Power shifts as Gulf airlines sign US$150b deals
Print Edition
Gulf airlines splashed out over US$150 billion on new plane deals on the first day of the Dubai Airshow yesterday, underscoring a shift in power in the aviation industry and giving a boost to the formal launch of Boeing’s newest jet, as well as to Airbus’s A380 superjumbo.
Under hazy skies, sheikhs and ruling family members of Dubai and neighboring Abu Dhabi toured rows of passenger jets and arms pavilions at the new 645,000 square meter venue, built to showcase the Middle East’s largest aviation hub and take on the industry’s traditional showcase events in Britain and France.
Dubai-based Emirates led the buying spree yesterday with an order for 150 of Boeing’s new 777 mini-jumbo, in a deal worth US$76 billion at list prices. It also ordered 50 Airbus A380s, the world’s biggest passenger plane, worth US$23 billion.
With demand from other Gulf carriers including Etihad Airways and Qatar Airways, Boeing announced commitments for a total of 259 of the new 777 jet, previously codenamed 777X, worth about US$100 billion at list prices — the largest combined order in its history.
“The response to the 777X has been astounding,” Boeing Chairman James McNerney told a packed news conference to officially launch the new plane, in front of Dubai ruler Sheikh Mohammed bin Rashid al-Maktoum.
Strategic location
Gulf airlines are competing with each other for a share of traffic flooding through the region due to its growing prosperity and strategic location between East and West. And with many recession-hit European airlines strapped for cash, Gulf business is increasingly important to Boeing and Airbus.
The revamped 777 marks a new front in the battle between the two aircraft manufacturers that dominate the civil aviation industry. Boeing’s new plane is aimed at heading off competition from the largest version of Airbus’s A350 in the mini-jumbo market that drives growth and connectivity between continents.
Boeing pledged not to let a dispute with Seattle assembly workers over where the new 777 should be built interfere with its launch, which kicked off the Dubai show.
The US group is looking for a home for the new jet after members of the International Association of Machinists rejected a proposed contract that would have seen Boeing commit to keeping the latest member of the 777 series near Seattle in exchange for restructured benefits.
Battle for orders
With Boeing also agreeing deals for 30 of its 787 Dreamliners with Etihad and for over 100 of its 737 planes with budget carrier flydubai, the US manufacturer looked on course to defeat Airbus in the battle for orders at the show.
However, Airbus also announced a deal for 87 aircraft with Etihad which, including options for 30 more, could be worth US$26.9 billion.
In a sign of the Gulf’s increasing power in the industry, Emirates Chairman Sheikh Ahmed bin Saeed al-Maktoum said he was confident of a shift in stance in the West that would allow the group to fly more of its planes to airports there.
“We are buying a product from their countries. So why would they not allow us to fly to these airports? If they don’t, they can take their planes back,” he said.
A group representing US airline pilots, meanwhile, warned the sale of planes to Gulf carriers that compete with US carriers would have “serious consequences for the US economy and US airline workers.”
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