Dubai’s Airshow lived up to its high reputation after a tough two years for the Gulf carriers
If there were any fears of a low-key affair at this year’s Dubai Airshow, they were soon put to bed.
While it was not the same thick and fast action of the 2013 event where $162.6bn of orders were made by Etihad Airways, Emirates Airline, flydubai and Qatar Airways in the space of three hours, each day brought new surprises and some truly enormous deals.
Opening proceedings was Dubai airline Emirates, which just hours after unveiling a plush new first class product built in partnership with Mercedes-Benz, made a surprise order.
For many of the awaiting press it seemed Airbus had finally secured the A380 deal its sales chief John Leahy had made his mission to secure ahead of retiring by the end of the year.
But surprisingly after a long wait it was Boeing that threw the first punch, securing an Emirates order for 40 Boeing B787-10 Dreamliners worth $15.1bn.
The deal was no doubt a blow for Airbus, which had an Emirates order for 70 A350s at the 2007 Airshow cancelled in 2014, and undoubtedly drew a line under the A350-or-B787 order debate of recent years.
“We looked at the two ‘apples’ and the management, planners and maintenance … concluded the B787 will be the best option,” said Emirates chairman HH Sheikh Ahmed bin Saeed Al Maktoum,
But as the week went on it proved to be far from the only trick both manufacturers had up their sleeves as they fought for orders and headlines in the wider context of tough conditions for regional airlines.
The next day Boeing was back with a $2.2bn order from Kuwait-based Aviation Lease and Finance company for 20 737-MAX jets, adding to an order for 20 first made at the Paris Airshow.
Airbus then fired back with a $2.7bn deal with Wataniya Airways’ supplier Golden Falcon Aviation for 25 A320neo aircraft on the Tuesday following the airline’s return to the market in July after a six-year absence.
Following this, the order situation entered a different league entirely the day after as Airbus confirmed its largest plane order by volume ever.
US aviation investor Bill Franke’s Indigo Partners signed a memorandum of understanding to order a total of 430 A320neo aircraft worth $49.5bn at list prices in a deal that is sure to be remembered for years to come.
The deal includes 273 A320neos and 157 A321neos spread between Indigo’s four low cost airlines including Hungary’s Wizz Air, US carrier Frontier Airlines, Chile’s JetSMART and Mexico’s Volaris and will be confirmed with each by year-end. Indigo had previously ordered 427 A320 family aircraft.
Boeing hit back with a sizeable if not as substantial order for 225 B737 Max aircraft worth $27bn, including 175 jets and purchase options for 50 more. All but sealing flydubai’s commitment to being an all-Boeing airline with its third major order since being founded eight years ago.
This was followed by an order for 90 A320neos from Dublin’s CDB Aviation Lease Finance before both manufacturers closed out the Thursday with an order for two A320neos from Air Sénégal and six B737 Maxs from Kazakhstan’s SCAT Airlines respectively.
By the time the show was over, event organiser Tarsus F&E LLC confirmed the order book had reached $113.8bn, above and beyond what many were expecting.
“Overall, the show underscored its global importance. If you want a big deal done, you come to Dubai. In my eyes, Farnborough and Paris are vying for the also-ran status now,” said Saj Ahmad, chief analyst at StrategicAero Research.
However, there was undoubtedly still disappointment at the lack of an Emirates A380 deal as the show closed, amid demands from the carrier that Airbus guarantee production for at least another decade.
“The lack of A380 deal points directly at a breakdown in the Airbus-Emirates relationship,” Ahmad added.
“That Airbus CEO Tom Enders and his number two Fabrice Bregier left the show after barely a day infers that Emirates may have been rather insulted that Airbus leadership couldn’t be bothered to stay and thrash out a deal.”
Spotlight on Dubai South
Away from the mega-deals there were other parts of the market that also made headlines, particularly the executive aviation market that is thriving at the home of the Dubai Airshow, Dubai South.
DC Aviation Al-Futtaim, which offers aircraft management, maintenance and fixed-base operation and handling services, used the occasion to open its second hangar at the airport after commencing operations there in 2013. The new addition adds 7,500sqm of hangar space to the existing 5,700sqm.
“When we started off in 2013 we slowly managed to penetrate the market and, over the first year and a half especially, saturated the availability for that very quickly,” said managing director Holger Ostheimer.
“Into the 18th to 20th month past the initial opening we made the decision to start with a new one.”
Another executive aviation player expanding at the airport is Jetex, which operates from the VIP Terminal. At the airshow the company announced a new fixed-base operation at the terminal, with a 1,600sqm lounge, and plans to develop a 20,000sqm plot with a 7,000sqm air-conditioned hangar to accommodate the parking and maintenance of aircraft. This is set to be operational by 2019.
