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September 2022, Virtual
September 29 2022, Virtual
In the last few months, airlines based in the Middle East have launched or announced plans for new flights to Mumbai, Glasgow, Beijing, Christchurch and Vienna.
Nothing particularly unusual in that until you look at the rate of expansion.
Etihad Airways, the national carrier of the United Arab Emirates (UAE) and based in Abu Dhabi, started less than a year ago but now has 12 destinations worldwide. By 2008 it aims to have 65.
Qatar Airways, the national carrier of Qatar and based in Doha, operates to 53 destinations, with more to come in 2005.
Emirates, based in Dubai and first launched in1985, had 74 destinations in 52 countries when the year began and now has 77 in 54 countries again with more to come next year.
All three regard themselves as among the fastest growing airlines in the world. The aviation market of the Middle East where they are based is expanding at 30% a year. No other region matches that.
A brief look at the new aircraft these carriers have on order would tend to confirm this breathtaking growth. Emirates took delivery of eight new Airbus A340-300s in January and has 71 new aircraft on order and due to be delivered by 2012.
Qatar has a current fleet of 34 planes, all Airbuses, and is due to double this by 2009 in an order worth $5.1bn. The order includes the super jumbo A380s.
Etihad signed a Memorandum of Understanding with Airbus this July for 24 new airbuses including four A380s and four of the long range A340-500s. In addition it has an option for 12 more Airbuses as yet of unspecified variety. The whole order, which is due to be delivered from 2006, is worth $7bn.
The carrier has also placed an order for five Boeings worth $1.09bn which are due to start arriving next year.It all adds up to a phenomenal rate of growth unmatched by any of the more firmly established carriers in either America or Europe.
None of the carriers makes any secret of its aim to establish a worldwide network and in the process turn its Middle East bases into world hubs.
So the question looms; at whose expense will this expansion take place? The obvious answer is carriers like BA, Air France-KLM and Lufthansa. If this is the case, they have much to lose.
It is estimated that long haul is about two thirds of the business of these major European carriers. Already under attack and forced to re-structure their short haul operations because of the rise of the no frills carriers, the last thing they would want is a battle to retain their profitable long haul routes, especially from cash-rich competitors.
Herve Joseph-Antoine, air solutions director for CWT in Paris, said the rising Middle East carriers were “becoming serious competitors” to the Europeans. He added: “They are offering serious alternatives to getting to the Middle East and on to Asia.”
Mr Joseph-Antoine listed several reasons why the Europeans should take heed. “The Middle East market was at the baby stage several years ago but now it is exploding. There used to be only a limited number of people who could fly, business people or other specified people.
“But the leisure market is now increasing. There is much more democracy about who flies so the traffic is definitely increasing,” he said.
The Middle East carriers were also suffering far less than other airlines through the rocketing price of fuel which worked in their favour in terms of fares.
They were also perfectly placed geographically, in the centre of the route from Europe to the Far East and able to capture business going both ways.
“The market in countries like India, Malaysia, Thailand is also expanding,” Mr Joseph-Antoine said. “A lot of people from Asia work in the Middle East so they have to travel there and many go as tourists as well. Asia itself is one of those areas of inbound natural growth.”
But it is a thesis rejected by the Middle East carriers themselves. “I would not see it that way at all,” Peter Dunkin, Etihad's general manager in the UK, said. “We are working very closely with other airlines to build up our network.”
He added: “This is about developing the Middle East market ands there are plenty of opportunities for all carriers. In terms of other markets, we are very much interested in South Asia. We have just started a service to Mumbai and we already have one to Sri Lanka.”
Many of the passengers on these carriers are first time flyers while many others are tourists flying to destinations they have not visited before. But there is a good proportion of business travellers and Mr Dunkin concedes there is “an element of switching” from one airline to another. But he said there were also people who were coming back to flying after the various setbacks in the past two to three years.
With the Middle East and Asian markets rapidly opening up, there just might be enough business for both European, and Middle East and Far East carriers, although some market share is likely to be reduced and egos likely to be bruised.
It could, however be a different story if the battleground was switched to transatlantic routes, the basis of the profitability of some European carriers. It would be a battle the Europeans could not afford to lose.