-Caveat Lector-
Begin forwarded message:
From: [EMAIL PROTECTED]
Date: July 6, 2007 3:11:57 PM PDT
To: [EMAIL PROTECTED]
Cc: [EMAIL PROTECTED], [EMAIL PROTECTED], [EMAIL PROTECTED]
Subject: As Halliburton Goes, So Goes the World -- Goodbye USA,
Hello Persian Gulf
Emirates aims to redraw world aviation map
by Leslie Wayne
Published: July 5, 2007http://www.iht.com/articles/2007/07/05/
business/emirates.php
PARIS: The chairman of Emirates Airlines -- Sheikh Ahmed Bin Saeed
Al-Maktoum of the ruling family of Dubai -- has grand ambitions,
and a bankroll to match.
He has a huge pot of money to spend, $82 billion from his
government, the airline and other financiers. He loves large planes
and has ordered 55 super-jumbo A380s to create the biggest fleet of
these double-decker planes in the world. And he wants to make
Dubai, a sheikhdom by the sea, the busiest airport in the world,
overtaking London, New York, and Singapore.
Some may consider Maktoum's goals overreaching, but he has
delivered so far on all his promises. He built Emirates Airlines
from a two-plane operation, started with $10 million in 1985, into
one of the world's largest international carriers, with 105 planes.
Emirates is the world's fastest-growing airline -- it will take
delivery of one new Boeing or Airbus plane a month for the next
five years -- and Maktoum said he would like to see it become, some
day, the world's biggest.
"We've never seen anything like it before," said Robert Cullemore,
a consultant at Aviation Economics, a London-based aerospace
advisory firm. "We've never seen growth at this rate."
Of course, success for Maktoum is not just a simple matter of
buying airplanes. He must still compete with well-established
carriers plying many of the same routes as Emirates, attract enough
passengers to fill his vast fleet profitably and hope that the
economies of the Middle East, including Dubai, and emerging markets
in Asia and the Indian subcontinent, continue to expand to justify
the Emirates' massive investment.
But at the recent Paris Air Show, Maktoum seemed unfazed by those
concerns. He met with the Louis Gallois, the Airbus chief
executive, to sign a deal that added eight more A380s, with a list
price of $2.6 billion, to his fleet.
He held a news conference to tout Dubai's plan to spend $82 billion
over the next decade on aviation, including building a new $33
billion Dubai World Central International Airport, which is to have
six runways and to become the world's largest airport.
"What we are witnessing today," Maktoum said at the time, "is the
rewriting of the world's aviation history and the beginning of a
new era of global aviation."
Being oil-rich helps. Emirates Airlines, said Howard Rubel, an
aerospace analyst with Jefferies and Company, "has got cash, clout
and cache."
"What's surprising is the rapid emergence of the Emirates as a
player," Rubel added. "The economies of the Middle East are the
fastest growing in the world. So what do they do? They buy planes.
But five years ago it was like, 'Who are these guys?' "
Aviation has helped transform Dubai, which was a desert trading
post with hardly a paved road just 50 years ago, from being fly-
over country to a place where people are flying in. About 25.6
million passengers landed there last year.
The plan to develop Dubai was created by Maktoum's late older
brother and is now overseen by the current ruler, Maktoum's nephew,
Sheikh Mohammed bin Rashid Al-Maktoum.
Once a pearl-diving outpost that grew rich with oil revenues in the
1970s and 1980s, modern Dubai seems built on hyperbole.
Oil revenues have been declining as a percentage of Dubai's economy
prepares for the day that its reserves dwindle. Today, oil
represents only 5 percent of Dubai's economy, which increasingly
relies on revenue from superluxurious hotels, a growing financial
center and on serving as the regional headquarters for global brands.
For instance, Halliburton, the oil services company, is moving its
headquarters from Houston to Dubai, and such American companies as
Universal Studios, Nickelodeon, Microsoft and Cisco are also
setting up offices.
Dubai is on a $365 billion building spree, and more development
means more flights for the carrier. Construction projects include
the Burj Dubai, the world's tallest building, and the Mall of
Arabia, the world's largest shopping mall.
The 1,500-square-mile, or almost 4000-square-kilometer, emirate is
also building "Dubailand" - a leisure park bigger than Monaco - and
the Dubai Waterfront, a development of condos and stores that will
be the size of Barbados.
At the center of this development spree is the Maktoum family and
Maktoum, 49, who exudes a quiet confidence. In an interview at the
luxurious Bristol Hotel here, where he was about to host a
reception, Maktoum said that "when we started talking about
expanding our airline, people thought we were bluffing or that it
would take twenty to thirty years."
"But we've proven them wrong," he added, while puffing on an ever-
present cigarette. "I do believe we are rewriting history and we
believe that we can do it in a short time."
Emirates currently accounts for about one-third of all the orders
for Airbus A380s. The next closest customer is Qantas, with 20
A380s on order.
Moreover, since the ruling family is also the government, there is
a minimum of red tape and an ease of decision-making. Maktoum, for
instance, pointed out that if there are insufficient customs agents
to process incoming passengers, he can just get more.
The airline also benefits from an enviable location - Emirates
bases its strategy on the fact that its planes can reach any point
on the globe nonstop from Dubai and can connect any two city pairs
with just one stop in the Middle East. It also is further along
developing a hub than other airlines in the region.
"Sheikh Ahmed is making a huge bet and we'll see how it works out,"
said Edmund Greenslet, publisher of the Airline Monitor, a trade
publication. "We won't know for another decade. His concept is to
make Dubai the hub for travel between Asia and the West. But new
planes are being designed to go from city-to-city nonstop and to
make that paradigm obsolete. He may be making a huge bet on a
system that may not be as valid in the future as it has been in the
past."
Cullemore of Aviation Economics disagrees. While planes might fly
nonstop from London to Beijing or Tokyo, there are a lot of other
European, Asian and African cities that cannot offer nonstop flights.
The Emirates is one of the prime customers for both Boeing and
Airbus, not only for the size of its orders, but also because it
buys the high-margin interiors that please passengers and are
extremely profitable for the aircraft makers.
Its first-class seats feature flat-beds with in-seat massage and
personal mini-bars, while its in-flight entertainment includes 600
channels, e-mail connections and seat-to-seat telephones for in-
flight chats.
"One of the issues becoming obvious in the [global] aviation
industry is that it is not about the United States anymore," said
Jon Kutler, head of Admiralty Partners, a Los Angeles aerospace
private equity firm. "It's an extraordinary shift in power.
Airlines like the Emirates are pushing for the latest and greatest
-- an obvious contrast with American carriers that are nickel-and-
diming the passengers."
It is not only big planes and a new airport that Maktoum is
spending his $82 billion on.
The rest is going to Dubai Aerospace Enterprises, which includes
aircraft leasing, an aircraft maintenance program, aviation
information technology and a new aviation university. In addition,
$4.5 billion is going to expand the existing Dubai airport to
accommodate A380s.
One remaining market -- still somewhat untapped -- is the United
States. Emirates has daily flights from New York and just recently
added Houston. It would like to start flights to San Francisco,
Chicago and Los Angeles.
Maktoum doubts that many American tourists would fly all the way to
Dubai for vacation, but he sees a growing business market, led by
Halliburton's relocation to Dubai.
"Once you have one, others will follow," Maktoum said. "It's like
getting an anchor tenant. It has the pull to make others come."
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