“It’s an indication in our confidence in the market and confidence in Dubai South as a new airport,” said CEO and president Adel Mardini.
He added that the company had seen a “stable” 4 per cent growth in flight movements in year-to-date terms after beginning operations at the terminal last year and was expecting 5-6 per cent growth over 2016 by year-end.
“I am very confident because I can see there is demand not only from the region but people out of the region and looking to be based here.”
Both companies also appear to be using their operation in Dubai as a springboard for further expansion in the Gulf Cooperation Council.
Jetex announced at the airshow it had been selected to exclusively run FBOs from Oman’s Muscat and Salalah Airports next year. Mardini revealed the company would also announce a Saudi expansion soon once the details had been ironed out.
Similarly, Ostheimer indicated DC was looking at other markets in the region.
“We’re actually working on one opportunity, much too early to be mentioned but nonetheless I can answer the question yes we are looking to expand regionally,” he said.
Outside of the airport itself, the authority behind Dubai South is pursuing expansion of its own.
A newly announced addition to the Aviation District’s aerospace supply chain area is the suppliers complex. The complex includes 12,000sqm of light industrial space for companies providing support services like fixed-base operations, maintenance, repair and overhaul as well as supply of aircraft parts, chartering, freight forwarding and fleet management. It is part of a wider $55m investment into the zone until 2018, which also includes two aerospace supply chain buildings.
Lufthansa Techniq, GE Aviation and Advance Aerospace Industry already call the supply chain zone home and Tahnoon Saif, vice president of aviation at Dubai South, said there were also plans to attract Boeing and Airbus to setup distribution operations.
“We are in discussions with them [major manufacturers] for having distribution centres as a start,” he said. “We are designing a zone dedicated for manufacturing, which has not been announced as of now but for light manufacturing we’re already accommodating them with the aerospace supply chain [area].”
In the meantime, expansion work at the main airport is ongoing after Dubai Airports indicated earlier this year that the first phase had been delayed until 2018.
The initial phase of the $36bn expansion will increase capacity from seven million passengers a year to 26 million. When all of the phases are completed Dubai South will have the capacity for 160 million passengers a year.
Saif said work is underway but building the necessary infrastructure would take “five-to-seven years”.
Supersonic steals the show
As this work continues, Dubai itself may find itself welcoming a new kind of aircraft entirely if US-based Boom Supersonic is able to meet its ambitious targets.
Exhibiting at the show for the time first this year, the company is hoping to introduce the quieter replacement of Concorde that could take passengers from Dubai to New York in around half the time of a conventional flight, clocking in at around seven hours and 30 minutes, at speeds of Mach 2.2.
Boom is currently looking for a secondary manufacturing site outside the US after raising $33m to build a small-scale test jet. Requests for proposal will be sent out from the first quarter of 2018 and an announcement is expected six-to-nine months later. Construction will then take up to two years.
“We’re open to anywhere globally so we wouldn’t rule out the Gulf but it is far from being decided,” founder and CEO Blake Scholl said.
So far, the company has already amassed an order book of 76 jets with five airlines and is in talks with 20 for purchase deals.
Scholl indicated the company aimed to fly its first prototype, the XB-1, by the end of 2018 and planned to begin passenger services in 2023 with its global launch customer Virgin. The first route is yet to be decided but will likely be London to New York.
“The big barrier for supersonic with Concorde was not regulatory it was actually the economics,” Scholl said. “A ticket on Concorde was a $20,000 round trip and that was so expensive that most people in most markets couldn’t afford to fly it. Today we’ve been able to reduce the cost by about 75 per cent so there are 500 routes on the planet that are economically viable without any change to regulation.”
Scholl revealed new routes that would be viable with the company’s 55-passenger supersonic jet included Dubai to London, Dubai to Sydney and Dubai to Hong Kong with flight duration around 2.6 times shorter than conventional aircraft.
Tickets will cost about the same price as conventional business class at $4,000-$5,000, he said, and the CEO claimed new turbofan technology would make the ride a lot quieter than its famously loud predecessor.
“If you can afford to fly front cabin subsonic you can afford to get there in half the time,” he argued.
“I don’t think there is anyone on the planet who wouldn’t love to get places faster. So there is tremendous consumer interest and airlines would love to have something different and better to offer their customers.”
Whether or not these plans get off the ground there is certainly a lot for aviation enthusiasts to look forward to before the airshow returns in two years’ time.
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