Political instability amid lower oil prices force leaders to make tough investment decisions
Increased defence spending, not dazzling commercial aircraft orders, will dominate this years Dubai Airshow.
As it is, the Middle East region already has an estimated backlog of more than 1,000 commercial aircraft units due to the aggressive expansion plans of the regions airlines, led by Dubais Emirates airline and Qatar Airways. This accounts for about 30 per cent of the 3,180 new aircraft units the region requires to meet rising travel demand over the next 20 years.
Instead, the focus in this years show will be on defence spending as well as on new air navigation solutions that will allow for increased operational efficiencies given the low oil prices and spending capabilities, particularly for the regions oil-exporting countries.
Most GCC states have been ramping up defence spending over the past year due to their participation in the Yemen war as well as to protect themselves from external and domestic terror threats.
Some of the major defence orders and deliveries include the first batch of F-16s in Iraq, the pending finalisation of Kuwaits $9bn Eurofighter deal, and the approval of the US sale of $11.25bn-worth of warships to Saudi Arabia, and the yet-to-be confirmed sale of some $3bn-worth of Boeing fighter jets to Kuwait.
The bulk of spending, however, has been on weapons replenishment in addition to urgent orders for helicopters, according to Boeing. This means that despite the need to strengthen their defence, the regions procurers are developing a more circumspect approach, potentially sidestepping or delaying the acquisition of more expensive and cutting-edge jets going forward, in view of lower oil revenues.
It has become apparent that securing their countries amid weaker government liquidity is an unprecedented challenge that regional leaders have to learn to cope with, at least within the foreseeable future.
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