Middle East tension is driving demand for military hardware at the Dubai Air Show which opened on Sunday, but recession means fewer orders for civilian jets. Airbus looked set to bag $3.5 billion in airliner orders early in the show - including the first for an 840-seat version of its A380 superjumbo, the world's biggest passenger plane.
But it was the Gulf region's role as the world's busiest arms market that dominated day one of the largest Middle Eastern showcase for aviation.
Among a raft of dignitaries and businessmen, United Arab Emirates Prime Minister Sheikh Mohammed bin Rashid al-Maktoum, who is also ruler of Dubai, toured the Boeing Apache AH-64D attack helicopter, whose presence on the tarmac among combat jets highlighted the military stakes in the region. "With more threats and continued tensions, you will have continued demand for new systems and new capabilities, and that is why we have seen ongoing interest in upgrading and renewing fighter fleets," Riad Kahwaji, chief executive of the Institute for Near East and Gulf Military Analysis, told Reuters."So long as tension is there, and the situation with Iran is not solved, and there is the threat of terrorism and so forth, I think there will be an ongoing arms race," he added.
The UAE is in talks with France's Dassault Aviation to buy Rafale combat jets which will be on display at the November 15-18 air show. But analysts say the United States has not given up on grabbing a deal.
RAPTOR ON SHOW:
Others reported to be looking to renew fighter fleets include Kuwait and Oman, while sources told Reuters in July that Saudi Arabia was looking to expand a recent purchase of Eurofighter Typhoons and was talking to Boeing about F-15s.
In a surprise decision, the United States was preparing to display the world's most advanced fighter, the Lockheed Martin F-22 Raptor, months after axing a display at the world's largest air show in Paris.
The jet is not on sale abroad but its only other major foreign appearance in Britain last year created a buzz and was seen as a possibly deliberate reminder, for buyers of other US hardware and potential enemies alike, of its military reach.
"It is marketing for US equipment, maybe reminding the UAE that there are alternatives to Rafale, but they are also flexing their muscles near Iran," a European defence executive said.
The biennial air show is taking place a few miles from the mouth of the Gulf and the border with Iran, which remains locked in a dispute with the West over its nuclear programme.
Iran is under pressure to seal a nuclear fuel deal with Washington and other major world powers to help assuage concerns it is trying to develop an atomic bomb. Tehran insists it wants nuclear technology only for civilian purposes.
800 ON BOARD:
Ethiopian Airlines meanwhile looked poised to kick off the civil side of the four-day show with a $2.9 billion Airbus aircraft order, industry sources said.
The airline drafted a request for 12 A350-900s in July and was expected to aim for maximum publicity for its expansion by signing a final deal in public on Sunday. Confirmation of the deal is a boost for Airbus as it pushes orders for the future mid-sized jet above the 500 mark.
But rival Boeing remains in front in the lucrative market for modern fuel-saving planes after notching up 840 sales of its rival 787 Dreamliner despite ongoing production delays. Air Austral, based in France's overseas territory of La Reunion in the Indian Ocean, was also expected to firm up a provisional order for two Airbus A380 superjumbos worth $650 million. It is the first airline to order a no-frills version of the world's largest airliner, designed to carry 840 passengers when fitted only with economy seats. The A380 currently flies with fewer than 500 seats and previous buyers have focused on grabbing attention with luxury trappings for premium passengers.
Other business is expected to be sharply lower compared to the same event two years ago when the rivalry between Airbus and Boeing produced a haul of orders worth around $85 billion. "There will bve some orders, but not a lot," EADS Chief Executive Louis Gallois told Reuters. Airlines have been hard hit by the global recession and are forecast to lose a combined $11 billion this year. Gulf heavyweights such as Dubai-based Emirates that built up massive fleets to challenge flag carriers in Europe and Asia are expected to be relatively quiet at the show, analysts said.
Still, most aerospace executives are looking to the Gulf to ease them out of recession once the economy recovers. "It is the one civil and military aerospace market that is holding up, driven by passenger traffic, oil prices and regional tension," said Richard Aboulafia of Teal Group in Washington.
Airbus sees 6.9 percent Mideast passenger traffic growth between 2009 and 2028, faster than in any other region.
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