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Farnborough Review

July 21st, 2008

So just what will the Farnborough Air Show 2008 be remembered for?

It’s sixtieth birthday?

Or perhaps the record-breaking order placed by Etihad Airways?

Either way, everyone will take away something to ponder at this biennial event, not least the rather over-emphasised issue on environmental concerns and how the industry aims to reduce its global carbon footprint.

Image copyright and owned by FleetBuzz Editorial.com

While a raft of US airlines and others across the European and Asia/Pacific Rim battle for survival as oil prices continue to rise, once again, the Middle East has become the shining beacon at air shows. On the back of a highly successful Dubai Air Show just 9 months ago, Etihad Airways has finally joined its Arab rivals, Emirates and Qatar Airways in committing to numerous airplanes.

Of notable question is just how low did Airbus go to snare the A350-1000 at Etihad, given that Emirates is not at all pleased with that particular model. Equally, what tangible benefit does Etihad gain by opting for the A350 family given its larger commitment for 777’s and 787’s?

Given Airbus’ inherent exposure between these three airlines, the omens may come back to haunt it should deferrals become cancellations. Emirates is one carrier that isn’t shy - it wasted precious little time in terminating the gas guzzling A340-600 order despite desperate attempts by Airbus to salvage and covert the order for other models.

Image courtesy of Boeing

Further, between Etihad, Emirates and Qatar Airways, just how much traffic is there to split between Abu Dhabi, Dubai and Doha?

Only time will tell.

The one aspect that will be scrutinised in the weeks to come is the price of the A380’s bought by the Abu Dhabi based airline. Without going into too much detail, Etihad secured terms as favourable as British Airways. Break-even on the airplane is anyone’s guess…

As usual, the [boring] routine of Airbus announcing orders already known again and again reared its head as the company re-announced a deal with Dubai Aerospace Enterprise for a mix of A320’s and A350’s. (Makes you wonder why they bothered announcing the deal back in Dubai knowing full well they’d announce it again.) But we’re all accustomed to that style given the amount times the Qatar Airways A350 deal was regurgitated.

On the bright side, Airbus did the honourable deed and finally removed the Iraqi Airways A310 order that had languished on its order books for almost an eternity.

The highlight for most will have been the awesome display of the Lockheed Martin F22 Raptor.

In true English fashion, the aerobatic skills of all of the pilots drew huge applause from the audience around the show site.

Even the A380 drew gasps from those who were seeing this behemoth for the first time.

From the rather chaotic opening Monday, the show was a great experience. Not quite as brilliant as I’d hoped for, but then, neither did the industry prepare very well at all for oil floating at over $130 per barrel.

Between now and the next show in 2010, the extravaganza at Al Maktoum International Airport next November is the one to watch out for…

(Click here for selection of images from the show)

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Entry Filed under: Aeroplane, Aerospace, Air India, Air Transport, Air Travel, Airbus, Airbus Orders, Airlines, Airplane, Airplane Order, Airplanes, Airport, Airports, Aviation, Boeing, Boeing Orders, Farnborough Air Show 2008

13 Comments Add your own

1. Aurora | July 21st, 2008 at 10:44 am

EK and EY’s share of the Airbus wide body order book is wholly disproportionate if one considers only O&D traffic from the Emirates. It definitely speaks to “something else”. Whether that is economic / diplomatic leverage to open up Europe to more EK and EY flights, or a play for a couple of board seats on EADS and a couple of factories, remains to be seen.

Speaking of factories, EADS gave the Chinese that nice A320 factory to sell 300 A320s. Boeing has sold the Chinese almost as many 737s without giving away a production facility. What gives?
2. Steve | July 21st, 2008 at 1:06 pm

Wow, another Airbus bashing editorial. What a surprise!

“As usual, the [boring] routine of Airbus announcing orders already known again and again reared its head as the company re-announced a deal with Dubai Aerospace Enterprise for a mix of A320’s and A350’s.”

Unlike most of Boeing’s announcements, which were identifying previously booked orders, the DAE order is new business for Airbus, even if the commitment had previously been announced. Firm orders are the only ones that count.

Aurora wrote: “EK and EY’s share of the Airbus wide body order book is wholly disproportionate if one considers only O&D traffic from the Emirates.”

Anyone who thinks O&D traffic has much to do with the business plans of EK, EY and QR hasn’t been paying attention.

Aurora wrote: “Speaking of factories, EADS gave the Chinese that nice A320 factory to sell 300 A320s. Boeing has sold the Chinese almost as many 737s without giving away a production facility. What gives?”

It’s 410 (not counting any future orders), not 300. How exactly do you “give away” a production facility? The Chinese FAL will provide assembly of A320s more cheaply that those from TLS and FXW. What, exactly, has been “given away” by allowing the Chinese to bolt some A320s together?
3. BOEING777 | July 21st, 2008 at 1:18 pm

Bashing?

Hardly. Its fact that Airbus does indeed re-announce orders, even if the DAE news in Dubai was just previously an LoI.

