The Middle East is gradually turning out to be one of the major aerospace hubs and is becoming the focus of air travel, away from regions line Europe, US and Asia. Dubai based Emirates is one of the leading Gulf carriers and is gaining a lot of traction pretty quickly. In fact, Emirates happens to be Airbus (EADSY, Financial) and Boeing’s (BA, Financial) biggest client. The European aircraft major was hit badly recently when the airline had cancelled a huge order for 70 A350 XWBs and instead chose to go with 150 Boeing 777X, the deliveries for which is expected to start from 2020. But now, Airbus is again hoping to engage in talks with Emirates about a future deal for A350.
An update on the situation
Earlier is 2007 Emirates had placed the order for the 70 A350s. However, it went on to cancel the order in June this year. Emirates is one of the fastest growing airline world across and for it to sustain its growth or increase its growth, it will have to ensure fleet expansion at critical junctures. On the back of increasing demand for air travel, the airline has developed a strategy that will allow it to soon compete with major players in global markets such as US, Asia and Europe. For this to happen it needs to have an updated and technologically sound fleet.
Airbus was providing all that, but the delivery schedule of the A350s wasn’t complementing Emirates’ growth strategy. This is where Boeing scored with its 777X. In fact, Emirates had placed an initial order for the Boeing jets during last year’s Dubai Air Show. However, the order got confirmed only after the order for A350s was cancelled. At the time of the cancellation of the order Emirates had mentioned it might get involved in talks with Airbus once again during the end of the year. That’s exactly what’s happening at the moment.
Why is this important for Airbus?
The answer is simple – Emirates is a leading Gulf carrier that has huge space to grow and Airbus wants to be a part of this growth story. Analysts and industry experts expect the Middle East region to boost air travel greatly. Gradually the region is becoming the strategic stop over for passengers flying to and from South-East Asian markets, and also other parts of the world.
According to Airbus Global Market Forecast, the Middle East is the only region in the world where the wide-body fleet is larger than the single-aisle fleet, and the carriers here will grow from an 8% share to 13% of traffic in the next 20 years. The study also forecasts that total deliveries of 2,148 jets will take place by 2033, of which 20% will be for replacing old fleet and 80% will be for growth. On top of this, 62% of the total deliveries will be of wide-body jets.
So, keeping all these in mind, both Emirates and Airbus are positive about the growth scope of the geography. Emirates intends to look closely at how the new A350s function once the deliveries start this year. The airline will be in need of wide body aircraft 2019 onwards since by then the existing fleet would start aging. Also, greater number of passengers would require bigger or greater number of jets.
Automatically, Emirates is stressing a lot on an improved A380 Jumbo Jet that would increase the fuel efficiency and bring down the overall cost of operations. So far Emirates has placed orders for a total of 140 A380s and with new engine option the figure is likely to go up. So, if Airbus can strike the right chords and bag huge orders for both its A350 XWB and A380, it’s sure to benefit greatly and become a part of a great growth story.
