The Middle East has undoubtedly become key market for Boeing and Airbus alike, but the extent to which the two manufacturers enjoy market share in various capacity categories differs dramatically. Airbus, for example, holds a virtually unchallenged lead in the ultra-large-aircraft segment due to Emirates Airline’s installed fleet of nearly 40 A380s. It also leads in the narrowbody market, carrying more than 60 percent of the installed base thanks to the large number of A320-family jets at airlines such as Qatar Airways, Saudi Arabian Airlines and Sharjah-based Air Arabia. Boeing, conversely, accounts for some 54 percent of the installed base of twin widebodied aircraft, located most prominently at Emirates, whose 777 fleet now numbers 130.
Over the past five years, Boeing (Stand 1606) has worked especially hard to develop relationships and devote more resources in general to the Middle East in an effort to capture more of the narrowbody market, according to Marty Bentrott, Boeing Commercial Airplanes Middle East vice president of sales. Speaking with AIN a few weeks before the Dubai show, Bentrott acknowledged that Boeing underestimated the Middle East market for single-aisle airplanes roughly a decade ago, leaving it somewhat unprepared for the subsequent surge in demand among low-fare carriers, in particular. It has also been working hard to buttress its position in the widebody segment, he added.
As a result, its 737 family accounts for only 38 percent of the single-aisle airplanes in operation and just 30 percent of the backlog in the Middle East. Encouraged by the prospect of an imminent order for a large number of its new 737 Max airplanes for current 737-800 operator FlyDubai, however, Boeing expects its backlog share to increase significantly by the end of the Dubai show.
Focus on Customers
“We took our eye off the ball back in the late ’90s, early 2000s time period,” said Bentrott. “Airbus took advantage of what they deemed to be a strong, growing market and I think we probably didn’t expect things to take off the way they have taken off.
“[Today] we are more focused on customers and relationships, and if you looked at the data over the past five years our market share has been around 60 percent or 60 percent and above through the region, so we’ve done pretty well overall.”
Bentrott noted that Boeing has added three representatives at its Dubai office in the past three years to help with sales coverage in the region, and that the performance of the products in service, most notably its 737s that are in service with FlyDubai and Oman Air, have perhaps served as the most effective marketing tool.
“So as we’ve had some successes there, the airplanes have performed well and the customers like them and their utilization levels are very high, so they’re maximizing the revenue capability of those airplanes,” explained Bentrott. “And then, certainly on the widebodies, the success of the [777-]300ER has just been phenomenal compared to our competition. You’ve seen what has happened to the A340, and those that operate them today would just as soon get rid of them as soon as they could.”
One of those A340 operators is Abu Dhabi’s Etihad Airways, whose recent purchase from Air India of five 777-200LRs to serve such long-distance routes as Abu Dhabi to Los Angeles would appear to portend a less prominent role for that airline’s A340 fleet. “The reason [Etihad bought the 777-200LRs] is they want to phase out their A340s because they’re just costing them too much money,” said Bentrott, who added that Etihad’s move to 200LRs bodes well for sales to that airline of the 777 family in general.
Activity in Egypt
While Bentrott listed the UAE, Qatar and Saudi Arabia as the most prominent countries in the region for potential Boeing sales, the company can in no way consider Egypt an afterthought, particularly now that it has issued a request for proposal covering 60 airplanes, potentially of various sizes, to support a plan to replace aging jets and expand its fleet from 81 to 125 airplanes by 2022.
Although tourism has waned in Egypt since the 2011 overthrow of former president Hosni Mubarak and the subsequent violence associated with the military ousting from power of the Muslim Brotherhood, Egyptair continues to operate as normally as it can. “As much turmoil as the country is in, the airline seems to be plugging along OK,” said Bentrott. “As other airlines have backed away from that marketplace they’ve been able to fill the void.”
Boeing has managed to escape all the regional political turmoil “basically unscathed,” added Bentrott. In fact, it delivered its entire Egyptair backlog, and in places where sectarian strife hit hardest, such as in Syria and Tunisia, it carried no delivery commitments. Of course, U.S. companies cannot generally do business in Syria and Iran due to economic sanctions, but Bentrott wouldn’t discount their potential. “It all comes down to when are people going to be comfortable with opening up the sanctions and allowing them to acquire new airplanes,” he said.
…and in Iraq
In one new formerly closed market that Boeing has managed to penetrate, Iraqi Airways took delivery of its first 737-800 in August. It has committed to thirty 737NGs and ten 787s, although it doesn’t plan to take its first Dreamliner until after 2020.
In Iraq, as throughout most of the region, various cultural and political considerations often mean deals hinge on more than simple economics. “Obviously, each customer set has some unique aspects about how they conduct their business,” explained Bentrott. “Bringing more to the table than just the airplanes sometimes becomes a factor. Their accessibility to training for their pilots if there are visa issues for getting into the U.S. for training at times can be a negative check against us. In Iraq, we have a big infrastructure investment going on there to help the airline rebuild, even up through training their management people.”
In the UAE, Boeing has worked with Mubadala to help it develop its aerostructures business. The benefits of that cooperation can naturally extend into sales negotiations–with Etihad in particular. “Things like that weigh into their decision-making process,” said Bentrott. “It certainly [benefits Boeing] with respect to how the Boeing company is viewed in the UAE.”