Warn Orders Could Disappear If Oil Prices Stabilize
Flush with cash from ever-increasing
profits tied to oil production, it's no wonder airlines based in
the Persian Gulf are driving the high order numbers seen at this
week's 2007 Dubai Air Show... but planemakers had best not plan on
delivering all those planes, according to two industry
analysts.
Adam Pilarski is senior aviation analyst with Avitas, a
consulting firm for the airline industry... and he's appealing for
some common sense in the marketplace. "It doesn't make any sense,"
Pilarski told the Seattle Post-Intelligencer of the recent surge of
orders from such carriers as Emirates. "This is loony tunes."
As an example, Pilarski notes Emirates has so many jets on order
from Boeing and Airbus that every person in Dubai would have to fly
1,000 times each year, in order to fill all those seats. By
contrast, the currently-booming US airline industry sees about 700
million passenger airline flights each year, for about 300 million
residents.
As ANN reported, Emirates --
which has a current fleet of 100 passenger airliners, and 11
freighters -- signed on the dotted line this week for 80 Airbus
A350 XWB widebodies, with options for 50 more. The carrier also has
58 mammoth Airbus A380s on order, as well as 55 Boeing 777s. Rival
carrier Qatar Airways has a fleet of about 60 jets... and plans to
add 27 777s, 80 A350s, a handful of A380s and 30 Boeing 787s over
the next several years.
Some of those new planes will replace older models... but that's
still a lot of additional capacity, no matter how you break the
numbers down. To fill those seats, Middle East airlines will
increasingly spread into markets now dominated by legacy airlines
in Europe and Asia.
Teal Group analyst Richard Aboulafia says the order swell is
"all about oil money" -- and warns carriers like Emirates and Qatar
will have to drastically scale back their expansion plans if the
"colossal bubble" in oil prices bursts.
Pilarski agrees. "They will not take many of those planes," he
predicts. "I'm willing to have bets with people about that. In a
few years, things will change. Oil prices will come back down to
some semblance of normal, and people in the Middle East will
realize this cannot continue."
Also fueling demand for new aircraft are the numbers of
passengers visiting the region. For the moment, Dubai -- part of
the United Arab Emirates, a comparatively Westernized oasis in the
volatile Middle East -- has a reputation as a tourist mecca... but
that, too, may not last.
"One act of terrorism and all the tourism goes away," Pilarski
said.