Sunday 10 October 2010

Big three lead the way as they reach for the sky

The Gulf is home to what is likely to be the greatest concentration of globally ambitious airlines in the world, rivalling the boom in South East Asian airlines in the 1970s and 1980s. The big three of Emirates Airline, Qatar Airways and Etihad Airways are the most well known and established, but there are other large airlines with extensive networks such as Gulf Air, Oman Air, Saudi Arabian Airlines, and Kuwait Airways, along with a growing number of budget airlines.

Most are thought to be unprofitable, either hampered by the heavy competition because of ageing fleets and business models, or because of heavy investments in building up young brands, say analysts. "There are so many airlines with global aspirations in this region, which does not seem to have the passengers to sustain all of them," said Perry Flint of Air Transport World. Among the big three, only Emirates reported its financial results. Last year it was one of the most profitable airlines in the world, with net income of $963.5m after traffic rose by 24 per cent. The airline's results are for its year ending in March, and they include the performances of more than 25 associated companies in fields such as hospitality and retail. A key to its success has been the growth of its transcontinental traffic, taking market share from European and Asian airlines, while the Dubai Government simultaneously developed the emirate into a destination in its own right.

"Emirates has done amazingly well," Mr Flint said. "They are making Dubai a wonderful stopping point between Europe and Asia." The airlines acknowledging the heaviest losses last year - the worst year in aviation history, according to industry associations - were Kuwait Airways and Oman Air, with write-downs of US$189.6 million (Dh696.1m) and $167.3.m, respectively. Last year, Kuwait's traffic grew by 3 per cent, measured by revenue passenger kilometres, a key industry metric. The number of passengers it carried was up 2 per cent to 2.6 million.

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