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Middle East's carriers rack up plane orders

Boeing forecasts Middle Eastern carriers will buy around 869 airplanes, worth $115 billion, from all airplane makers between 2005 and 2024.

A long-serving Boeing executive told Dow Jones Newswires last year there are often "distortions" in the aircraft market when oil prices are high, as Middle East nations with petroleum-based economies rack up orders for planes.

Last week, for example, the UAE emirate of Ras Al Khaimah which has a population of around 900,000 said it plans to launch a new airline named RAK Airways and that talks on buying aircraft are under way with Boeing and Airbus. RAK would be the UAE's fourth national carrier.

"Every emirate or shaikdom wants to have its national flag on the tail of its airline," said Avmark's Solon.

Airbus said recently it's establishing a new subsidiary to oversee its Dubai-based Middle East operations. Airbus is owned jointly by European Aeronautic Defence & Space Co. NV and BAE Systems PLC.

Arabian Gulf carriers account for a large part of Airbus' total order book of 132 for the passenger version of its new double-decker A380, which can carry at least 555 people.

Emirates has ordered 41, while Etihad Airways has four on order and Qatari flag-carrier Qatar Airways has ordered two.

In addition, at November's Dubai Air Show, Emirates placed an order for 42 wide-bodied Boeing 777 aircraft in a deal worth $9.7 billion at catalog prices.

Emirates, Etihad and Qatar's growth has outpaced that of Bahrain-based Gulf Air in recent years. However, the carrier, which is owned by the governments of Bahrain, Oman and Abu Dhabi, is looking to finalize funding to replace some of its existing planes, such as its Boeing 767s.

The orders for the A380 and other large aircraft have prompted concern among European and Asia-Pacific carriers that Emirates might drive down long-haul fares to fill them.

An active policy of liberalising air traffic with foreign countries by regional governments has not only given Persian Gulf carriers access to overseas markets, but also means foreign airlines can offer services into the region on a reciprocal basis — further increasing capacity.

U.K.-based carrier Virgin Atlantic Airways — owned by Richard Branson's Virgin Group and Singapore Airlines Ltd. and Ireland's Aer Lingus Group PLC — are due shortly to start services to Dubai.

A Virgin Atlantic spokeswoman said the move is designed to tap into both the business and holiday travel markets. Germany's Deutsche Lufthansa AG meanwhile started a three times weekly service to Doha in Qatar in January. Lufthansa said the move is part of its strategy of serving airports in important energy-producing countries. — Dow Jones