For an industry stunned by almost two months of bad news, Emirates' decision to buy up to $15,000 million-worth of new aircraft was perfectly timed. The orders, announced at the 7th Dubai International Aerospace Exhibition, not only affirm the carrier's international ambition, but also underline that some Middle East carriers have escaped relatively unscathed from the the 11 September attacks on the US. While its competitors are cutting back capacity, Emirates has seized the initiative, sending out a clear signal: it's business as usual in Dubai.
'These are difficult times for the airline industry,' said Sheikh Ahmed bin Saeed al-Maktoum, chairman of Emirates, on 4 November. 'But the dynamics of this business require us to plan ahead in order to meet the anticipated global demand and growth in air travel. By 2006, when the first [Airbus] A380 enters service we expect to be carrying more than twice as many customers as we do now.'
The spoils being shared between the two big manufacturers - Europe's Airbus Industrie and The Boeing Company of the US - will eventually see Emirates' fleet of 36 aircraft almost triple to 100 jets by 2010. And the new orders are for some of the biggest, most advanced aircraft on the market - from Airbus, the A380, the A340-600 and the A330-200; from Boeing, the 777-200 and the 777-300.
Both manufacturers are keen to nurture their relationship with the ambitious carrier and have gone to great lengths in their race to be its number-one supplier. Emirates is a valued launch customer for new aircraft in the region, and with Boeing and Airbus now desperate to secure new business, Sheikh Ahmed could not have picked a better time to buy new aircraft. 'It is certainly a good time to buy,' says Sash Tusa, aerospace analyst at Goldman Sachs. 'Any deal of this magnitude will always attract keen prices and it is likely that Emirates has taken advantage of both manufacturers' eagerness to sell. But this is still a very gutsy move by Emirates at this time in the business cycle and with an aircraft that is still unproven in the A380.'
Compared to the international giants of air transport Dubai's flag carrier is a relatively small player, even by Middle East standards. Emirates is dwarfed by its bigger neighbour, Saudi Arabian Airlines, which operates a fleet of more than 200 large aircraft and last year carried some 12 million passengers on scheduled services. Emirates, which has only been in business for just over 15 years, carried about 5.5 million passengers .
'Either you are number one or you are nothing,' said the UAE Defence Minister and Dubai Crown Prince Sheikh Mohammed bin Rashid al-Maktoum, at the airshow. 'While there is a recession in the global civil aviation sector, it takes a big heart to take such decisions. We are pressing ahead with all our plans and projects and we have shown this with these orders.'
Following Emirates' decision to increase its commitment to the A380, Airbus has emerged as the principle beneficiary of the airline's new fleet plan. At the airshow, Airbus chief executive officer Noel Forgeard was eager to emphasise the airline's favoured status, 'Emirates was a customer when the A380 was a project not a product,' he said.
In addition to its five existing orders for the 555-seat aircraft, Emirates has purchased another 15 A380s, which will be capable of flying more than 8,000 nautical miles non-stop, with two A380-800F (freighter) aircraft also on the way. An option has also been taken out for a further 10 A380s. In total, the order makes Emirates the biggest customer for the revolutionary aircraft ahead of more established names like Air France, Singapore Airlines and Virgin Atlantic. The first four A380s are due for delivery in 2006, followed by six more in 2008 and eight in 2009.
The aircraft will form the centrepiece of Emirates' ambitious strategy to become a global player in the aviation industry. 'The A380 represents the only possible way forward for an airline like Emirates. Not only does it offer greater efficiency, but landing slots at the world's most popular airports like London Heathrow, Frankfurt and Hong Kong, which are becoming harder to obtain,' said Sheikh Ahmed.
Proving that size does matter, the airline has also opted for Airbus' all-new, 380-passenger A340-600, which, like the A380, is tailored for the high revenue, long-haul market that Emirates coverts. Not that Emirates is ignoring its regional business. The airline is also planning to acquire another three 253-passenger A320-200s to add to its existing fleet of 17 A320s.
Leading international carriers are advised to take note. Emirates is serious about opening new direct routes from Dubai to New York and Los Angeles, and into South East Asia and Australia. Next year the airline plans to start a non-stop service from Dubai to Perth and Emirates has earmarked Boeing's 777 aircraft specifically for this purpose. In conjunction with the Airbus orders, Emirates has signed a letter of intent with Boeing for 25 new 777-200 and 777-300 wide-body aircraft. The deal, worth an estimated $6,600 million, will increase its operational fleet of twin-engine 777s to 37 aircraft by 2010, and intensify the US manufacturer's battle with Airbus for the supply of long-range wide-bodied aircraft to the Middle East.
Despite its success in making a place for the 777 in Emirate's future plans, Boeing should be concerned at the size of Emirates' commitment to the much larger A380. Boeing decided against producing a bigger version of its ubiquitous 747 jumbo and has no alternative in the super-jumbo class to offer airlines like Emirates. 'If other carriers in the Middle East are looking for an aircraft in the super-jumbo class, the A380 is the only option,' says Charles Burrows, aerospace analyst at HSBC. 'When it came onto the market, the 747 became obsolete.'
Instead, Boeing's strategists have decided to develop the Sonic Cruiser aircraft, which will have the capability to carry around 250 passengers at just below the speed of sound. The company's leading customers, including Emirates, have expressed an interest in the aircraft, which will slash an hour off flights from Dubai to London. However, the first Sonic Cruisers will not come into service until 2008.
The aircraft sales announced in Dubai have also intensified the competition to supply engines. On the opening day of the airshow, Emirates placed orders with the UK's Rolls Royce for 38 Trent 500 and 700 engines for its A340-600 and A330-200 aircraft. However, the big engine deal will be to supply Emirates' A380. Alliance, a US grouping of General Electric Aircraft Engines and Pratt & Whitney, is offering airlines its GP7200 engine for the A380, and Rolls has adapted its Trent engine to fit the giant aircraft. Both companies have submitted bids to supply Emirates, and the airline says a decision will be made next year.