Spoiled much? Gulf airlines splurge more than their countries' GDP's on new aircrafts at Dubai Airshow
Gulf airlines splashed out nearly $200 billion on new planes on day one of the Dubai Airshow, 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 neighbouring Abu Dhabi toured rows of passenger jets and arms pavilions at the new 645,000 sq m venue, built to showcase the Middle East's largest aviation hub.
Dubai-based Emirates led the buying spree on Sunday with an order for 150 of Boeing's new 777 mini-jumbo, in a deal worth $76 billion at list prices. It also ordered 50 Airbus A380s, the world's biggest passenger plane, worth $23 billion.
Abu Dhabi's Etihad Airways dominated the afternoon with its largest ever fleet order, for 199 aircraft and 294 engines, in a $67 billion dollar deal which will enable the airline to accelerate its industry-leading growth over the next decade.
It announced firm orders for 87 Airbus and 56 Boeing aircraft, with a further 56 options and purchase rights. The new aircraft will be powered by 127 GE Aviation, 115 Rolls-Royce and 52 CFM engines.
The deal – for 50 A350s, 36 Airbus A320/A321neo and an A330-220F freighter - includes related engines. The A320/A321neos are scheduled for delivery from 2018, while the A350s will be delivered from 2020 onwards.
In a unique new approach, Etihad said it will have a capability to redirect orders to members of its equity alliance, the airlines in key markets around the world in which it holds minority shareholdings.
This will allow capacity to be allocated where most required, while improving fleet commonality and sharing significant cost synergies among equity alliance carriers, said its top official.
The order, for 25 next-generation Boeing 777X aircraft, 30 Boeing 787-10 Dreamliners, one Boeing 777 freighter, 50 Airbus A350 XWB, 36 Airbus A320neo family aircraft and one Airbus A330-200F, will see passenger aircraft deliveries start in 2018.
The airline currently has a fleet of 86 aircraft, with more than 80 on firm order. Its last major aircraft deal was made at the Farnborough Air Show in 2008, where Etihad announced firm orders for 100 aircraft, in a long-term order which was at the time one of the largest in commercial aviation history.
With today's orders, Etihad will now become the single largest airline customer for the Boeing 787 Dreamliner, with the 30 aircraft in this order being added to 41 announced in previous orders. It will also become a launch customer for the Boeing 777-8X aircraft.
Etihad president and CEO James Hogan said: "Last week, Etihad celebrated its tenth anniversary. In just one decade, we have grown into an airline with 86 aircraft, carrying more than 11 million passengers on 97 routes, served by more than 16,500 employees."
"We now have seven equity alliance partners reaching across the world and a business strategy that has seen us create the world’s leading airline. We have achieved all of this while reaching sustainable profitability," he noted.
"These aircraft orders provide the next step in our long-term growth strategy. They are about meeting the needs of the next 10 years, and beyond, as we grow further and faster than ever before," added Hogan.
Gulf airlines are competing with each other for a share of traffic flooding through the region, due to its strategic location between East and West, and with many recession-hit European airlines strapped for cash, their business is becoming increasingly important to Boeing and Airbus.
Airbus was also celebrating a Dubai Airshow deal with Qatar Airways for five A330-200Fs, including eight options in a deal worth potentially worth over $2.8 billion at list prices.
With demand from other Gulf carriers including Etihad and Qatar Airways, Boeing announced commitments for a total of 259 of the new 777 jet, previously codenamed 777X, worth about $100 billion at list prices - the largest combined order in its history.
"The response to the 777X has been astounding," Boeing chairman James McNerney said at a packed news conference to officially launch the new plane, in front of Dubai ruler Sheikh Mohammed bin Rashid al-Maktoum.
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.
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 Dubai show.
But the European group has a record of springing surprises and is keen to prevent a smooth lift-off for the new 777.
Emirates' A380 order was something of a coup for Airbus, which is under pressure to revive the fortunes of a plane which previously hadn't found any buyers this year and faces a cut in output unless empty 2015 production slots can be filled.
Emirates is already the biggest customer of the A380 and its order for 50 more was at the top end of expectations, and brings its total orders for the plane to 140.
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 that the sale of hundreds of planes to Gulf carriers that compete with U.S. carriers would have "serious consequences for the U.S. economy and U.S. airline workers." This would create stiff competition for the U.S. airline industry.
Boeing's new 777 comes in two models including what will be the world's longest-distance passenger jet, a 350-seat model to be known as the 777-8 once the aircraft has been launched.
The larger 777-9 edition, carrying 406 people, will be the main version and be delivered starting 2020.
Together, the modernized planes call for development of carbon-fibre wings that fold at the tips to fit in the same parking spaces and new engines from General Electric.
Airbus says Boeing has packed in passengers densely to make the revamped aircraft's economics work against its own all-new 350-seat model, the A350-1000, due to enter service in 2017.
It has launched a campaign for a minimum standard seat width of 18 inches on long trips, aiming to draw attention to what it says will be the 777's narrower seats.
Some airlines have told Airbus that this is their decision and Boeing says many Airbus jets have similar seats.
Highlighting defence deals also at stake at the air show which runs till November 21, UK Prime Minister David Cameron toured the complex even before the event had started, telling the heads of British aerospace and defence companies to "get out there and win".
Britain is competing with France for a potential 60-plane fighter jet deal with the UA
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