Something in the Air


By John Defterios

The announcements of order books at air shows are a tricky thing and Boeing and Airbus have a dog fight over who will outgun the other.

In Berlin, Airbus secured an $11.5 billion order for 32 A380s. At Farnborough, Boeing announced a $9 billion order for 30 777s. The two shared one common theme, the dominant Middle East carrier Emirates was behind both of them.

Six months after shocking the global financial community with a standstill on debt payments, the Emirate of Dubai is out to make its mark in the sectors it built its reputation on: trade, transport, tourism and financial services.

While it was placing record plane orders, it opened Dubai World Central airport to cargo services – the gigantic hub will open for passenger traffic in March 2010.

If behind the scenes Dubai is expressing caution – restructuring debt and the chief lieutenants that report to Sheikh Mohammed bin Rashid Al Maktoum – outward activities are conveying something else.

But this is not only a Dubai story.

To mark our coverage of the biennial event at Farnborough, we spent time with the two smaller, fast-growing challengers in the Middle East’s airspace – the chief executives of Qatar Airways and Etihad Airways, Akbar Al Baker and James Hogan.

They are very different personalities, but both carriers are expanding alongside their respective home markets. Doha will open a brand new airport in 2012 and Etihad a brand new terminal projected for the same year.

We have all raised eyebrows at Farnborough orders in 2008 and this year, but as the Americans often say “you ain’t seen nothing yet”. According to a recent study by Boeing, passenger traffic in the region will grow by 11 percent a year for the next two decades.

The U.S. aerospace giant says there is a regional backlog of some 789 jetliners today, but the carriers will need more than 1,700 planes by 2030. No wonder exhibitors welcome the Middle East players with open arms each year.

By the time the new airports are fully operational in Dubai, Doha and Abu Dhabi, passenger traffic capacity will be well over 200 million a year. While airports like Heathrow have blocked expansion and new runways due to environmental concerns, these hubs are making a 21st Century “air and land grab” and scooping up routes as fast as possible.

As a result, Europe’s legacy carriers have been crying foul and accusing their Middle Eastern competitors of route dumping. Al Baker of Qatar Airways strongly dismisses such talk: “If the legacy carriers don’t have the guts or the courage to take opportunities or to expand their services or regions it is their problem.” While sharing a buggy across the Farnborough airfield, Al Baker says competitors from Europe and Asia bypassed the Middle East, which created an opportunity for the deep-pocketed Gulf players.

Etihad’s Hogan said he has a huge advantage coming into the market with a clean sheet of paper, which helps him draw up a growth plan from scratch. If you look at the plans of Emirates, Etihad and Qatar, they tilt to the East and South and are opportunistic, shall we say, when going West.

By 2011 in its 14th year of operations, QA will have crossed the century mark in both planes and routes and Al Baker says we should expect more expansion in China, Africa and Latin America. When asked about his concerns related to an expanding bubble in the regional airline market he said: “We are going to make sure that all this capacity that is being added around us won’t deviate us from the plans that we have.”

While touring his integrated operations center in Abu Dhabi, Hogan also avoided commenting directly about the Dubai card now being played to expand in a “larger than life” way. He talks about being “best in class” across any market they choose to go into. Like Al Baker’s role in Doha, Hogan wants his carrier to support the bigger brand which for him means the UAE capital.

Something is definitely in the air and, likely, in the future, most tail wings will be carrying a brand from Dubai, Doha or Abu Dhabi.