Farnborough: Generation Next arrives. And the centre of the aviation world shifts
Etihad, the Abu Dhabi-based national carrier of the UAE, yesterday announced a massive list of orders and options for 205 Airbus and Boeing aircraft, worth USD43 billion. All but 25 of the options and orders are for widebody, long range aircraft. These aircraft are not designed to fly within the region, but to span the world. They will be delivered between 2011 and 2020.
It is now hardly a secret that Middle East aviation expansion - and especially the United Arab Emirates - is not a "bubble" phenomenon, although remarkably there are many who still promote that idea. Between the various UAE airlines, fleets and orders amount to a remarkable 690 aircraft. The Emirates' current population is just over 4 million, of whom three quarters are expatriates.
Last year, the Centre published a report on Middle East Aviation, entitled "Middle East Aviation Outlook - the Next-Gen Aviation System". The Report highlighted the "next-gen" nature of the new era of aviation based on that region.
The three key ingredients of that successful new formula are: (1) the growing liberalisation of market access, which makes new airline entry possible; (2) the availability of new, fuel efficient, long haul aircraft capable of operating non-stop to any point in the world from the Gulf; and (3) the provision of cutting edge, high capacity airport and associated facilities.
(the Centre's 150 page report is available for free download)
Meanwhile, Emirates' subsidiary, FlyDubai, a startup low cost airline from Dubai, today announced by comparison an almost modest order for 54 B737-800NG aircraft. The LCC will be the UAE's third to base there, following Sharjah's highly successful Air Arabia and Kuwait-originating Jazeera Airways. FlyDubai plans to commence operations in the middle of 2009.
And, across the border, Saudi Arabian Airlines ordered 8 A330s, while local independent, NAS, announced an order for another 5 Embraer 190s, to accompany 5 orders and 5 options concluded at last year's Dubai Airshow.
Prior to Farnborough's orders and options, Etihad operated 30 aircraft and had 17 on order. Neighbouring Emirates Airline currently operates 114 aircraft and has 240 aircraft on order, of which 58 are A380s. LCC, Air Arabia, operates 16 aircraft and has 30 on order, while the new startup FlyDubai now has orders for 54. Then there is Qatar Airways, Gulf Air....
Engine manufacturers also have a substantial stake in the new orders. Of the aircraft orders, Rolls Royce engines will power Etihad's A350s and General Electric will supply GE90s for the B777-300ERs; other aircraft engine suppliers are still in negotiations. For FlyDubai, the B737s will be equipped with CFM56-7B engines.
The new order list brings the total value of aircraft orders in the UAE to nearly USD200 billion, but surface infrastructure construction is well under way to support this massive expansion.
As James Hogan, Etihad CEO noted, Abu Dhabi alone "will see planned investments in infrastructure and projects within the Emirate likely to exceed US $200 billion during the next 10 years, an aggressive tourism push and enormous residential development." Aerospace and infrastructure investment at Dubai Airport and construction of nearby Jebel Ali, being built by Dubai, amounts to another USD50 billion and more.
If this is a bubble, it's a mighty big one.