777 will drive market share gain in Mid-East: analysis

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Boeing's 777 will drive a more even market share in the Middle East which has been dominated for years by Airbus, according to a new analysis by Bernstein Research.

"The 777 is emerging as a potential safety strategy [for Middle East airlines] in case A350 improvement comes more slowly than planned," Bernstein said in a 28 November note. "The 777 also has an advantage that it can operate with 10 abreast seating in economy. This is a configuration used by Emirates, but not Etihad or Qatar (the A350 will only take nine abreast seating). We believe it materially improves Emirates economics."

Airbus, which has dominated market share in the Middle East for years, delayed the A350-1000 entry into service by two years and has now pushed back EIS of the -900 by at least six months, into the first half of 2014. Qatar Airways is the launch customer of the -900 and the -1000 and Emirates also ordered a large number of -1000s. Neither airline is happy with the delays. Emirates announced an order for 50 777-300ERs at the Dubai Air Show, in part as insurance against the A350 delays.

"Airbus had been leading in the Middle East," said Bernstein. "But now we are seeing Boeing make major inroads, so that the region is moving toward a balanced fleet. The 777 is the reason for Boeing's progress."

Bernstein also predicted a large number of single-aisle airplane orders from the Middle East.

"Expect a coming wave of narrowbody orders... as GDP rises. With roughly 400 million people in the Middle East, intra-regional travel is far below Europe and North America on a per capital basis," Bernstein said. "Growth is likely to be facilitated by low cost carriers led by Air Arabia and flyDubai."