Middle East airlines are gearing up for heightened competition as Dubai carriers made significant orders at the region's largest air show, attracting attention from potential rivals who were also teasing their own deals. The Dubai Airshow saw a surge in widebody jet orders, totaling a staggering $67 billion at list prices. As this unfolded, Saudi and Turkish national carriers were finalizing their own blockbuster orders from the sidelines.
The Middle East is widely regarded as having an advantageous geographic location, connecting around 80% of the world's population within an 8-hour flight. This strategic advantage has attracted significant attention from industry players. Boeing, whose vice-president of commercial marketing, Darren Hulst, spoke about the geographical benefits, managed to outperform Airbus in terms of orders during the airshow.
Dubai International airport has set its sights on increasing its capacity to accommodate 120 million passengers annually by 2026. This ambitious goal will build on its existing capacity of 100 million passengers. On the other hand, Saudi Arabia is also planning to expand its international routes substantially, aiming to increase them from 99 to over 250. In addition, the country seeks to more than triple its annual passenger traffic to 330 million by 2030, up from 109 million in 2019.
Saudi Arabia's heavy investments in the aviation sector include plans for a new national airline and a massive airport in Riyadh, designed to enhance connectivity and transform the country's aviation industry. This drive to expand the sector is occurring amidst simmering economic regional rivalry between Saudi Arabia and the United Arab Emirates (UAE).
While Saudi Arabia's state-backed start-up, Riyadh Air, showcased its exhibition in vibrant livery on the main concourse, its carriers refrained from placing firm orders during the event. Turkish Airlines, an established player in the lucrative transit market, made headlines by previewing an order for over 350 planes just before the airshow. Although Airbus claimed there was an agreement in principle, no formal signatures were reportedly exchanged.
The emergence of Riyadh Air poses a potential challenge for the Middle East's leading airlines, Emirates and Qatar Airways, as they dominate the profitable transit passenger market. Both airlines have established Dubai and Doha, respectively, as primary hubs for international travel.
Dubai has experienced a surge in point-to-point traffic following the end of the COVID-19 pandemic. The city's Dubai International airport is expecting approximately 86.8 million passengers this year, signaling a positive rebound and positioning Dubai as an emerging force in the post-pandemic era. Aviation analyst Brendan Sobie expressed optimism about Dubai's outlook as an aviation hub despite the current challenges and uncertainties. Under the leadership of Dubai Airports Chief Executive Paul Griffiths, Emirates' Dubai hub has grown into one of the busiest airports globally since 2007.
Acknowledging Dubai's leading position, Griffiths emphasized the need to prevent complacency, adding, "You always have a target on your back, and your competitors are aiming for you." Regarding Saudi Arabia's plans, Griffiths described them as "ambitious," recognizing the potential impact they could have on the industry.
The state-owned Saudia Group, which owns the national carrier Saudi Arabian Airlines and budget carrier flyadeal, announced its readiness to sign an order for more than 150 narrow-body jets. In addition to this significant order, Saudi Arabia has revealed plans to construct a new airport in Riyadh that has the capacity to handle up to 120 million passengers annually by 2030.
Saudia Group's general manager of communications and media affairs, Abdullah Al Shahrani, expressed confidence in their infrastructure development, stating, "Maybe the competition will be difficult for others because we have already started to build our infrastructure." Reflecting on the kingdom's domestic population of around 35 million, aviation consultant John Strickland believed there was space for another large Gulf airline based in Saudi Arabia. Strickland noted that there is enough market share for both operations to thrive in the region.
Earlier this year, both Saudia and Riyadh Air placed an order for 78 Boeing 787s. Riyadh Air's CEO, Tony Douglas, recently revealed the airline's intentions to place a "sizeable order" for narrow-body jets in the coming weeks. Douglas, who was previously employed by Abu Dhabi's Etihad Airways, emphasized that Riyadh Air's business model is distinct from that of Emirates and Qatar Airways. He explained that while the majority of Emirates' and Qatar Airways' business focuses on transfer traffic, Riyadh Air's operations primarily cater to point-to-point travelers.
In anticipation of launching operations in 2025, Riyadh Air, owned by the kingdom's sovereign wealth fund, proudly displayed a royal purple wide-body jet at the airshow. One of Riyadh Air's key target audiences is travelers visiting Saudi Arabia, and sources have revealed that the airline also plans to facilitate travel between countries via the kingdom, emulating the strategies adopted by major Gulf carriers.
In conclusion, the Dubai Airshow 2023 showcased the heightened competition among Middle East airlines. The substantial orders placed by Dubai carriers and the ambitious plans of Saudi Arabia underscore the region's determination to dominate the aviation industry. As the Middle East continues to position itself as a crucial aviation hub, the rivalry between industry giants and emerging players promises to reshape the dynamics of the market in the years to come.
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