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Dubai to showcase demand for jets under shadow of tensions

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Dubai to showcase demand for jets under shadow of tensions
November 10, 2023
Alexander Cornwell, Tim Hepher and Valerie Insinna - Reuters

By Alexander Cornwell, Tim Hepher and Valerie Insinna

DUBAI/WASHINGTON (Reuters) - Dubai will stage its high-profile aerospace pageant next week against the backdrop of the Israel-Hamas war in Gaza that is pushing up demand for weapons while closing airspace and making flights longer and more expensive for some airlines.

The biennial Dubai Airshow is typically a barometer for the aviation industry that in the past has produced a frenzy of commercial deals for planemakers Airbus and Boeing. It is also an opportunity to test the mood of arms buyers.

Analysts have said the war in Gaza is likely to push up demand for weapons on top of a surge in the past 18 months as the United States and its allies rearm Ukraine against Russia.

Washington has vowed to supply Israel with the weaponry it needs in its fight against Hamas, which Israeli authorities say killed 1,400 people when it stormed into Israel on Oct. 7. Israel's retaliatory assault on Gaza has killed more than 10,000, according to health authorities in the besieged enclave. Organizers have said they are expecting more than 1,400 companies from 95 countries, including four listed from Israel.

The fighting has disrupted some commercial passenger travel, with airlines suspending flights to Israel where the airport has been targeted by Hamas rocket fire and tourism has collapsed. And as Middle East officials warn of a risk of regional spillover, travellers are cancelling or postponing planned vacations to the Middle East and North Africa.

The Nov. 13-17 event is "going to be a really interesting show from a geopolitical standpoint", said Richard Aboulafia of AeroDynamic Advisories.

The war in Israel is not expected to unravel long-planned orders, but carriers in areas seeking to exponentially increase air travel - such as Saudi Arabia – may face questions about whether the conflict softens future growth plans, he said.

Emirates Chief Operating Officer Adel Al Redha said last week that demand from markets in parts of Asia had been "slightly impacted" by the war, now in its fifth week. "While we don't wish for any conflict we are used to being able to adapt our operation and mitigate every risk," he said. The chief executive of the national airline of Jordan, which neighbours Israel, said there had been a major drop in its reservations, while the airline was now flying longer routes to avoid Israeli airspace, which was driving up operating costs. "This is our fate," said Royal Jordanian CEO Samer Majali, lamenting the region's history of conflict and instability.

WIDE-BODY RECOVERY

Even so, the show is expected to yield orders underscoring a recovery in demand for long-haul jets, with Emirates sizing up more Airbus A350, Boeing 787 or Boeing 777X aircraft.

The main question mark is over the capacity of manufacturers to overcome supply chain or certification problems to deliver their latest models to the region, notably for the 777X.

A widely expected new Emirates order would be a boost for the 777X, which is already five years late.

Airline president Tim Clark said in May he hoped to get the long-delayed 777-9 version between July and October 2025.

But Al Redha told Aviation Week last week the plane was now scheduled to arrive in October 2025, and industry sources said the programme faced continued pressure on its development schedules, which are in the hands of regulators.

Boeing said there was no change to its estimates, which it most recently suggested would see the jet delivered in 2025.

Saudi Arabia's Riyadh Air could unveil a major order for narrow-body planes, with Boeing currently most favoured amid a tight back-and-forth competition with Airbus, sources said.

Flydubai, Etihad and India's IndiGo have also been chasing deals ahead of the event. None was available to comment.

(Reporting by Alexander Cornwell, Tim Hepher and Valerie Insinna; Editing by Alex Richardson)

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