With US defence spending down, the UAE's desire to aid distressed countries is helping to keep the production of Boeing's emergency aircraft alive.
Gulf provides relief for airlift industry survival
Since 1991, Boeing has produced more than 200 C-17 Globemaster III large military transport aircraft, all in the same shade of military grey. But this summer, the company rolled out the plane sporting the white and maroon livery of Qatar Airways, emblazoned with the word "QATAR" and the Arabian oryx logo on the aircraft's tail, from its facilities in Long Beach, California.
No, the airline was not venturing into the oversized air cargo market. The customer, the Qatari air force, chose to use the carrier's colours for the plane, which will be used in humanitarian and disaster relief missions and is seen by the country as a sort of ambassador. "They wanted people to know that this is Qatar's donation to the world," says Tommy Dunehew, the vice president of business development for global mobility systems at Boeing.
Qatar's new airlifter highlights a growing trend among the group of six GCC states: taking a greater role in addressing problems outside of their region, particularly in other Muslim countries. Their interest in large transport planes for humanitarian purposes could provide a much-needed shot in the arm for defence contractors such as Boeing and Lockheed Martin, which have been hit hard by declining US spending.
US defence contractors are trying to boost international sales in a challenging domestic climate. Boeing, Lockheed Martin and other firms have benefited from defence spending for Afghanistan and Iraq. But a deep recession in the US is forcing Barack Obama, the president, and Robert Gates, the defence secretary, to cut military spending, including a high-profile measure to strip US$1.7 billion (Dh6.24bn) of funding from the budget for seven new F-22 Raptor fighter jets.
Their military transport aircraft are well suited to emergency response. The C-17, for example, can deposit 77 tonnes of food and medical supplies anywhere in the world within 24 hours after disaster strikes. Boeing has sold the planes, with a reported price tag of $218 million each, to Canada, Australia, the UK and NATO, and now it is looking to the Gulf region. The oil-rich states, strong US allies, wanted to send relief supplies to Indonesia after the tsunami in 2004 and to Pakistan after the earthquake in 2005, but lacked the resources to lift the material themselves, Mr Dunehew has said.
Instead, the states reportedly relied on US airlifters and helicopters, and leased Russian cargo planes. With two C-17s now in Qatar's fleet, the country was one of the first to respond to the Indonesian earthquake last month, ferrying key supplies throughout afflicted areas. Qatar and the UAE are investing billions of dollars in military transport aircraft. Last year, Qatar agreed to buy the two C-17s from Boeing and has another two on option.
"As soon as they got the aeroplane they flew it," Mr Dunehew says, adding that Qatar has already sent more cadets through C-17 pilot school to respond to heavy demand. It also ordered three smaller C-130 Hercules cargo planes from Lockheed Martin. At the International Defence Exhibition and Conference in Abu Dhabi this year, the UAE Armed Forces signed letters of intent for four C-17s and 11 C-130s, worth a total of Dh11bn.
Much like Qatar's purchases, the investments are seen as ways for the UAE to help with disaster relief. The Emirates is also a staunch ally in efforts to rebuild Afghanistan, and its troops there are said to be the only Arab soldiers undertaking full-scale operations. Without actually naming the UAE, Mr Dunehew says a C-17 customer "in the same neighbourhood" as Qatar is interested in a custom paint job after seeing the civilian livery.
Elsewhere in the GCC, Kuwait, Oman and Saudi Arabia are also said to be potential C-17 buyers. International customers for these aircraft, the development of which was funded by the US department of defence, provide critical support to these programmes as they reach the end of their cycle. The US air force is on contract to buy only another 24 C-17s from Boeing. At a rate of 15 a year, Boeing should finish the last one about the middle of 2011, Mr Dunehew says.
Without any more significant orders, Boeing would probably shut the C-17 line for good, affecting more than 30,000 jobs within Boeing and among its suppliers. A firm contract from the UAE and other GCC states could provide a critical boost to the longevity of the programme, even if it ultimately depended on continued US air force support. Other Boeing programmes could benefit from the humanitarian and peacekeeping push among Gulf states.
John McGraw, the regional business development director for Boeing's rotorcraft division, says there is growing interest in the region for the Chinook heavy-lift helicopter, not only for disaster relief but also to solve some of the unique challenges of the haj pilgrimage. "There is a very large event that occurs every year on the lunar calendar in the kingdom of Saudi Arabia and they have lots of logistics issues for that," Mr McGraw says.
The UAE has been named as a possible customer for the Chinook to expand its fleet from the 12 it bought second-hand from Libya. Any future orders from the UAE could come at a critical time for Boeing, with less demand for commercial aircraft caused by the economic downturn adding to the cut in US defence spending. And while a contract with the Emirates for the C-17 would not be enough to guarantee the continued existence of this programme, it would boost ties between the two countries and help the UAE take a greater role on the world stage.