Flying through turbulence: what the future holds for UAE airlines

Despite scaled back orders and grounded aircraft, the UAE’s airlines are setting their sights on expansion and heavier traffic

The new jet deals Emirates signed at Dubai Airshow will contribute to its ongoing expansion plans

Despite a subdued Dubai Airshow that palled in comparison to the massive deals of previous years, the main players in the UAE’s aviation sector remain optimistic about the state of the industry and their future prospects, with airlines reporting plans to expand even amidst smaller orders and the ongoing ordeal of the Boeing 737 Max.

At the show, Emirates announced two major deals with rival manufacturers Boeing and Airbus. The first, with Airbus, saw the airline announce that it will buy 50 Airbus A350-900 aircraft in a deal worth $16bn, deliveries to begin from May 2023. The firm order replaces a previous deal for 30 A350-900 and 40 A330-900 aircraft that had been announced in February.

In the second deal, Emirates announced that it will take 30 Boeing 787s worth $8.8 billion at list prices, together with 126 larger 777Xs. In this case, the order represents an adjustment of a previous deal for 150 777Xs.

Although both deals represent a scaling back of previously announced agreements, Emirates officials say they are confident that the purchases will help accelerate the carrier’s expansion plans, as well as its codeshare agreement with Flydubai. Collectively, the two airlines fly to about 257 destinations currently.

“We want to get the airplane into the network as soon as possible and expand,” says Emirates president Tim Clark. “This is a recognition that we have a variety of useful tools to be able to get that network in a manner that, by the early 20s, Emirates will be able to re-start its expansion in no uncertain terms. We can do that we these aircraft.”

Clark adds that the purchases represent a “holistic approach to the way we go about the growth of the Dubai hub… it makes a lot of sense.”

Saj Ahmad, chief analyst at London-based StrategicAero Research, told Arabian Business that the purchases are evidence that Emirates “is reshaping its business to become not just agile in the face of competition, but to be able to respond much quicker and flexibly to demand changes across its network… Emirates is now well primed to continue its expansion plans.”

Air Arabia boosts its fortunes

In another highly anticipated announcement, low cost carrier Air Arabia said it would buy 120 Airbus A320s for $14bn, representing a major expansion for the airline. It currently has a fleet of 53 aircraft, including A320s and A321s.

According to analysts, the purchase – along with a planned joint venture with Etihad – will help even the playing field between the Sharjah-based airline and its more high profile rival, Flydubai, as well as other smaller regional carriers. The ultimate winner in this competition, Ahmad says, will be the passengers.

“Across the border in Saudi Arabia, other airlines like Flyadeal, Flynas and even Saudia are inducting new airplanes and opening new city pairs,” Ahmad explains. “While these new city jets will help Air Arabia expand its footprint, the competitive landscape will become more challenging for everyone and its here where pricing may suffer, but passengers will be the beneficiaries of that.”

The 737 Max’s long shadow

Despite votes of confidence in the form of orders and planned orders of the embattled – and still grounded – Boeing 737 Max from the likes of Turkish carrier SunExpress, Kazakhstan’s Air Astana and another unnamed carrier, the continued woes of the Max cast a large shadow over the airshow.

Notably, Flydubai was conspicuously absent from the show. Boeing, for its part, faced a steady stream of questions from the media about the return of the Max, although Stan Deal, the president of Boeing Commercial Airplanes, was reluctant to commit to any timelines.

The Dubai Airshow, Deal added, also served to allow Boeing to work with its partners around the globe to re-assure them and, in the case of Flydubai – whose entire fleet of Maxs remains grounded – work to mitigate the ongoing financial crunch the airline is feeling as a result.

However, Deal did not publicly commit to any compensation to Flydubai, which amid the groundings reported a half-year loss of $53.6 million – a 38 percent reduction compared to H1 2018.

“We’re in discussions around the globe, including Flydubai. The range of the discussion varies airline by airline.”

Source: Read Full Article