Middle East carriers gain long-haul market share
While air transport markets in the rest of the world shrank during the global economic downturn of 2009, international air travel continued to grow for Middle East carriers, demonstrating the region's prominence in global air travel. International traffic continued to grow during 2010, rising 17.8 percent for Middle Eastern carriers-far exceeding the world average of 8.2 percent growth.
Strong traffic growth
The civil unrest in Egypt, Bahrain, Libya, Syria, Yemen, and Tunisia has dampened the outlook for 2011. While the impact to global traffic has been relatively minor, some of the region's most important destinations have been affected.
Despite the turmoil, the region's economy is forecast to grow 6 percent in 2011, outpacing the world average. The six nations of the Gulf Cooperation Council are forecast to average 7.8 percent growth as energy production expands to cover the shortfall from other oil-producing countries.
Rapid capacity increase
Capacity at the three carriers, Emirates, Qatar Airways, and Etihad, collectively has grown 23 percent annually over the past 10 years. Their growth is likely to continue as the large backlog of new, efficient airplanes that the three carriers have on order will provide a competitive advantage over European and Asian rivals. Approximately half the 885 airplanes on order in the Middle East, including 72 percent of the widebodies, will go to these carriers.
Strategy based on location
The market strategy of the "Gulf 3" airlines is based on the so-called sixth freedom, which allows an operator in one country to carry passengers or cargo from a second country to a third country via a scheduled stop in the operator's home country. Sixth freedom privileges have enabled Emirates, Qatar Airways, and Etihad to take advantage of their central location to expand their share of traffic between Europe and Asia. This huge air travel market does not depend on the relatively small populations of the home countries. The three carriers have also expanded into new markets, offering more than 100 weekly frequencies to destinations in the Americas-including Chicago, Houston, Los Angeles, New York, San Francisco, Washington, D.C., Toronto, and Sao Paulo. More than 70 weekly flights are offered in the rapidly growing China market.
Newly emerged low-cost carriers are stimulating demand for travel, targeting the young local population and the large migrant workforce. Flying short- and medium-haul routes within the region and to Africa, India, and Eastern Europe, the low-cost carriers supply only 4 percent of the region's capacity, yet they account for more than one-third of the region's backlog of single-aisle airplanes.
