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Tue 6 Jul 2010 08:15 PM

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Mideast defies global aerospace, defence slowdown

'Mideast carrier fleets are set to almost double their size by 2020' - consultants.

Mideast defies global aerospace, defence slowdown
BUCKING TRENDS: The Mideast is bucking slowing global aerospace and defence industry trends thanks to heavy investments in the sector. (Getty Images)

The global aerospace and defense industry is in slowdown mode but Middle Eastern countries are bucking the trend thanks to heavy investments in the sector and a growing wealthy population, a study showed on Tuesday.

Although the industry worldwide may take years to recover from the impact of the recession, Middle East carrier fleets are set to almost double their size by 2020, consultants AlixPartners said.

The report said: "Companies like Qatar Airways and Emirates will continue to challenge the more established carriers for market share of long haul travel and cargo routes."

The study comes as Dubai's Emirates airline eyes an expansion of its fleet by at least 100 aircraft over the next eight years.

Meanwhile Emirates, already the largest customer for the Airbus A380 aircraft, is due to reveal new plane orders at the July Farnborough Airshow after a record deal with Airbus for 32 superjumbos in June.

The Middle East region accounts for about 40 percent of the total A380 order backlog of 180 aircraft and Emirates, Qatar Airways and Abu Dhabi's Etihad Airways will drive growth over the next decade, AlixPartners said.

Dubai opened the first phase of its new airport last month and has ambitions to make it the world's biggest.

The report also sees recovery in mergers and acquisitions activity globally, with increasing buying opportunities and investments from the Middle East into the sector.

Growth in the maintenance, repair and overhaul (MRO) services sector in the region is projected to grow from $2.1 billion at present to at least $4.4 billion by 2019.

The Middle East, India and China are seen driving the MRO market as airline capacity shifts towards the east.

Global spending on defense in the next 12 months is expected to decline, or at best remain flat, given budget deficits and constraints in the United States, which accounted for 45 percent of the global spend over the past five years years.

In the Middle East, by contrast, defence spending should grow to $100 billion a year by 2014 from $90 billion in 2009 -- about 6 percent of the global spend.

The driver will be regional political tension and demand from oil rich Saudi Arabia, Iraq, the UAE and Israel, the report said.

The Arab Gulf region borders Iran, which remains locked in a dispute with the West over its nuclear programme. (Reuters)

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