With more than $50 billion in Boeing aircraft orders placed on Monday, Dubai carriers laid down the gauntlet to up-and-coming regional rivals as the race to secure depleting long-haul jet supply and prepare for an increase in international travel heats up.
Emirates, controlled by the government, and sibling airlines operate the start of the Dubai Airshow. Dubai acquired 125 wide-body Boeing (BA.N.) aircraft but left Airbus (AIR.PA) in Europe waiting for an order for A350 aircraft that are essentially equivalent.
Orders included 35 of the smaller 777-8 and 55 of the 400-seat Boeing 777-9, a boost for the 777X program, which has been delayed for the past five years.
In addition, Emirates procured five further 787 Dreamliners, while FlyDubai placed its inaugural long-haul order for thirty of the same model. “Combining these orders, they signify substantial investments that demonstrate Dubai’s dedication to the aviation industry’s future,” stated Sheikh Ahmed bin Saeed Al Maktoum, Chairman of Emirates and flyDubai.
According to him, Emirates anticipated receiving the 777X around 2025, corresponding with Boeing’s most recent goal. Dubai’s economy, which lacks the oil resources of many of its neighboring states, depends heavily on the aviation and tourism sectors.
Following the orders, which included 45 narrow-body 737 MAXs for the German-Turkish airline SunExpress, Boeing shares increased by 4.4% in New York. A Bloomberg article suggesting that this week’s talks between Chinese President Xi Jinping and US President Joe Biden may ease the long-standing ban on Chinese 737 purchases also helped to boost shares.
The competitive Airbus A32neo and the 737 MAX are examples of medium-haul aircraft that propel airline and supplier profitability worldwide. However, because of the advantageous location of its hubs in the United Arab Emirates and Qatar, the Gulf is the largest market for bigger wide-body planes.
According to industry experts, the fresh purchases have increased the stakes as Turkey and India devise schemes to divert connecting traffic away from the Gulf, and Saudi Arabia seeks to develop its footprint.
CEO of Air Lease Corp. (AL.N.) Steven F. Udvar-Hazy stated, “They (Dubai) are saying we are the big elephant in the room and demonstrating that they are a big player.” Industry insiders believe that to make up for replacement plans put aside during the epidemic, airlines worldwide are in discussions to purchase 700–800 new aircraft, including 200–300 wide bodies.
However, Udvar-Hazy questioned if there was enough space for all of the capacity the carriers in the area were exploring simultaneously. “They are fighting for the same passengers,” he told reporters.
Tight supply chains are still a worry, according to analysts. “There are several orders and numerous aircraft in this. According to Douglas Harned, a Bernstein analyst, manufacturers are having trouble producing enough of them. “Not only are they oversold, but they can’t make what they have already sold.”
Before the show, rumors of a potential 777X transaction began to circulate, and on Sunday, Bloomberg revealed that a significant order was being considered. Following reports from the state-run Anadolu news agency on Saturday, Turkish Airlines (THY) (THYAO.IS) unexpectedly appeared on the show’s agenda—it was in discussions to purchase up to 355 Airbus aircraft.
This set off plans for a high-profile reveal at the air show on Monday and Tuesday, as an insider from the Middle East anticipated a “bold move” in the competing Gulf states’ backyard.
Airbus said it had secured an agreement “in principle” on a significant order for THY in an unusual holding statement. However, it said that the deal must be approved in the next few days, which some observers saw as a hint that it might no longer be revealed at the event.
Other big orders in Dubai didn’t seem to be underway or being carried out in public. Riyadh Air, the newest airline in Saudi Arabia, is still negotiating with manufacturers to order narrow-body aircraft.
According to the group’s vice president for fleet management, Saudia Airlines Group plans to acquire around 150 narrow-bodied aircraft for Saudia Airlines and low-cost Flyadeal, Asharq TV has learned.
Saudi Arabia founded Riyadh Air as part of their ambition to make the country a significant aviation hub. Airlines are taking a chance on the long-term demand from future travelers—many of whom have not even been born yet—because several aircraft are not expected to be delivered until 2030 and will remain in the sky for 20 years.
However, the Israel-Hamas conflict in Gaza, which is increasing the demand for weaponry and blocking airspace, overshadowed the event.
The CEO of Royal Jordanian ordered six Boeing 787s, citing the neighboring war as the reason for the airline’s lower traffic and need to run longer trips.
Daniel Silke, head of Political Futures Consultancy in Cape Town, stated, “There’s enough statistical evidence, at least in the short term, to show that there’s been a substantial drop in ticket sales in the region.”
According to analysts, the battle in Gaza is expected to increase demand for weaponry, which has already increased during the previous 18 months as the US and its allies rearmed Ukraine against Russia.
However, few significant arms sales were anticipated during the exhibition, as the exhibits of Israeli defense companies Rafael Advanced Defense Systems and Israel Aerospace Industries (IAI) were vacant.