Big three carriers keep flying high amidst unrest

May 29, 2011

Gulf carriers Emirates Airline, Etihad Airways and Qatar Airways have each established themselves as serious players in the global aviation game. As the Middle East’s airline industry suffers under the weight of soaring fuel prices and regional instability, how are the big three staying out in front?

It has been a memorable decade for frequent flyers in the Gulf. A string of new airline launches has increased route options and pushed down prices, while GCC national carriers have placed jaw-dropping orders for the very latest planes and technology. And at the forefront of this growth have soared Emirates Airline and Etihad Airways, the flag carriers of Dubai and Abu Dhabi respectively, which have blazed a trail through the skies, breaking records and order books along the way.

Emirates is the Middle East’s biggest carrier and last year announced a multi-billion dollar increase in its fleet to include 120 Airbus A380 ‘superjumbos’. From its base in the UAE capital, meanwhile, Etihad has grown significantly since its launch eight years ago, now operating close to 1000 flights per week, serving an international network of 67 destinations in 45 countries.

And yet, while Emirates and Etihad have manoeuvred themselves into an enviable position of strength, a relatively new kid on the block is gaining fast. Qatar Airways recently launched its 100th route, and along with the two UAE carriers is boosting its global services to take on established competitors in the US and Europe.

Expansion into European, Asian markets

“With their continuous fleet expansion plans and increasing frequency in European and Asian destinations, the three major Gulf carriers are posing a challenge to the established operators in Europe and Asia,” says Ketki Mahajan, a research analyst with the Aerospace and Defence Practice, South Asia and Middle East, at Frost & Sullivan.

“In order to position itself in the global market, Qatar Airways is focusing on increasing its fleet capacity and frequency to existing routes and adding new destinations in Europe and Asian markets,” he adds.

The Qatari national carrier has already announced plans to hire an additional 3,500 staff annually across the group over the next three years. With 19,000 employees currently working for the airline and its units, the increase represents a more than 50% addition to the head count by 2014.

And it comes as part of an ongoing recruitment drive fuelled by the airline’s expansion, which will see further new routes opening up later in 2011. According to the carrier, by 2013 it plans to serve more than 120 key business and leisure destinations worldwide, with a fleet of more than 120 aircraft.

Boosted by the Qatari government’s immense hydrocarbon wealth, and supported by the country’s concerted efforts to raise its profile as both a business and tourism hub, Qatar is talking acquisitions as well as new routes: CEO Akbar Al Baker told reporters in March that his carrier was eyeing European targets and could strike a deal before the end of the year.

While Al Baker declined to name any possible targets, he did admit that the carrier might be prepared to buy 49.9% of a European airline, the maximum level a foreign investor can obtain without additional conditions. On the ground in Doha, meanwhile, Qatar will benefit from a new $10bn airport designed to cater to 24 million passengers a year.

Backed by such lavish state spending, the three carriers are thriving at a time when other regional operators are struggling in the wake of high oil prices, and soaring insurance charges. Unrest in the region impacted heavily upon the Q1 performance of local carriers, and low-cost airlines in particular are facing turbulent times.

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