Feb. 19 (Bloomberg) -- Dubai, prospering from near-record oil prices, plans to invest $15 billion to create a company that will lease planes, develop airports and make aircraft parts to tap into growing demand for air travel in the Middle East and Asia.

The family-ruled sheikhdom, which owns the largest Arab airline, may buy as many as 50 wide-body aircraft from Boeing Co. and Airbus SAS during the next four years, said Rashid Al Malik, project director for the planned company, which will be called Dubai Aerospace Enterprise.

``We want to be a very important player in this region and the world in a short time,'' Al Malik told reporters in Dubai, United Arab Emirates, today.

Dubai seeks to rival the two largest aircraft lessors, American International Group Inc.'s International Lease Finance Corp. and General Electric Co.'s GE Commercial Aviation Services. The airport development unit will compete with BAA Plc, Aeroports de Paris and Fraport AG for projects in India and China.

``It's not surprising Dubai is moving into these activities because the whole focus of the aerospace industry has shifted eastward in recent years to the Middle East and Far East,'' Doug McVitie, managing director of Arran Aerospace, a forecasting company based in Dinan, France, said in a telephone interview.

Middle East governments including Dubai, Abu Dhabi and Qatar have ordered as many as 300 aircraft for delivery during the next five years and Dubai Aerospace will order its first aircraft this year, Al Malik said. Dubai owns the airline Emirates.

Government owned companies such as Dubai International Capital, Istithmar and Dubai Airport Free Zone Authority will help finance the new leasing and development business, Al Malik said.

Economic Growth

From 1990 to 2004, Dubai's gross domestic product quadrupled to $27 billion, and expanded another 16 percent last year, according to the Dubai Department of Economic Development. The total volume of trade through the emirate increased 41 percent in the same period to $59 billion.

Oil prices have more than tripled from less than $20 a barrel during the last four years, helping spur economic development and investment in a region that pumps almost a quarter of the world's 85 million-barrel-a-day oil supply. Dubai has been working to become the region's biggest transport and commercial center.

Dubai, the second-largest member of the United Arab Emirates federation, also is trying to broaden its investments and lower dependence on oil revenue to the Persian Gulf monarchies to cushion against a decline in petroleum prices.

``These guys are basically taking oil money and trying to convert it into a long-term value-added business,'' said Richard Aboulafia, vice president of Fairfax, Virginia-based Teal Group. ``That's not dumb.''

Dubai Purchases

The emirate has agreed on purchases worth at least $10.8 billion since January 2005, when it spent $1 billion on a stake in DaimlerChrysler AG. Shareholders of Peninsular & Oriental Steam Navigation Co. agreed last week to sell the company to Dubai for $6.8 billion.

Dubai International Capital, one of the government-owned companies financing Dubai Aerospace, bought the U.K.'s Doncasters Group Ltd. for 700 million pounds ($1.2 billion) in December. The company makes parts for Airbus's double-decker A380 plane.

In a sign of the demand for aircraft related services in the region, Airbus, the world's largest commercial-aircraft maker, said Feb. 14 that it will set up a unit in Dubai to handle its commercial activities in the Middle East and South Asia, including a spare parts center.

The new air leasing and finance business will focus on Airbus A380 and A350 planes, and Boeing 777s and 787s in the Middle East and Asia, Dubai said in a statement today. Dubai Aerospace Enterprise will be a holding company with six operation subsidiaries involved in 14 industry segments, including aircraft maintenance, parts-making and services.

Airport Development

Dubai Aerospace wants to develop airports in India, China and other countries where air travel is growing, Al Malik said. Dubai's government operates the Middle East's business airport, handling 24.7 million passengers and 1.3 million tons of cargo last year, according to the airport's Web site.

India, Asia's fourth-largest economy, needs to upgrade its airports as air traffic in the country rises. It climbed 22 percent to 59.3 million people in the year ended March 31, according to the Airports Authority of India. Aeroports de Paris is among companies that bid to buy stakes in India's two biggest airports, Mumbai and New Delhi.

Airline passenger traffic in the Middle East and Asia is expected to grow as much as 9 percent annually for the next 10 years, reaching 1.7 billion passengers by 2015 while air freight will grow 6 percent annually, Dubai said in a statement today.

Rapid Growth

India and China alone plan more than 145 airport projects over the next 10 years, including new airports, expansions and upgrades, Dubai said.

Henry Hubschman, chief of General Electric's aircraft leasing unit, says growth in demand for aircraft in Asia has led GECAS to triple its investment in the region over the last few years, opening an office in Delhi, India, and adding staff in Beijing.

``It's been pretty astounding I would say, principally over the last three to five years,'' he said in an interview Feb. 13.

Dubai plans to use the Doncasters purchase to buy other companies in the aerospace and turbine engineering industry, then sell as much as 40 percent of the shares to the public in 2009, Dubai International Chief Executive Officer Sameer Al Ansari said in December.

Dubai Aerospace is in talks with Airbus, Boeing and other planemakers about building components for aircraft, Al Malik said, without being more specific.

To contact the reporter on this story: James Cordahi in Dubai on cherifcord@bloomberg.net; Andrea Rothman in Toulouse, France at aerothman@bloomberg.net.

Last Updated: February 19, 2006 12:59 EST