Emirates aircraft orders a signal of Dubai rebound
Posted on 21 July 2010 with no comments from readers
The orders for 30 Boeing 777s and 32 Airbus A380s by Emirates Airline over the past few weeks are both a symbol and tangible evidence that the Dubai economy is on the rebound from its 21-month recession.
Not that there has been any recession in the UAE aviation sector. Etihad Airways this week also highlighted its growth in the first half. Emirates flights continue to be mainly full and the airports are busier than ever.
Switching planes
Now it may well turn out that a part of the Emirates’ 777 order is a reallocation of planes previously sold to the Dubai Aerospace Enterprise leasing company whose credit probably not as good as the Dubai carrier. But this is still much more than just a gesture of confidence.
The UAE really is emerging as an aviation hub for the region, indeed it is already there. The economics of operating new, fuel efficient planes with non-unionized, younger and cheaper staff are well understood; airport operations are also well run and profitable.
Moreover, aviation is a feeder for local tourism, business and the expatriate communities. There is a multiplier effect from investment in a new aircraft that touches hotels, shops and even the efficiency of multinational companies based in the UAE.
How many people can say that they first discovered the UAE on a stopover? It is a tremendous advertising and marketing tool for the country.
New destinations
Each new destination added to the network opens a whole new door to two-way trade and tourism. Entrepreneurs from the new destination can discover the business friendly, tax-free UAE for themselves.
Keeping the aircraft fleets expanding is therefore a vital part of this process. There are still many destinations that would make sense. What about Vancouver or Montreal, or St Petersburg in Russia?
One day every major city in the world will be inter-connected from west to east through the UAE airports. But there is a long way to go until that goal is achieved, and until then the airlines will have to keep buying aircraft.
They are assisted by the export credit guarantees available in both the US and Europe to finance new aircraft, and there is some irony in the governments of these countries subsidizing competition for their own flag carriers. But then they would not be in a position to buy new planes.
