Old foes reunited in battle (thegulfonline.com)

July 2, 2014

As global aviation industry executives convened in Doha last month, a much-publicised divide between GCC and European airlines showed little sign of being bridged

In June, delegates arriving at the AGM of the International Air Transport Association (IATA), the airline industry’s biggest annual bash, were among the first passengers to experience Doha’s new Hamad International Airport.

The glistening new gateway was not quite completed – screens had to be erected in lieu of a few finishing touches – but Qatar Airways nonetheless moved its entire operation to the hub on 27 May, five days before the world’s airline bosses descended on the Gulf state.


As one of three so-called Gulf super-connectors, Qatar Airways’ selection to host the event was a symbolic reminder of the new dynamics sweeping across the industry.


“This is the first time that the AGM is being held in the Gulf. The footprint of our industry in this region is large and growing,” said IATA director general Tony Tyler. “A key element of the region’s development is its aviation-friendly approach to doing business. The governments here understand the value that aviation brings as a catalyst for economic growth.”


No-one disputes that the big Gulf three – Dubai’s Emirates Airline, Qatar Airways and Abu Dhabi’s Etihad Airways – have transformed intercontinental traffic flows in recent years. Their geographical location at the crossroads of east and west puts two-thirds of the world’s population within eight hours flying time, causing a gradual realignment of civil aviation traffic away from western Europe and towards the Gulf.


Over the past decade – due in large part to these three ambitious airlines – the share of global traffic handled by Middle Eastern carriers has skyrocketed from four to nine per cent.


Dubai International Airport briefly overtook London Heathrow Airport as the world’s busiest hub for international passengers in the first quarter of 2014, handling 18.4 million compared with 16.1 million. Renovation work in Dubai will dampen its full-year figure, but even this temporary slowdown highlights the differences between the two regions.


In Dubai, an 80-day runway upgrade is putting the gateway on-track to reach annual capacity of 90 million within four years. Diverted flights will still fly into the capital, instead landing at the under-development Al Maktoum International Airport, which will eventually accommodate 150 million.


By contrast, in bureaucracy-riddled western Europe, efforts to expand Heathrow with a third runway have for years been disrupted by a mixture of political apathy and environmental lobbying. Existing operations are curtailed by night-time flying restrictions, and cost structures across the UK civil aviation sector are kept high by taxation and unionised labour.


“They [unions] are a pain in the ass,” Qatar Airways chief executive Akbar al Baker blurted out during a roundtable discussion at the AGM. “Everybody agrees, but a lot of them [foreign airline bosses] would be afraid to say that I’m right.” [bold added]


The Gulf carrier has little need to worry about organised labour. Along with its near-limitless financial resources and avowedly pro-aviation government – Qatar’s amir, Shaikh Tamim bin Hamad al Thani, personally opened the AGM – there is an outright ban on unions in Qatar. Indeed, the International Transport Workers’ Federation has singled out Qatar Airways for criticism over its treatment of female cabin crew.


With Middle Eastern carriers continuing to enjoy more favourable operating conditions than their European counterparts, tensions remain high and accusations are being flung in all directions.


Lufthansa waited until the AGM had closed before issuing a terse statement through its chief financial officer, Simone Menne, who blamed Gulf airlines for the German flag carrier’s falling profit forecasts.


“It is the [Lufthansa] Group’s American and European business that has suffered from increasing excess capacity, which leads to falling prices on these routes,” the statement read. In a veiled reference to Etihad, it warned of more expansion to come: “They [Gulf carriers] are advancing ever further into the European market, also by means of investments in European airlines.”

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