Dubai Air Show

Forecast predicts large aircraft required for Middle East fleets

 - November 12, 2009, 6:34 PM

Middle East carriers will account for a larger share of the global airline fleet as they expand, with an emphasis on increased numbers of large and long-range aircraft, according to Boeing’s latest market forecast. “More than 100 new airplanes, including 45 twin-aisle [designs], will be delivered to the region [this year]–approximately 20 percent of 2009 twin-aisle deliveries worldwide,” reads the U.S. airframer’s analysis. Another 50 such aircraft are predicted to join the Middle East fleet next year.

Rival manufacturer Airbus took 230 commercial jet orders in that part of the world last year, and by year-end might double the 27 “firm commitments” it has received up to the third quarter. Letters of intent cover perhaps another 10 or 12 aircraft, with Airbus Middle East president Habib Fakih saying the manufacturer expects to reach “hopefully above 50.”

Looking forward 20 years, Boeing believes the region will take 1,710 new aircraft (see table below) worth $300 billion. Of these, 1,020 will be for growth, with the balance replacing existing jets. These aircraft will account for 6 percent of new units and 9 percent of value, figures which demonstrate that the Middle East market’s requirement generally is for larger aircraft. In fact, in Boeing’s estimation, twin-aisle designs are predicted to comprise 49.7 percent of new deliveries, while 39.8 percent will be single-aisle models. Less than 3 percent will be regional jets, with 7.6 percent constituting “large” aircraft, according to the report.

Overall, the need for extra capacity means that airlines in the Middle East, as well as those in Asia/Pacific, require a higher proportion of twin-aisle airplanes than do carriers elsewhere, according to Boeing. This contrasts with Europe and North America, where demand is concentrated on single-aisle airplanes and is more for replacement than for growth.

The Middle East has led the world in average aircraft size, with an increase of 41 percent since 1972, according to Airbus. The European manufacturer emphasizes that its global market forecast (GMF), published in September, deals with predicted local demand for capacity, which it translates into units. Accordingly, the region’s airlines are predicted to take 1,418 aircraft with 100 or more seats (see table) by 2028.

Fastest Expanding Region
Growth in Middle East international traffic in the coming decade will make it the fastest expanding region, predicted to increase at 6.6 percent each year, according to the Airbus forecast. Intraregional and domestic travel will increase annually at a more modest 5.2 percent, to yield an overall rate of 6.4 percent (or 5.9 percent over the longer period to the late 2020s).

Greater growth will be achieved by locally based airlines. Airbus predicts an initial 7.6-percent annual growth through 2018 followed by a lower 6.3 percent to provide an annual average growth of 6.9 percent during the period 2009-28.

Acknowledging that the region has few global airlines, Airbus predicts that these carriers will continue their claimed “current domination of growth markets” to take more than 70 percent of Middle East twin-aisle and very-large aircraft deliveries (and over 50 percent of all deliveries) in the period.

Given the region’s relatively low population, Boeing points out that Middle Eastern carriers have focused on establishing connecting services among Africa, Asia and Europe through their home airports. Their central location generates “tremendous market potential,” according to Boeing’s June 2009 Current Market Outlook.

Sixth-Freedom World Hub
Airbus agrees, saying that strategic foresight by the region’s leaders in the past 30 years has “sought to convert geographic and raw-material bounty into major locations for tourism and business.” Such moves have made the area a globally important crossroads, “the ideal place [for] a sixth-freedom world hub.”

Long-haul aircraft such as the Airbus A340 and extended-range Boeing 777s support use of Middle East airports as transfer points. For example, Emirates Airline claims that from Dubai it can reach anywhere nonstop– except the Galapagos Islands in the extreme South Pacific.

More than 85 percent of the world’s population is within 4,500 nm of the Middle East, a catchment area containing more than 60 percent of global gross domestic product (GDP), according to Airbus. Boeing’s market outlook puts annual Middle East GDP growth at 3.8 percent and projects 20-year traffic growth from the region to Asia/Pacific, including China, at 6.3 percent each year, while that to Europe will increase at 5.5 percent. In the shorter 10-year future, travel to the Commonwealth of Independent States, Eastern Europe and India will provide opportunities for more traditional and low-cost carriers, according to Airbus.

Boeing market analysts say that recent Middle East development, driven by “economic expansion, well-coordinated growth plans, modern air-transport infrastructure and favorable location,” has produced “unprecedented growth.” Reflecting this, the Airbus forecast reports that Abu Dhabi and Dubai monthly passenger numbers for 2008 at almost 3.5 times the 1999 level. It says accommodation, shopping and arts developments under way in Abu Dhabi will “no doubt” drive a trend for connecting passengers to spend time there between flights.

Suffered Less in the Recession
The current recession has seen Middle East carriers suffer “less than many others,” according to Airbus, which cites International Air Transport Association statistics showing the region alone having recorded positive scheduled international traffic growth in the early months of 2009.

Acknowledging six recent low-cost start-up operations, Boeing sees the Middle East as a “large, relatively underserved” market for budget travel, for which it sees strong potential. “Significant migrant populations need an affordable way to return home,” it states. “The proximity to high-growth markets, such as India, Europe and Central Asia create many opportunities [for] service.”

Airbus predicts a boom in domestic regional travel, stimulated by the prospect of increasingly open skies and what Boeing calls a “youthful” population. About 60 percent of Middle East citizens are younger than 30 years old, compared with, say, 35 percent in Europe.

The OEM’s forecast foresees a large part being played by Saudi Arabia, which is “considering options to attract up to 8.8 million travelers a year by 2020, effectively doubling current levels.” The kingdom is reportedly planning to invest $12.3 billion in overhauling infrastructure and in new development.