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Less aircraft orders for Dubai Air Show as crisis bites

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dubai-aircraft-at-the-airshow-2007With the Dubai Air Show 2009 coming up next week the aviation industry is warning observers not to expect a repeat of the $155 billion worth of aircraft ordered at the 2007 edition. Times have changed dramatically since then.

Nor does it seem likely that there will be anything like the $15 billion order from Emirates for 25 Boeing 777s, 22 Airbus A380s, eight Airbus A340-600s and three A330s which the airline placed in November 2001, just weeks after the 9/11 tragedy stunned the aviation sector.

Emirates expansion

Somethings do not change. Emirates Airline is still grumbling about not having enough aircraft to meet demand. But there is an element of showmanship here as the airline’s revenues fell in the first half of its financial year despite adding substantial new capacity.

Yet all is not gloom and doom. The Dubai Air Show can still boast 10 per cent growth in exhibitors this year to over 900 from 47 countries. The focus will be more on defense than commercial aviation at this show.

These are still very exciting times for airlines in the Middle East with the huge fleets of aircraft ordered in the early years of this decade now arriving en masse.

Qatar Airways has more than 200 aircraft on order, including 80 A350s and 30 Boeing 787 Dreamliners. At last year’s Farnborough International Air Show, Abu Dhabi-based Etihad ordered 100 Airbus and Boeing aircraft, and Flydubai placed an order for 50 Boeing 737-800 aircraft.

However, the fear is now that overcapacity is going to further undermine the commercial viability of the sector. Globally airlines are big loss makers as they are in the Middle East with the exception of Emirates in Dubai.

Cut-price travel

For regional travelers a golden age of cut-price travel is at hand with low-cost carriers for short haul, and the national champions battling it out for their business on long haul.

But the biggest losers will not be the regional airlines but the global legacy carriers. They are facing intense and often subsidized competition from airlines in the Middle East with much lower cost structures and the newest aircraft.

It could be that the casualties in this commercial war are not found in the region but among the flag carriers of Europe and the US. All those new planes will have to be filled, and passengers on most airlines will enjoy state subsidies from countries that they will most likely never visit. Is there commercial logic in this? Probably not.

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Written by Peter Cooper

November 12, 2009 at 9:32 am

Posted in Aviation, Qatar, Travel

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