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Boeing Predicts $300b in Plane Sales 
for Middle East Over Next 20 Years

DUBAI — US plane-maker Boeing Company forecasts that carriers based in the Middle East will need 1,710 new airplanes valued at $300 billion over the next twenty years, with half of these planes going to airlines in the UAE.

This growth in demand will arise as the region’s airlines increase their market share of profitable Asia-Europe routes by taking advantage of the Middle East’s strategic location, said Randy Tinseth, vice president of marketing at Boeing Commercial Airplanes.

Tinseth, presenting Boeing’s 20-year forecast at the Dubai Airshow on Monday, said that economic growth in this region and in Asia would contribute to projected growth in fleet capacity and air traffic.

“We see tremendous growth for the Middle East region, and Middle East carriers are well-positioned to meet those growth requirements with the fleet capacity they have in the form of unfilled orders, or backlog,” Tinseth said.

“We expect half of that demand ($300 billion), in value, to be in the UAE.”

Tinseth predicted that Asia and then the Middle East would lead recovery for the aviation industry beginning in 2010. He foresees that airlines worldwide will become profitable on balance by 2011 and that they will need new planes by 2012.

“We have begun the process of a long, slow, and, what I would call, an uneven recovery,” Tinseth said.

Monday’s forecast for 1,710 new planes by 2028 marked an 8 per cent increase from Boeing’s previous prediction for 1,580 planes by 2027. The company issued its earlier forecast in its September 2008 Current Market Outlook.

Tinseth said that Boeing’s previous forecast had overestimated the likely growth in regional jets, which he said were not economically viable at current fuel prices, as well as the growth in demand for super-jumbo jetliners.

A jump in fuel prices followed by the international financial crisis and a drop in air traffic worldwide have caused big changes for the industry. Some airlines failed, and others restructured, cutting their costs and improving efficiency.

After a 5 per cent drop in worldwide passenger traffic in 2009 and a plunge in cargo business by 15-17 per cent, Tinseth said that September showed strong passenger growth. The International Air Transport Association reported 11 per cent passenger traffic growth in August in the Middle East.

Boeing said fuel costs would continue to shape the trend of the aviation industry, estimating that a $1 change in fuel price meant a $1 billion impact on their customers’ costs.

Some industry experts and IATA have pointed to the risk of over-capacity in the Middle East. Currently, more planes are on order in the region than in service, with low-cost carriers are set to expand their fleets by more than 400 per cent. Air Arabia has planes with a total seat capacity of about 2,500 passengers, but it has three times that amount on order.

“With a youthful population and a large migrant workforce, there are tremendous opportunities for budget travel,” Tinseth said.

The region’s main carriers – Qatar Airways, Gulf Air, Etihad Airways and Emirates Airline—currently had about 20 per cent of the important Asian market and thst this would increase to 27 per cent by 2015.

“They’ll have to take market share from other airlines in order to grow,” Tinseth said. “They’re also working to leverage their geographic position.”

Boeing estimates that the region’s main carriers would grow by about 11 per cent per year between now and 2028. But many of them had secured deals with options to increase their fleet size that could see them grow even faster, the company said.
— zoe@khaleejtimes.com