Dark clouds form Gulf's low-cost carriers, but horizon remains bright | ZAWYA MENA Edition

Dark clouds form Gulf's low-cost carriers, but horizon remains bright | ZAWYA MENA Edition:

Competition is stiffening in the Gulf’s budget airline sector following the recent launch of state-backed low-cost carriers (LCCs) in Saudi Arabia and Oman, while the blockade of Qatar has halted some of the region’s most profitable routes as regional passenger growth has slowed.

Rising fuel costs are weighing on earnings, with per-seat profitability among the lowest globally. Yet the longer-term outlook for Gulf LCCs remains bright, analysts say, with the cost-conscious segment of the Middle East’s aviation market relatively small compared with other regions.

“We’re seeing the same customer reaction in the Gulf as elsewhere – people are willing to use these services and the airlines are getting a good response,” said John Strickland, a director at London’s JLS Consulting.