Middle East spends big at Farnborough Air Show

The air show is celebrating its 60th anniversary and is one of the biggest events in the commercial aviation industry.

However, activity at this year's show has been quieter than in recent years.

The lack of orders by US and European carriers at the show has been no surprise, according to John Strickland, director of aviation specialist at JLS Consulting in London.

He said the 'climate of crisis' that is impacting world markets due record high fuel prices, tight credit and slowing economies has squeezed airlines and hurt ticket demand in the US and Europe.

By contrast, Middle East countries are experiencing an economic boom fuelled by the same record oil prices. These countries are eager to purchase more aircraft as part of their ambitious plans to develop themselves into leading economic and tourism hubs.

Etihad sets the pace

Abu Dhabi-based Etihad Airways kicked things off in a big way on Monday by announcing one of the largest orders ever - up to 205 aircraft in the next two decades for a list price of $43bn.

The order involved both major aircraft manufacturers, Boeing and Airbus, and spanned all three aircraft categories - narrow bodies, mid-sized and extra-large carriers.

The order entailed firm orders with Airbus for 55 aircraft, comprising 20 narrow-bodied A320s, 25 of the mid-sized A350s, and 10 of the double-decker A380 Superjumbos. The A350s will feature engines by Rolls-Royce in a deal worth $2.1bn at list prices.

The carrier also took options on another 55 Airbus jets and obtained purchase rights for a combination of 50 Boeing and Airbus aircraft.

The Boeing order involves firm orders for 45 aircraft, comprising 35 Dreamliner 787s and 10 extended-range 777-300 jetliners.

It also secured options on another 25 Boeing 787s and 10 Boeing 777-300ERs and purchase rights for a further 10 787s and five 777s.

The orders by Etihad make clear that the airline is aiming to be one of the biggest players in the entire aviation industry, Strickland said.

FlyDubai aims high

The next Middle East carrier to make an announcement was FlyDubai, the new low-cost airline from Dubai, which said it had signed a $4bn deal for 54 next-generation 737-800 aircraft from Boeing.

The order, which marks the budget airline's first aircraft purchase in preparation for the planned launch of flights in mid-2009, comprises a firm order for 50 aircrafts from Boeing and a separate leasing agreement with Babcock & Brown Aircraft Management for a further four Boeing 737-800s.

Saudi and Qatar make their bids

Next up from the Gulf was Saudi Arabian Airlines, which signed a firm contract with Airbus for eight A330-300 wide body aircraft as part of its fleet modernisation plan.

The contract follows one deal for 22 Airbus A320s signed at the end of 2007, marking the first agreement between Saudi Arabian Airlines and Airbus for commercial aircraft in 26 years.

The carrier said it will benefit from the operational commonality and efficiency of a combined Airbus wide body and single aisle fleet.

On Tuesday, Qatar Airways announced that it intended to purchase four single-aisle Airbus passenger jets worth a total of $361m.

The Doha-based carrier added that it had taken the option of buying a further two A321 planes, bringing the total order up to a possible six.

The airline also said it remains interested in Bombardier's CSeries, the new family of 110-149 seat commercial jets that are expected to enter the market in 2013, and hoped to announce a further A320-family order soon.

Mubadala and DAE add to tally

Also on Tuesday, European aerospace group EADS and Mubadala Aerospace, part of an investment vehicle owned by the Abu Dhabi government, signed a deal to make Airbus plane parts in the UAE.

And last but not least, Dubai Aerospace Enterprise (DAE) announced a firm order to buy 100 Airbus planes worth $12.6 billion for its leasing operations. The order is for 30 extra-wide-bodied A350 passenger jets and 70 single-aisle A320s.

See also:
Low-cost carriers fly high in the Gulf
Travel industry has yet to feel the impact of high oil prices