While the Middle East market for airliners has developed into the world’s fastest growing, constraints do exist, and airframers’ ability to manage the unique challenges intrinsic to such a diverse region often prove the difference between sales success and failure.
In Dubai, for example, airport capacity constraints continue to hinder Emirates Airline from realizing its full growth potential, despite a widespread perception in the West that the Arabian Gulf carriers enjoy boundless expansion opportunity due to government largesse. In Saudi Arabia, aspirations for opening domestic air transport to competition remain largely unfulfilled, while in Iran economic sanctions imposed by the West have effectively closed the market to outside investment. Elsewhere, sectarian conflict and terrorism have completely closed Syria and impeded progress toward developing a modern air transport market in places such as Iraq.
Of course, the biggest prizes for the likes of Marty Bentrott, Boeing vice president for sales for the Middle East, Russia and Central Asia, reside in the Gulf region, whose status as a global hub have allowed Emirates Airline, Etihad Airways and Qatar Airways to assume their place among the world’s most influential carriers.
Emirates’ influence, for example, proved plainly evident in the ultimate form of the Boeing 777X. As the biggest customer for the new jet, scheduled for entry into service in 2020, Emirates played a key role in determining range, capacity and payload capability. By extension, Qatar and Etihad will benefit as well, given that they operate in virtually the same environment and generally fit the same mission profiles.
In fact, all three airlines contributed to Boeing’s sales windfall during the last Dubai Airshow, where the company launched the 777X on the strength of commitments for 150 of the new jets from Emirates, 50 from Qatar and 25 from Etihad. Speaking with AIN before the opening of this year’s show, Bentrott cautioned against heightened expectations for the 2015 edition, however.
“I think there’s a little bit of a question mark [for this year’s show],” conceded Bentrott. “It’s always a great forum for order announcements, but a lot of our customers have ordered a considerable number of airplanes, and the lead time on availability is pushing out such that it becomes a little bit more of a challenge to get them to commit.”
Airbus, conversely, holds open delivery slots for its A330, and its desire to maintain production rates on that model could translate into tougher price competition. In the fight for orders between the A350 and 787, meanwhile, Bentrott also conceded that Airbus might hold a slight advantage in terms of slot availability due to the Dreamliner’s healthier sales backlog. “Aside from just a few selective opportunities maybe in 2019, we’re kind of sold out [of 787s] until the 2020, 2021 time period,” said Bentrott.
Now flying with Qatar Airways, which just took delivery of its 25th 787-8, and Royal Jordanian, the 787 has already gained good visibility in the Middle East, while Etihad stands as a major -9 and -10 customer. Oman Air took its first 787-8 in early October and Saudi Arabian Airlines–another highly prized prospective customer for the 777X–plans to take its first 787-9 next month [December]. Bentrott noted that Emirates’ current fleet needs and capacity constraints would suggest a preference for the largest Dreamliner, notwithstanding concerns voiced by the airline’s CEO, Tim Clark, that the mid-range -10 might prove underpowered for the hot operating environment in Dubai.
“The -10 would fit really nicely as Emirates looks at phasing out their older A330s They’re phasing out their A340s, and then they’ll be phasing out some of their earlier 777s,” said Bentrott.
Although the 787-10 would mainly serve to replace existing airplanes, any further fleet growth at Emirates will largely depend on when the new airport in Dubai gets the infrastructure the flag carrier requires. “It is a bit of a moving target,” explained Bentrott. “Most recently FlyDubai has set a plan to move some of their flights over to [Dubai World Central]. An airline like Emirates, they don’t do anything second-hand. They’re going to want their image of infrastructure in place before they start moving large volumes of their traffic over to DWC. That includes the terminals, that includes the lounges, that includes probably better logistics services to get people from DWC back into Dubai. I think there’s going to have to be substantially more progress.”
Elsewhere in the Middle East, airlines’ concerns center on far more basic needs. In Iran, for example, old, decrepit fleets desperately need replacement. But until the West relaxes economic sanctions against the Islamic Republic, airframe manufacturers can only wait and hope for a market to present itself. Once it does, Boeing plans to aggressively pursue the opening.
“When you’re dealing with a population base of 80 to 90 million people and an aviation environment where most of their airplanes are aging and need to be replaced, clearly it is a great opportunity,” said Bentrott. “But the availability of new airplanes is out a ways, so most likely initial requirements would be satisfied by what’s available in the marketplace today via the lessors that are willing to place airplanes there.”
Although Bentrott said he expected Airbus to share in the spoils of an open Iran, the prospect of any Russian incursion with the Irkut MC-21, for example, would appear remote mainly due to Iran’s historical preference for Western airplanes. “There hasn’t been a rich history of successful operation of Russian aircraft in Iran, so that would probably be a hindrance,” he said.
In one formerly closed market Boeing has managed to penetrate, Iraqi Airways continues to take deliveries of new 737-800s. It has committed to thirty 737NGs, the most recent of which it took in September. It also holds delivery slots on ten 787s, although it doesn’t plan to take its first Dreamliner until after 2020.
Overall, Bentrott expressed optimism for the region, notwithstanding the geopolitical turmoil and security threats that have beset the Middle East since the dawn of the Arab Spring. Boeing, for one, hasn’t felt much effect, according to Bentrott, even as its customers have had to adjust operations to account for overflight restrictions, for example, or cease service to certain cities in conflict zones.
Even in Egypt, where tourism just about ceased following the 2011 overthrow of former president Hosni Mubarak and subsequent violence associated with the military ouster from power of the Muslim Brotherhood, Boeing sees encouraging signs. “It’s been nice to see some degree of civility in Egypt over the past eight to 12 months,” said Bentrott, who noted that current 737 operator Egyptair continues to evaluate a next-generation narrowbody and also will choose between the 787 and A350 to satisfy a need for midsize widebody capacity.
Notwithstanding his optimism, Bentrott doesn’t deny he faces special challenges in his dealings with Middle Eastern buyers. “All our customers are different, yet similar,” he said. “When I say similar, [I mean] similar requirements in terms of the airplanes and airplane capability, but different in terms of their decision-making process.
“I mean you have everything from Emirates, which does things very clearly on a commercial basis with very little political influence to Kuwait Airways, which is going to be very influenced politically, to Qatar and their decision-making process that is to a large degree [controlled] by the individual who runs the airline...There are so many different dynamics [at play] here.”
