Middle East airlines show their buying power

Etihad Airways, the United Arab Emirates’ flagship carrier, has ordered $7 billion worth of engines for 100 Boeing and Airbus aircraft ordered at last year.

The firm order for 239 engines, which includes 19 spares, could rise to $14 billion if all options and purchase rights for an additional 100 aircraft are exercised. 

By boosting its fleet from 50 to 150 planes over the next decade, the six-year-old airline will cement its position as “the fastest growing airline in aviation history”, according to Etihad chief executive James Hogan. 

Highlighting the prowess of the region, BusinessWeek reported: “Obviously, Etihad has grand ambitions and deep pockets – but so do a lot of other Middle Eastern carriers. Qatar Airways, Dubai-based Emirates and its low-cost affiliate Fly Dubai, and Bahrain-based Gulf Air together have more than 420 passenger jets on order from Boeing and Airbus. ALAFCO and DAE, two leasing companies based in the region, have ordered about 260 more planes.” 

“Even as the airline industry was spiraling into deep recession, Airbus booked an astonishing $30 billion in orders from Middle Eastern customers, accounting for some 61 percent of its order book during the 12 months leading up to the show. Qatar ordered another couple of dozen planes, worth almost $2 billion, as the show opened on June 15.”  

“The question is whether all these airlines can possibly succeed, or even survive. Boeing and Airbus, in their long-term market forecasts, say they expect passenger traffic in the Middle East to rise an average six to seven percent annually over the next two decades, compared to an average rate of five percent or so worldwide. Yet Hogan predicts Etihad will grow 12 percent annually at least through 2020. The orders from other carriers imply that they are counting on similar expansion.”