Arms race dominates Dubai air show

Middle East tension is driving demand for military hardware at the Dubai Air Show which opens on Sunday, but recession means fewer orders for civilian jets.

Bitter rivals Airbus and Boeing will still woo carriers at the top Middle East aviation event, but most airlines' cheque books are empty and the fiercest marketing battles will be waged by jet fighters performing above the Gulf.

"With more threats and continued tensions you will have continued demand for new systems and new capabilities and that is why we have seen ongoing interest in upgrading and renewing fighter fleets," Riad Kahwaji, chief executive of the Institute for Near East and Gulf Military Analysis, told Reuters.

"So long as tension is there, and the situation with Iran is not solved, and there is the threat of terrorism and so forth, I think there will be an ongoing arms race," he added.

"This Dubai Airshow is going to be much more low key than the last few years," said Rupinder Vig, an analyst at Morgan Stanley. "I wouldn't expect massive orders to come through."

But Allison Weller, director of show organizer F and E Aerospace, is confident about the future of the aerospace industry after a year of global financial woes.

"The past year has been a difficult time for the aerospace industry worldwide, with manufacturers, suppliers and service providers facing a bleak and uncertain future," Weller said in a statement.

"However, with a more bullish outlook for the coming year, especially within the Middle East region, I am cautiously optimistic that the Dubai Airshow will signal a return to a healthy marketplace."

She said the industry is "now looking to the Middle East, where aerospace suppliers and service providers have managed to weather the economic maelstrom better than elsewhere."

Weller said she expects sales to beat the 155.5 billion dollars spent in 2007, claimed to be the largest amount of deals ever concluded at a single event.

I am cautiously optimistic that the Dubai Airshow will signal a return to a healthy marketplace

Allison Weller, director of show organizer

In talks

Host nation United Arab Emirates is in talks with France's Dassault Aviation to buy Rafale combat jets which will be on display at the Nov. 15-18 air show. But analysts say the United States has not given up on grabbing away a deal.

Others reported to be looking to expand or renew fighter fleets include Kuwait and Oman.

In a surprise decision, the United States will show off the world's most advanced fighter, the Lockheed Martin F-22 Raptor at the show, months after axing a display at the world's largest air show in Paris.

The jet is not on sale abroad but its only other major foreign appearance in Britain last year created a buzz and was seen as a possibly deliberate reminder, for buyers of other U.S. hardware and potential enemies alike, of its military reach.

Emirates indicated on Wednesday that it might look into increasing its intake of Airbus A380 superjumbos, of which it ordered 58 units, by taking over the orders of distressed carriers.

"We are always one of the first-movers to take advantage of the market," chairman Sheikh Ahmed bin Saeed al-Maktoum said.

We are always one of the first-movers to take advantage of the market

Emirates Chairman Sheikh Ahmed bin Saeed al-Maktoum