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Military spend outshines orders at Dubai Airshow

A member of the flight crew sits in the cockpit of a Boeing 787 Dreamliner, operated by Qatar Airways, on the opening day of the 14th Dubai Air Show
Jasper Juinen I Bloomberg via Getty Images
A member of the flight crew sits in the cockpit of a Boeing 787 Dreamliner, operated by Qatar Airways, on the opening day of the 14th Dubai Air Show

Airlines took a pause for breath at this year's Dubai Airshow, as a backlog of bumper orders from the last event managed to curb major purchases this time around.

Instead, the focus shifted to military spending as conflict in the Middle East continues to dominate headlines, with many nations in the region bolstering their defense budgets in response.

Asia shines

In 2013, the biennial show saw a record number of passenger aircraft deals, with the Middle East's airlines clocking up combined orders worth over $200 billion. This time around, the big plane orders came from Asia.

On Monday, Boeing signed a deal for 75 single-aisle planes with India's Jet Airways worth around $8 billion. While, low-cost Vietnamese carrier Vietjet, confirmed an order for 30 Airbus A321s in a deal worth $3.6 billion at list prices.

Emirates' 'largest' MRO

Meanwhile, Emirates also agreed to a $16 billion maintenance, repair and overhaul (MRO) contract with General Electric Aviation. This was for its GE9X engines that will power the airline's fleet of 150 Boeing 777X aircraft over a period of 12 years, making it Emirates' largest single engine MRO contract to date.

"The biggest difference versus the show bonanza in 2013 was that there was no new widebody launch that precipitated big orders like the last show," said Chief Analyst at StrategicAero Research, Saj Ahmad.

"New widebody jets aren't launched at every air show - indeed, they materialize every decade or more, so it stands to reason that the 2015 edition of the Dubai Airshow stood no chance of emulating the record set two years ago," he said.

Two years ago, Dubai's flagship carrier placed an order for a total of 200 aircraft, a mix of Airbus and Boeing, at a combined list price of around $100 billion.

Order values are based on catalog prices of planes, which airlines do not actually pay, with the actual value paid a closely-guarded industry secret. Key airlines of the region, Emirates, Qatar Airways and UAE airline Etihad did not order a single new passenger jet at the show.

Military spend boost

Military and defense aircraft were the real focus of this year's show – but many of the orders and deals that were struck throughout the event will remain under wraps.

One deal that was revealed at the show on Monday included an agreement with the United Arab Emirates (UAE) Air Force with Swedish aerospace firm Saab, worth $1.27 billion.

The deal will see the UAE pick up two brand new Global 6000 long-range surveillance aircraft, while two existing Saab 340 jets already in UAE ownership will undergo upgrades.

Saudi Arabia and the UAE have been leading the war in Yemen against the country's Shi'ite Houthi rebels since March and are part of the U.S.-led coalition bombing the Islamic State in Syria and Iraq.

"The paradigm shift to focus on defense deals is no coincidence. The current war across Syria and Iraq over ISIS means that many Gulf Cooperation Council (GCC) nations are looking to procure and beef up their military capability in assisting the U.S. in defeating these terrorists," said Ahmad.

"And in a catch-22 situation, the need for more military airspace usage poses a growth challenge for commercial traffic," he added.

Among other orders publicly disclosed, was one from Lebanon, for an undisclosed price. Embraer Defense & Security said Lebanon would buy six Super Tucano aircraft for basic missions and training.

And Boeing disclosed that it is in "serious conversation" with five potential customers for its Maritime Surveillance Aircraft, a long-range spying plane.

Lockheed Martin announced it has been awarded a $262.8 million contract from the U.S. Air Force to service Saudi Arabia's F-15 sniper targeting system, its search and track sensors and radars that allow for day and night low-level navigation.

The U.S. aerospace and defense company also used the show to unveil a permanent chalet at Dubai World Center, the location of the Dubai Airshow. The three-story structure was officially commissioned on Monday by Lockheed CEO Marillyn Hewson.

The new building "underpins the strength and depth of the company's partnership with the UAE and the wider Gulf region," the group said in a statement.

On Sunday, Boeing also announced plans to establish its Middle Eastern headquarters in Dubai South's Aviation District. The goal is to open the center for business by the end of 2017.

"Overall, the Dubai Airshow was still a huge success given the number of exhibitors and attendees. It's not a one-trick pony show like the Paris Air Show where Airbus saves orders and announces them there. Dubai showed the real colors of today's industries - commercial and defence wise," Ahmad said.