Growing airline industry offers metalworking opportunities

Dubai's Emirates airline is poised to become the largest wide-body carrier in the world by 2016, according to the latest report on the Middle East aviation industry. The improving airline industry in the region has brought demand and provided opportunities for metalworking tools manufacturers all over the world.

"Over the next five years, we expect that Emirates will continue its ascent and become the largest wide-body carrier in the world. We further expect that its regional peers, Qatar Airways and Etihad Airways, won't be far behind in the ranks of the top 20. We project that passenger flows to and from the Middle East will reach nearly 140 million by 2015 – an increase of 45 million during 2010-2015," Boston Consulting Group (BCG) said.

Metalworking tools industry is sensitive to changes in the economic and financial climate. Demand responses to economic ups and downs are typically amplified in this industry highlighting the level of sensitivity to the broader economy. Changes in production capacity utilisation, capacity expansions, and the level of business confidence strongly influence demand in the marketplace.

The Middle East's largest carrier has almost tripled its capacity and passenger revenues in the last five years. Dubai's carrier is currently the world's second largest airline in terms of wide-body fleet capacity after Air France/KLM.

Last year, Emirates ordered 30 777-300ER wide-body aircraft worth US$9.1 billion from US manufacturer Boeing at the Farnborough Air Show. The deal added to airline's fleet of 71 of the same type. The Dubai carrier has 79 A380s, 70 A350s and 7 B777 freighters on order with a total price of more than US$67 billion.

Emirates emerged as the fastest growing among the world's three top airlines in terms of monthly capacity, according to a recent report by Centre for Asia Pacific Aviation. BCG estimated Emirates will grow its capacity by nine to 12% annually through 2015 to become the largest operator of wide-body aircraft.

Having a newer and fuel-efficient fleet will enable Dubai's carrier to simplify its maintenance and crewing operations, reduce fuel costs and wield significant operating-cost advantages over airlines that deploy older and more complex fleets. "We estimate that delivery of newer, more cost-effective aircraft over the next several years will reduce unit operating costs at Emirates by an additional 12 to 15% below their already-low levels," the authors said.

Market upturn

After a temporary period of lull, the world market for metalworking tools staged a remarkable recovery in the year 2010, as mirrored by the growth in annual value sales. Improvement in capital spending across key end-use industries, thanks to a strong resurgence in growth fundamentals such as increased demand for end products, subsequent rise in production needs and improved manufacturer confidence, especially has revived market prospects for machine tools in the year 2010.

The sheer diversity of its application areas, ranging from aerospace and automobile manufacturing to electronics, non-electric machinery & equipment, wind power generation, process, mining and oil exploration too ensured that machine tools market staged a quick recovery. Increase in automotive and electronic equipment production in response to growing demand for new automobiles and electronics respectively, in particular had a positive impact on the demand for machine tools over the last few years.

As manufacturers continue to re-directed their focus and efforts on achieving global competitiveness by increasing production capacities and productivity, metalworking tools market will witness tremendous gains.