The Gulf’s airlines, which over the last decade conquered the world’s skies with armadas of long-haul jets serviced by glitzy airports, face a new challenge to their business from their European rivals, even as they move to double their capacity.
Led by Emirates, Qatar and Etihad Airways, Gulf carriers have $200 billion of new jets on order for delivery over the next 10 years, a buying spree that will more than double the number of seats they can offer fliers.
The Gulf’s carriers are the biggest customers for the next generation of super-long-haul carriers, the Airbus A380, a double-decker behemoth that carries up to 850 people over distances of 15,000km.
“We’re heading for a big bloodletting,” said PMI Media aviation consultancy lead consultant Philip Butterworth-Hayes.
“This growth rate is sustainable for the moment, but the big legacy carriers in Europe are starting to forge more effective alliances.”
Backed by governments and fortuitous geography, Gulf carriers offer fliers a compelling package of low fares and the best connections between Europe and the emerging economies of Asia via some of the world’s biggest and most modern airports.
European and US airlines - known in the industry as ‘legacy’ carriers in contrast to start-up, discount airlines - have struggled to meet the competition.
Middle Eastern and North African airlines today account for about 11 per cent of all global airline traffic, up from 5pc a decade ago, according to the International Air Transport Association (IATA), whose members include 230 of the world’s airlines. Dubai International Airport recently surpassed New York’s John F Kennedy for total capacity, and that, before it opens a fourth terminal in 2012.
Across the Middle East, eight new runways are being developed amid $100bn in airport expansion programmes, the IATA estimates.
European airlines are still constrained by factors such as environmental regulations, which make the process of expanding the continent’s crowded airports a long and expensive process, Butterworth-Hayes said.
But the Europeans have started to regroup, forming alliances that should overcome the shortage of airport space and enable them to offer more frequent flights.
Meanwhile, the continent’s carriers are pushing the European Union to provide antitrust immunity for services to Asia like they have on trans-Atlantic and trans-Pacific services. European carriers such as Lufthansa and Air France-KLM have rallied against Middle East rivals, alleging they receive unfair subsidies. The Emirates and others deny the charge.
Like their peers around the world, the Middle East’s airlines were hit badly by the global recession, losing $600 million in 2009, IATA director-general Giovanni Bisignani told a conference in Cairo this week.