Airline may unveil new A380 order later this week
Will Emirates' $15 billion Boeing order mark a turning point for regional aviation?
The Arabian Gulf’s aviation sector is in something of a holding pattern at the moment.
New aircraft continue to arrive and airports are being built and expanded. But the spending power and dynamism in the region that created the great long-haul fleets has been hit by an extended period of lower oil prices, the impact of a higher US dollar on local tourism, lower load factors and geopolitical tensions.
Emirates did its best on day one of the biennial Dubai Airshow to inject new life into the sector with a US$15.1 billion order for 40 Dreamliner Boeing 787-10 aircraft, and a new first-class seat enclosure for its final generation of Boeing 777-300ER planes.
Having recently mourned the passing of first class travel when reviewing a two-class flight from Budapest, it was heartening to see Emirates fighting back with a fully enclosed first-class cabin.
Designed in co-operation with Mercedes-Benz, the leather seat and controls of this private cockpit are borrowed from the world of luxury automobiles; indeed, the doyenne of car journalists, Jeremy Clarkson, is fronting its advertising campaign.
All the same, the larger size of the cabin – still a compact 40 square feet – means that the first class offering is reduced from eight to six seats.
But as Emirates airline president Tim Clark said the cabin is “a real game changer in terms of privacy, comfort and thoughtful luxury”.
Sadly only eight or nine of the current 777 series will ever feature the new product, and its implementation on the Airbus A380 super jumbo is a “work-in-progress”, said Mr Clark.
As we journalists waited patiently for Emirates to announce its latest aircraft order, there was fevered speculation about another large purchase order for the A380 fleet, of which the 100th aircraft has just been delivered out of a total of 142 on order.
It was therefore a slight anti-climax when the $15.1bn order for 40 Boeing 787-10s was eventually revealed. Emirates chairman and chief executive, Sheikh Ahmed bin Saeed, said the aircraft pipped the rival Airbus A350 to the post because his planners considered it the most efficient option for the airline. The new aircraft will be delivered between 2022 and 2030.
Etihad Airways was far more subdued on the aicraft deal front, having made a $1.9bn loss in 2016 and moved on from unsuccessful investments in Air Berlin, which is now completely grounded, and Alitalia, which is flying only thanks to an emergency loan from the Italian government.
Etihad awaits the arrival of its new group chief executive Tony Douglas in January to finalise a new business strategy, and expansion is also constrained by the slow delivery of the new midfield terminal at Abu Dhabi International Airport.
However, I did climb aboard Etihad’s A320 “flying test bed” aircraft for a demonstration of its new broadband internet system. I ran a speed test and clocked 57 Mbps or about three times faster than my du (which collaborated on this project) system at home. Etihad hopes to have this revolutionary service flying by 2019. Certification is holding up implementation, said my hosts.
The other big name of Gulf civil aviation, Qatar Airways, is having a bad time due to the current boycott by the Saudi Arabia-led bloc of GCC countries.
It has had to re-deploy 20 per cent of its capacity because of the 18 destinations it can no longer serve; then again, it has just bought a 9.6 per cent stake in Cathay Pacific to add to its collection.
I’ve been attending Dubai Airshows for two decades, and what is happening now reminds me a little of 2001, and how the sector rebounded from an even worse crisis after the 9/11 attacks.
At that time, air passenger numbers were down simply because people were afraid to fly.
Nothing is that bad today; passenger growth figures are actually quite good this year, at least for Emirates and Etihad.
But what marked the turning point for Gulf aviation was a huge order at that year’s the Dubai Airshow, actually then the largest in aviation history, when Emirates Dubai bought its first fleet of 22 25 A380s, and 25 Boeing 777s, in deals worth a total of $15bn.
Emirates has placed bigger orders since then but probably never one more instrumental in turning market sentiment.
Could today’s $15.1bn order by Emirates mark the start of an upturn for the aviation sector after several difficult years?
It’s not an unrealistic idea. Things are getting better. Rising oil prices are good for Gulf business. The US dollar is about 10 per cent down on a year ago, and local tourism is up.
Also a week is a long-time in Gulf aviation; Emirates could still announce an order for 36 more A380 superjumbos at this show.
Peter Cooper has been writing about finance in the Gulf for more than 20 years