Dubai air show: Middle East sets course for economic recovery

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The Middle East has not escaped the global recession. But although the world's continuing demand for energy has cushioned the impact on the region's oil- and gas-producing states, Dubai in particular has been badly hit. Foreign investment in its fast-expanding construction and tourism sectors took a tumble at the end of last year, and as the cranes stood idle, property values dropped and businesses laid off staff to whom they had, until recently, been paying huge salaries to entice them to the emirate. Stories circulated, urban myths or not, of previously high-earning expatriates dumping leased luxury cars they could no longer afford in the airport car park with keys in the ignition as they flew home for the last time.

After a bail-out for its indebted government from Abu Dhabi, there are signs that the Dubai economy is slowly picking up. A gleaming overground metro system opened in September, and the drop in traffic congestion, inflation and property rents has made Dubai a more liveable city in the past 12 months.

dubai skyline david hobcote/rex features
 © David Hobcote/Rex Features

Dubai's vision to become one of the world's major air and sea ports remains in place with the development of the giant Dubai World Central - a multi-modal transport and commercial hub centred on its under-construction Maktoum International airport. However, its ambition to create its own aerospace champion has been severely dented. Dubai Aerospace Enterprise (DAE) was the vehicle through which the emirate planned to create a six-pronged holding company in areas such as aircraft leasing, maintenance, repair and overhaul, airport development and aviation systems. Launched with a fanfare in 2006, DAE acquired US business aviation services group Standard Aero and a minority stake in Swiss MRO SR Technics (Abu Dhabi's Mubadala owns the rest), and has had some success in placing aircraft leases. But it has closed a pilot training school and "university", it has not yet replaced chief executive Bob Johnston, who retired last year, and the company was not giving briefings ahead of the Dubai show.

Abu Dhabi investment house Mubadala, on the other hand, is driving forward its aerospace strategy around a planned aerospace cluster at Al Ain airport (see P42), which will include a joint-venture composite manufacturing plant with EADS and Finmeccanica, due to open next year, and a stake in Italian business aircraft builder Piaggio. Already co-owners of SR Technics, it remains to be seen whether the show will see a move towards further consolidation between the two would-be aerospace powerhouses.

Mubadala's home-based MRO unit, Abu Dhabi Aircraft Technologies, is also expanding its infrastructure and activities at its site at the emirate's main international airport. Foundations are being laid for an Airbus A380 hangar, due to open in October 2010, ahead of the arrival of its sister airline Etihad's first superjumbos in the second half of 2012. Their first C-checks will be due in 2014. The company is also preparing to become a specialist centre for the General Electric GEnx engine, and the GE90, after signing an agreement with the power giant at the Paris air show in June.

"The move represents a step-change in what ADAT has worked on so far," says chief executive John Byers. "We have done some GE90 work, but this will take us to module capability." Although Etihad remains ADAT's biggest customer - accounting for one-third of revenues, with this figure set to increase as the flag-carrier's 43-strong fleet grows and matures - the company remains firmly focused on the third-party market, says Byers. He notes that other than a dip in cargo aircraft maintenance over the summer, the business has "not been too badly affected" by the downturn in the airline market.

Although ADAT is committed to "seeking synergies in terms of capabilities" with SR Technics, integration with the Swiss company is out of the question, he insists. "We handle different engine types and have only a very small area of overlap where we compete - on some widebody Airbuses. Otherwise, our two businesses are reasonably complementary."

For the past few years, the Middle East has been one of the main engines powering the global aerospace industry and the organisers of the Dubai air show predict that the region will lead the sector's economic recovery, with strong military spending by Gulf countries complementing civil orders from airlines and business jet operators. The event - which is marking its 20th anniversary - is set to attract about 900 exhibitors, with 50,000 registered visitors representing a 10% increase over the previous event in 2007, says Alison Weller, director of F&E Aerospace.

Although delays to the planned Dubai World Central airport development at Jebel Ali have stalled the move to an all-new exhibition centre there, the event remains one of the fastest-growing air shows, having expanded from about 500 exhibitors a decade ago.