,” Theodore Karasik, the Director of Research and Development at the Institute for Near East and Gulf Military Analysis, said.
No major military deals have been signed at the show but contractors believe security concerns and Gulf support for operations in Libya could boost sales to the region.
The UAE is currently looking to buy fighter jets and trainers. It recently requested technical details on the Typhoon combat jet built by European arms consortium Eurofighter, something that has not shaken France’s confidence in securing a deal to sell the Gulf state more than French 60 Rafale warplanes, the French air chief told Reuters.
“I know that the Emirates air force is very keen with Rafale, that’s for sure because they told me that they like the aircraft, they know how operational it is,” General Jean-Paul Palomeros said on Sunday on the sidelines of the Dubai Air Show.
After the briefing on October 17, the UAE asked Eurofighter to submit a proposal on potentially supplying the Typhoon to the major oil exporter’s air force, the consortium said in a statement on Monday.
France is struggling to secure a foreign buyer for the aircraft, which is more developed than fourth generation combat aircraft but lags behind fifth generation multi-role fighters such as Lockheed Martin’s F-35 Lightning II.
The United Arab Emirates has pressed for the aircraft’s engines to be upgraded with extra thrust and for better radar, industry sources have said, but Palomeros said UAE officials are satisfied with the plane.
The UAE said in 2008 it was in negotiations with France to buy at least 60 Rafale warplanes to replace its fleet of Mirage-2000-9 warplanes, in a deal that could be worth 10 billion euros, according to experts.