[Avionics Today 10-26-2015] Middle Eastern airlines plan to invest a combined $200 billion on new aircraft over the next decade, International Air Transport Association (IATA) CEO Tony Tyler told attendees of the Aviation Day event in Abu Dhabi earlier this week. In order to support that type of growth though, the region will need to modernize its Air Traffic Management (ATM) infrastructure, as well as continue to scale up the aviation community with pilots, engineers and other stakeholders to ensure the increase occurs in a safe way.
Emirates Airbus A380. Photo: Vladimir Mikitarenko.
"This region is fortunate to have benefitted from governments and rulers, CEOs and regulators, who could see the bigger picture. Most crucially, they were also prepared to invest. The Middle East has invested over $200 billion in more than 1,000 aircraft since 2005, and plans to spend a further $200 billion in the next 10 years," said Tyler.
Considering the continued expansion and growth in demand the region’s top three carriers — Dubai Airlines, Etihad Airways and Qatar Airways — are realizing, $200 billion could actually be the floor of spending levels for gulf carriers over the next 10 years.
Michel Merluzeau, vice president of global aerospace strategy and business development for Frost & Sullivan, which provides expert aviation industry analysis, says its possible Gulf carriers could surpass Tyler's $200 billion spending prediction.
"If you look at the plans, with the four major Middle Eastern carriers, you have a total of 269 aircraft on order for Emirates, about 190 for Turkish, about 213 for Qatar, and about 193 for Etihad. Basically if you look at the current fleets between those four, the fleets will more than double over the next 10 years," said Merluzeau. "At this level, that gives us approximately, 866 aircraft, or close to 900 aircraft. I think we’ll have more after the Dubai Airshow in two weeks. We’re going to get about 900 aircraft, mostly wide bodies, over the next decade or so."
Along with that growth, the Frost & Sullivan VP said Middle Eastern carriers will also look to continue to expand into the North American market. Etihad, Emirates and Qatar will aim to increase the frequency of the routes that they are currently flying as they add more modern airframes into their fleet. Emirates has been the most aggressive in penetrating the North American market, evidenced by a codeshare agreement announced with Alaska Airlines last week, an airline that the carrier launched a frequent flier partnership with in 2012.
As far as what types of aircraft that $200 billion will be spent on, the majority will be long-haul and wide-body aircraft, Merluzeau said.
"Both Airbus and Boeing will get a pretty equal share with Middle East carriers. Emirates CEO Tim Clark has repeatedly voiced his interest for an upgraded and improved A380, he’s committed to the 777-8s and 9s, and will probably look at the A350 again," said Merluzeau.
Considering the current trend of young aircraft with highly customized premium cabins and Wi-Fi offerings, there will not be a major demand for avionics modifications in the near term since the fleet in the region is so young. But there could be demand for custom In-flight Entertainment (IFE) and premium cabin interior upgrades, he said.
"You’re talking about a different generation of avionics products here. These are not your older A330s or 767s, these are airframes that are designed with software upgradeability in mind so they become easier to keep up to date. And furthermore, where most of the concentration of the customization aspect of the aircraft is going to be in the interiors, and the connectivity element and the seat and premium seating in those aircraft," said Merluzeau. "This is where the cycle is going to accelerate because their standards are different and therefore you have a near business jet like quality in standard coming to commercial aviation in that region. Therefore the use of those solutions is going to require maintenance and upgrades on a frequent basis. This is a premium product that is going to have to stay premium."
While the aircraft purchasing power is well established at $200 billion or more through 2025, operators, airports and other aviation stakeholders will need to continue to work with regulatory officials in the region to ensure that the ATM infrastructure is modernized to accommodate for the projected growth in air traffic to the region. According to IATA's Tyler, that's where the International Civil Aviation Organization's (ICAO) Middle East ATM Enhancement Program (MAEP) comes into play.
"ICAO has established the Middle East ATM Enhancement Program (MAEP), creating an umbrella under which all regional air navigation projects are prioritized and implemented. MAEP will focus on regional efforts to overcome fragmented airspace structures," said Tyler in his speech at Aviation Day on Monday.
“It is also important that the MAEP is coupled with the development of a suitable and sustainable airspace infrastructure to meet the projected increase in demand. The need for action is urgent, and strong political will is required.”