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Boeing: Don’t Mind Order Plane Orders Drought At Dubai Air Show 2015

This year’s Dubai Air Show was less spectacular than previous yours. And some see the absence of orders from the Gulf Carriers as a bad sign for Boeing and Airbus. This article will explain why that may not be so.

Dubai Air Show 2013

First of all it is important to have a look at what was different compared to the Dubai Air Show in 2013.

The biggest difference between this year’s show and the air show 2 years ago is the fact that neither Boeing nor Airbus offered anything new. In 2013 Boeing launched the Boeing 777X, which gathered over 250 orders and commitments valued at over $95 bn. So the launch of the Boeing 777X caused a one-off bump in the Dubai Air Show’s order tally, accounting for almost half the total order value.

Additionally, there was an order from Emirates for 50 Airbus A380 airframes valued at $23 billion. Combining Emirates’ mega orders the airline accounted for almost half of the order value, which should not be considered a standard for every edition of the air show.

Additionally flydubai ordered 100 Boeing 737 MAX aircraft valued at $11.4 bn or 5.5% of the total order value. Etihad Airways ordered 86 A350 and A321neo airframes valued at $26.7 bn.

Dubai Air Show 2015

During the 2015 edition of the Dubai Air Show no new aircraft were launched. Due to the absence of new aircraft launches a lower order inflow during the Dubai Air Show was to be expected and that is exactly what happened.

Before placing follow up orders for relatively new aircraft such as the Boeing 777X, Airbus A350, Boeing 737MAX and Airbus A320neo, airlines will first take delivery of the new aircraft and evaluate their performance in the fleet.

A second reason for the lower order inflow during the 2015 air show is the absence of orders for the Airbus A380, which accounted for over 10% of the order value during the 2013 show. Emirates which is the main operator of the A380 is looking for an improved version of the superjumbo and in order to keep pressure on Airbus for coming up with the Airbus A380neo, it was to be expected that the airline would not place an order for the current superjumbo.

A possible mega order could have come from Emirates that is going to add either the Airbus A350 or the Boeing 787 to the fleet, but a decision about that will slip into 2016 as the airline awaits performance data for both aircraft.

The absence of performance data and the absence of an Airbus A380neo made an order from Emirates, which accounted for 50% of the order value last year, very unlikely.

Conclusion

The lower order inflow should not be seen as a sign of weakness, but is a direct consequence of the 777X launch and mega orders in 2013.

Airlines are awaiting the first deliveries for the 777X before placing any follow-up orders. Additionally, Emirates that is a big player on the Dubai Air Show is awaiting the launch of the A380neo and still has to decide whether it will add the Airbus A350 or Boeing 787 to the fleet.

The significantly lower order inflow becomes more apparent on the Dubai Air Show, since this mainly is the stage for the 3 big Gulf carriers that already placed their mega orders 2 years ago.

The lower order inflow is not an indication of a downturn in demand for aircraft, but is to be expected since airlines are integrating new aircraft types in their fleet before placing additional orders. Another reason is the fact that orders that are placed now will be delivered years from now, airlines will most likely wait for order books to decline before committing to ordering new aircraft.

The Dubai Air Show was not the big order festival it was in 2013, but this is not a bad sign. The lower order inflow supports my view that order books are not bubbles, but should decline at some point for airlines to make it more attractive to buy aircraft again.

Boeing: Don’t Mind Plane Orders Drought At Dubai Air Show 2015

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