This scene at the air show last week perhaps best illustrates the current state of the industry: Boeing CEO Jim McNerney sits at the podium flanked by Emirates Chairman Ahmad bin Said Al Makhtoum and Qatar Airways CEO Akbar Al Baker, and the three announce deals for 200 Boeing 777Xs worth close to $100 billion, launching what is Boeing's next big widebody program. After McNerney leaves the stage, his seat is taken moments later by Airbus CEO Fabrice Bregier, listening and smiling as Ahmad states that his airline is ordering 50 more Airbus A380s—a $20 billion deal at list prices.

Of course, immediately preceding these events, McNerney had walked across the exhibition hall at the Dubai Airshow from another conference room in which he had sat next to Etihad Airways CEO James Hogan, who confirmed an order for 30 787-10s and 25 777Xs. Hogan also announced orders for 50 more A350s, among other Airbus aircraft. Within the first few hours on the opening day of what is still officially a regional air show, the two big manufacturers bagged deals for $200 billion worth of aircraft, launched a new program and saved the struggling A380—at least for now.

Astonishing? It is the new reality in international air transport. If there were any doubt left that the “Big Three” Persian Gulf carriers—Emirates, Etihad Airways and Qatar Airways—are becoming the dominating force in long-haul aviation, it should now be dispelled. And their influence on key aircraft programs is growing: Three of the four launch customers for the 777X are Gulf carriers—Lufthansa being the only airline outside the Middle East to have signed up for the aircraft. The new 777-8, which will have an unheard of 9,400-nm range, has so far been ordered by the Big Three exclusively, although its performance characteristics make it attractive for other hot-and-high markets.

Nowhere is the Gulf carriers' importance to aircraft makers more visible than in the Airbus A380 program. Emirates has essentially provided a life insurance policy for the otherwise struggling aircraft. The airline increased its order to 140 from 90 A380s and will take more if it can figure out how to handle additional aircraft at Dubai's current and planned international airports. Emirates now accounts for almost half of the total A380 orderbook (308 aircraft) and slightly more than half of the backlog.

Emirates' loyalty as a customer does not, however, solve the short-term problem of filling what Airbus describes as a “handful” of empty 2015 A380 production slots, but it does buy the manufacturer valuable time to make the aircraft more competitive and attractive to the rest of the market. Most other airlines believe the A380 is too large, and they do not like the additional costs of operating four-engine aircraft nor the additional risk of having to fill more than 500 seats on every flight to make money now that smaller aircraft with lower unit costs, such as the 777X and A350, will soon be available.

But even there, improvement might soon be triggered by Emirates' demands. Airbus has been quietly studying possible upgrades that increase the A380's competitiveness. Emirates Airline President Tim Clark has a clear vision of what these improvements could look like, and he shared it with Aviation Week at the air show here (see page 30).

“The A380 needs to get the benefit of what is going on with the midsize fans,” he says. “To leave the A380 in a position where it isn't developed does not make any sense.” In other words, Emirates wants the aircraft to be fitted with adapted versions of the engines that are to power the A350 and 777X.

Clark also wants a 10% reduction in direct operating costs. This is because Emirates currently operates the A380 at unit costs almost identical to those of the much smaller 777-300ER. The 777X is expected to be up to 20% more efficient than its predecessor, and similar figures apply for the A350-1000. As new engines are likely to become available only in the 2020 time frame, Emirates will probably take a significant part of its backlog with current-generation engines. While the first 90 aircraft use the Engine Alliance GP7200 powerplants, the carrier has not made a choice for the other 50 yet and, because of timing, only part of that order batch may have new engines.

Referring to the General Electric GE9X in initial development for the 777X and the Rolls-Royce Trent XWB in testing for the A350, Clark says options could include “a smaller version of the -9X. It could be a smaller version of the Trent.” Rolls-Royce says it “continues to study all options and is constantly working with Airbus” on prospective engine solutions.

However, program officials indicate that a variety of options are under evaluation, ranging from scaled “light” derivatives of the Trent XWB to an adapted variant of the Trent 1000TEN in early development for the Boeing 787-10. The manufacturer is also believed to be reviewing designs based on the RB.3025, an all-new engine configuration that lost out to the GE9X in the contest to power the 777X.

While the engine may be the most important aspect, other changes are also being considered for the A380. Winglets could be added to improve fuel-burn performance by up to 3%, according to Airbus Chief Operating Officer for Customers John Leahy. Airbus is also working on persuading airlines to choose an 11-abreast seating configuration in economy class on the main deck to increase capacity by 30-40 seats, depending on the deck layout. And it comes as no surprise that Emirates is already working on a detailed design of how best to accommodate that.

All three Gulf carriers point out that part of the large orders then announced here will be used to replace older aircraft—the remaining Airbus A340s and part of the A330 fleet are clearly on their way out, along with the older 777-200s and -300s. But Emirates plans to retire even its initial A380s starting around 2020, when their 12-year leases expire. Even so, a considerable but still undetermined number of the aircraft just ordered will be used to expand capacity.

Etihad's fleet planning is based on the assumption that the airline will grow by an average of 14% annually over the next few years. Emirates' passenger numbers were up 15% in the first six months of the year. No other long-haul airline in the world is close to those growth rates; most are adding capacity in low single-digit percentages, if at all. The Gulf carriers will therefore continue to gain market share. Their revenue passenger kilometers (RPK) will rise to 12% from the current 8% in the next 20 years, according to the Airbus global market forecast, even though huge Asian markets such as China and Indonesia are also growing rapidly and Europe and the U.S. are unlikely to shrink.

But that RPK growth figure does not really reflect the realities of the long-haul segment in which the Gulf carriers compete. If all domestic and short-haul RPKs are taken out of the equation, the share of the Big Three is much higher. Emirates, Qatar and Etihad are on their way to becoming the dominating airlines to all the destinations they serve. And other carriers can only hope that that will remain limited to routes touching their hubs. There are signs that it will not. Emirates has been playing with the idea of creating a transpacific network, for which it has the necessary traffic rights.

And Etihad does not seem to be limiting its ambitions to long-haul flying, given its investments in carriers such as Air Berlin and Swiss regional Darwin Airlines, which it will rename Etihad Regional, thereby introducing its brand to the European regional market—something that would have been hard to imagine only a short time ago. Etihad's CEO indicates that Darwin may very well be just the first in a broader scheme of regional affiliates. And perhaps the rebranding will soon no longer be limited to regional feeders.

—With Guy Norris in Dubai.

Tap the icon in the digital edition of AW&ST to watch a video of Emirates President Tim Clark discussing the Boeing 777X with Aviation Week editors, or go to AviationWeek.com/dubai2013

Dubai Air Show 2013 Boeing and Airbus Orders and Commitments
Boeing
Emirates EtihadAirways FlyDubai QatarAirways
737 11
737 MAX 75
777 Freighter 1
777-8x 35 8
777-9x 115 17 50
787-10 30
Orders 56
Commitments 286
Total 342
Airbus
EtihadAirways Emirates LibyanWings QatarAirways AirAlgerie
A320neo 10 4
A321neo 26
A330-200 3
A330-200F 1 5 8
A350-900 40 3
A350-1000 10
A380 50
Orders 142
Commitments 18
Total 160
Sources: Boeing and Airbus