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Vimala Vasan

Abu Dhabi , Feb. 21

THE Dubai authorities have announced the formation of Dubai Aerospace Enterprise (DAE), an investment vehicle to channel $15 billion into creating a global aerospace manufacturing and services corporation.

An agreement to establish the company was signed on Monday, according to the official Emirates news agency, WAM.

The DAE will become the holding company for six operational subsidiaries involved in manufacturing and services across 14 industry segments.

The DAE Chairman, Sheikh Ahmed Bin Saeed Al Maktoum, President of Dubai's Department of Civil Aviation and Chairman of Emirates Group, said the enterprise will form strategic alliances with leading aerospace companies as it progressively steps up its bid to become a significant presence in the industry.

West Asia has become the leading buyer of aircraft internationally and together with Asia it will account for three out of every five wide-body aircraft delivered in the next few years, according to a feasibility conducted by A.T. Kearney, a leading management consultancy.

Initially, DAE will target the $100 billion in global airport development and operations, aircraft leasing and financing, and specialist education and training segments. Backed by the Dubai Government and the signatories to the agreement - Dubai International Capital, Dubai Holding's investment arm; Emaarp, leading property company; Istithmar, leading investment holding company; Dubai International Financial Centre; Amlak Finance; and the Dubai Airport Free Zone Authority (DAFZA) - DAE will progress through a series of phases to establish an integrated aerospace industry cluster.

The Airport Development and Operations business will focus on `greenfield' development, extending existing airport infrastructure regionally and internationally, and targeting the emerging markets of China and India.

The Aircraft Leasing and Finance business will capitalise on the rapid growth of the wide-body aircraft fleet - primarily

Airbus A380 and A350, Boeing 777 and 787 - in West Asia and Asia. DAE's aircraft leasing solutions will leverage funding options available in the Islamic and international finance sectors to provide airlines with increased operational flexibility and leaner asset structures.

The Dubai-located Aerospace University and Research and Development facility will offer degrees and apprenticeships. It will be located at Jebel Ali Airport City, which is expected to become the world's largest aviation hub.

The Aircraft Maintenance, Repair and Overhaul (MRO) businesses will be developed in parallel and launched by the end of this year, enabling DAE to pursue its objective to become a major MRO hub for airline operators in the region and internationally.

Components and engines manufacturing and assembly will offer global aerospace players the ability to establish their footprint in West Asia in close proximity to their regional customers. DAE expects to take this to the next level and establish an aircraft final completion facility in Dubai.

The group will also create presence in business segments such as space services, aircraft brokerage, aviation media and events, and aviation IT systems. Within a decade, the industry is expected to emerge as one of Dubai's richest sources of revenue.

Some 30,000 new jobs will be created through DAE activities and 8,000 students a year will pass through the new university.

Dr Mohammed Al Zarouni, Director General of the Dubai Airport Free Zone Authority, who has been appointed Managing Director of DAE, said, "DAE will expand gradually and by 2015 the group would have become a major force in the economy. "In the medium term, DAE will create and operate one of the largest MRO facilities and establish itself as a significant civil aircraft research, development and manufacturing cluster."

DAE has established the market potential for its offering through a study carried out by DAFZA in tandem with A.T. Kearney. The group's projections and plans are supported by evidence of unprecedented growth in the regional aviation industry.

Airlines operating in the Gulf region are expected to nearly double their fleets in the next few years. Airline passenger traffic in West Asia and Asia (especially China) is expected to grow as much as 9 per cent a year for the

next 10 years, reaching 1.7 billion passengers by 2015. Annual air freight growth is also expected to exceed 6 per cent a year.

India and China alone plan more than 145 airport projects in the decade - including greenfield builds, expansions and upgrades.

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