Middle Eastern airlines flying strong

The opening of Dubai Airport's new terminal is a sign that Middle Eastern airlines are bucking global trends and prospering.
Yesterday's opening of Dubai AirportÆs new terminal three symbolises the regionÆs bullish aviation outlook. The sleek, modern tube-like building is home to Emirates AirlinesÆ world hub and provides necessary facilities to handle the continued growth in traffic between Asia and points east.

The new terminal opens at a time when the outlook for Middle Eastern airlines is exceptionally bullish. ôIt is pretty much business as usual. Middle East carriers seem intent on expansion and are welcoming of the recent big reduction in oil prices,ö says Derek Sadubin, chief executive officer of the Centre for Asia-Pacific Aviation.

The Airports Council International (ACI) predicts that even in todayÆs weak economic climate, Middle Eastern airlines will continue to see strong passenger growth. It predicts passenger growth of 5.5% in 2008 and 7% in 2009, making the Middle East the fastest growing region in the world. Passenger growth in Asia-Pacific will be 4.3% in 2008 and 6.9% in 2009, according to the ACI.

In the third quarter, Abu Dhabi-based Ethiad Airways recorded a 35% rise in passenger traffic year-on-year. EthiadÆs strongest region was Asia-Pacific where its average load factor (the percentage of seats filled) was 82% versus 75% system-wide.

Profits for Middle Eastern airlines also remain strong. The International Air Transport Association estimates Middle Eastern carriers will post operating profits of $200 million in 2008, down from $300 million in 2007 but the highest globally this year.

ôEmirates is increasingly optimistic about revising its profit forecast up again, pending the situation in financial markets over the next month or so,ö says Sadubin. ôIt is the biggest and most profitable carrier in the region, so the overall profit outcome is closely related to how Emirates performs. We think it probably will exceed its most recent guidance.ö

Airline services between the Middle East and Asia continue to grow. Five-year-old Ethiad Airways added flights to Beijing in China and two cities in India earlier this year and will launch service to Almaty in Kazakhstan in December. Doha-based Qatar Airways has already launched new services to China and India this year and is promising significant additional expansion to the region.

ôAsia-Pacific is a land of opportunity for Middle Eastern carriers, particularly as they seek to grow their global hubs by feeding traffic to and from resource-rich regions like Africa, where business travel from Asia is on the rise,ö says Sadubin.

One factor limiting the growth of Middle Eastern airlines is air service agreements. Air service agreements are bilateral agreements between countries that restrict the number of airlines, destinations and flights that can fly between two nations. Middle Eastern carriers, despite strong demand and cash flow, are restricted from expanding in certain Asian markets by these agreements.

Despite such diplomatic limitations, Sadubin believes that a shift in the global aviation balance of power has already begun. With strong cash positions, record number of aircraft orders and new airport facilities, Middle Eastern carriers will ôexit this current phase of turmoil in a much stronger position, subject to foreign governments maintaining the momentum on liberalising aviation accessö.

Back in Dubai, the airportÆs new terminal three represents the bullish attitude the emirate has towards its aviation future. The first phase of the terminal includes separate first and business class facilities, a plethora of shopping and eating options and 26 gates for hometown Emirates Airlines. When terminal three is completed in 2009 it will handle 43 million passengers per year, bringing Dubai AirportÆs total annual capacity to 60 million travellers.

But a new terminal is not all Dubai is building. Forty kilometres across the desert, construction of the emirateÆs second airport û Dubai World Central-Al Maktoum International Airport û is well under way. That airport, in addition to having a final capacity of 120 million passengers annually, will fuse logistics, cargo and passenger capabilities together in a new aero-city. Its first phase is due to open in 2009. If these moves are indicative, Dubai certainly is positioning itself well to be at the centre of Middle Eastern aviation for years to come.
¬ Haymarket Media Limited. All rights reserved.
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