Pointing that out hardly constitutes bashing

Equally, you should/may be aware that Boeing’s announcements are determined by their customer(s), not Boeing.
4. keesje | July 21st, 2008 at 1:30 pm

I think the market for Qatar, Emirates and Ethihad has nothing to do with the Gulf market. It’s main focus is the big Europe to Asia market. Long term strategy of EK is to make Dubai the HKG / SIN of the Middle East before the oil is up. Dubai present it self as global hub.

http://i191.photobucket.com/albums/z160/keesje_pics/dubaiworldhub.jpg?t=1216642932

The suggestion that comes up everytime Airbus wins a battle on the prices paid is becoming too transparent / bitter / predictable. Also the critics on Gulf airlines expansion strategy, but only when they buy Airbus is too funny

On the A350-1000, I agree with McNerney they might have to upgrade the 777 family or come up with something new.

http://seattletimes.nwsource.com/html/businesstechnology/2003681476_boeing26.html

Apart from the usual suspects I think it was interesting to see the tanker battle being fought (EADS flying around the boom), the F22 demo (”we don’t want to sell but just look at us!”), the Klimov dance party and last but not least the Vulcan demo!
5. Steve | July 21st, 2008 at 2:01 pm

Boeing777 wrote: Its fact that Airbus does indeed re-announce orders, even if the DAE news in Dubai was just previously an LoI.

The order is booked once, it doesn’t matter how many times it’s announced. I don’t see it as any better or worse than Boeing making a big dog and pony show about “announcing” orders they booked last year! It’s just different, but bad to some, simply because it’s Airbus.

Pointing that out hardly constitutes bashing

The whole tone of the article is negative towards Airbus. It’s funny how every Airbus sale to Gulf airlines involves some conspiracy including give-away prices on planes the airlines really don’t want, while a Boeing sales to the same airlines is blue-chip, top-dollar business. To say it’s a double-standard is simply stating the obvious.
6. Aurora | July 21st, 2008 at 2:07 pm

If the above post is correct that the “focus” of EY, EK, and QR will be “the big Europe to Asia market”, does that mean the carriers most at risk are the likes of LH, AF, KL, BA, and SQ? In the case of the Euro carriers, how will the governments react if they are forced to watch their beloved carriers shed tens of thousands of jobs and cut costs to meet the threat from these emerging giants. Will EK, QR, and EY demand route concessions to Germany, France, Spain, and the UK in return for ordering all those A350s and A380s? How about a European hub? Already the Emirates have made it know that they want a stake in the manufacturing and Dubai Inc already has a significant stake in EADS; there was talk awhile ago about a board seat as well. These three carriers, with their 200 firm A350XWB orders, own about 50% of the program at the moment. EK alone can make or break the A380 program, and the Engine Alliance GP7200. That’s a lot of clout and leverage and leaves one to wonder what form the ultimatum for “quid pro quo” consideration will take? Route preference, a hub, production offsets, board representation, or all of the above?
7. BOEING777 | July 21st, 2008 at 2:20 pm

No conspiracy theory Steve- its well known Airbus can out-price Boeing.
8. Steve | July 21st, 2008 at 2:43 pm

Aurora wrote: If the above post is correct that the “focus” of EY, EK, and QR will be “the big Europe to Asia market”, does that mean the carriers most at risk are the likes of LH, AF, KL, BA, and SQ?

Yes. SQ has talked about the threat from EK many times. Look at the facts - EK flies international from more UK airports than BA does! EK connects London (LHR & LGW), Birmingham, Manchester, Newcastle and Glasgow to most places in Asia and Africa. BA only flies to some of those places, and only from LHR!

Look at a globe - the Gulf is perfectly situated in terms of the World’s population. The opposite side of the globe from the Gulf, is the middle of the Pacific. I read somewhere that 70% of the World’s population is within a 7 hour flight of Dubai (I don’t know if it’s really true or not, but it seems possible!), those are the people that the Gulf airlines are moving from A to B. For example, a significant proportion of EK’s passengers do not set foot outside the terminal at DXB, they’re on their way somewhere else.
9. Jacobin777 | July 21st, 2008 at 3:04 pm

Its going to be interesting to see what all the A380’s in the region are going to fare…I think EK will certainly do well with a number of them..I wouldn’t be surprised to see between the three “majours” in the Middle East, some sort of leasing will be done..QR have already stated they plan on starting a leasing company (IIRC, “Onyx Leasing”).

I don’t care if its Boeing, Airbus, Embraer, ect., over-capacity is over-capacity…and I do believe we will eventually hit over-capacity….however..

1)Really don’t know when that will happen…so might as well “keep on going”
2)All three probably got great deals and favourable terms in many facets, such as cancellations, deferrals, etc.
3)Yes, I’m “Boeing-biased”, but the fact of the matter is that Airbus is more at risk than Boeing…the order-book speaks for itself.
10. Falcon | July 23rd, 2008 at 1:09 am

Any chance you will respond to robertkc’s question to you comments about keeping the A310 order on the books so long?

At the very least it would be fun to hear how you suggest to handle orders that are unlikely to be fulfilled but not legally canceled.
11. BOEING777 | July 23rd, 2008 at 7:09 am

Falcon- my point to robkc’s response was slightly overlooked was that the A310 is no longer on sale hence my “undeliverable” comment - I have/had no argument with the rest of his points.
12. Jeffo04 | August 3rd, 2008 at 10:54 pm

keesje:

Actually Boeing is working on a replacement for the 777…Boeing future models are part of the Yellowstone Project…there are three groups, Y1, Y2, Y3…Y2 is what is now the 787…Y1 is the next model being worked which will replace the 737 and Y3 will be the last design which will replace the 777
13. Doug McVitie | August 4th, 2008 at 8:39 am

Airbus can “outprice” anyone as there is no commercial imperative at work in Toulouse, thanks to French-government protection (”Airbus is a strategic company,” said Sarkozy). Like the yoghurt-maker Danone…?

It is an accepted fact in the industry today that Airbus massively discounts (55% has been recorded) in an attempt to buy market share — the A350 and A380 fiascos alone mean Airbus is in a hole it can never climb out of competitively. So they discount and pretend they’re doing really well.

Disney would reject the Airbus story as just too fantastic…