Real world prices and impacts come to the effervescent Gulf region

Implications: It has been apparent for some time that recently super rich oil based economies of the Gulf might be immune to the world's economic woes. Guess what? They are not, if your customer hurts then evetually you hurt too. Given that the Gulf's only real contribution to golbal economic activity comes from oil exports, the hurt will be painful, too. The west will learn to be creative and ever more fuel efficient. This will make slowly less depedent on the Gulf. But the Gulf economies will grow more dependent on the West.

Analysis: Kuwait's ALAFCO agreed to sell eight Boeing 787-9, with a list price of $1.6bn, to Saudi Arabian Airlines. The company said in a statement the aircraft would be delivered between 2014 and 2015.

ALAFCO also said it would lease out four Boeings for 12 years to the Saudi carrier with delivery expected in 2012. The list price of one plane is $200m, while the leasing price is 1% of the purchase price paid monthly, ALAFCO said in the statement posted on the bourse web site. This seems to be a very high lease rate - essentially in 100 months the plane is paid for whereas it should have a lifetime of over 240 months. This is a rather aggressive deal for ALAFCO - good business if they can get it. ALAFCO said earlier this month it agreed with Saudia to lease five new A320s for delivery next year, as part of the Saudi carrier's fleet renewal program.

The Gulf aviation industry is booming as surging economies spurred by record oil prices attract tourists, business people and workers to the world's largest oil-exporting region. Dubai-based Emirates, the United Arab Emirates' Air Arabia and Qatar Airways have bought billions of dollars worth of aircraft from Airbus and Boeing, looking to bring more people to their respective countries or hub passengers from around the world.But reality has started to enter this world. Emirates is about to delay their Durban launch, as well as LA and San Francisco. Its great to offer the world's best hub, but as the spokes grow thinner due to far off, local economic conditions, a growth slowdown is inevitable. Watch for delivery delays next.