Are the changing fortunes of the Gulf carriers a cause for concern?
On my most recent long-haul flight, in December last year, the route took my fellow passengers and me across five countries, three continents and one ocean. Out of the European Union, through the African Union and into the Union of South American Nations. Trans-Atlantic and trans-hemisphere. North to south, winter to summer, three hours backwards in time zones.
This happened smoothly and the few hundred of us on board had no reason to spend time thinking about the intricacies of international aircraft and airspace agreements. The hundreds of thousands of people up in the sky as you read this will rather be watching films, snatching a few restless hours’ kip or nibbling at a tray of in-flight food.
But when diplomatic quarrels escalate to include no-entry signs for the maligned airlines of regional foes, things come more sharply into focus.
Qatar Airways is having a bumpy old time of it at the moment. On the bright side, it has just regained its title as best airline in the world. The consumer website Skytrax also awarded it best airline in the Gulf.
On the other hand, the Saudi Arabia-led isolation of Qatar by several countries – nations from as far and wide as Mauritania, Mauritius, and the Maldives – has forced the airline to shift some of its routes. It has been banned, for the moment, from passing over certain countries – frustratingly for Doha, they include its three closest neighbours: Bahrain, Saudi Arabia and the United Arab Emirates.
This should be a red-letter day for its rival Gulf airlines, Etihad and Emirates, based out of the UAE cities of Abu Dhabi and Dubai respectively. It certainly offers some relief for the former, which has been enduring a torrid time relating to its investment in the Italian flag-carrier, Alitalia.
Last month, the struggling Rome-based airline filed for bankruptcy. Etihad pumped just shy of €2bn into Alitalia in 2014 but has seen its opportunity to make anything of the investment blow away in the wind.
Emirates is also on a bit of a come-down this year, recording profit before tax of $405m – an enormous drop from 2016’s figure of $2bn. The Dubai-based carrier explained the challenges its margins faced as coming from “increased competition and overcapacity”.
It also complained that it had been hit by a drop in demand for flights to the US which it blamed on “the actions taken by the US government relating to the issuance of entry visas, heightened security vetting, and restrictions on electronic devices in aircraft cabins”.
So is the status of the Gulf as the world air hub in danger? It pounced on saturation in European airports such as Heathrow (UK), Schiphol (Netherlands) and Frankfurt (Germany) and promoted its geography. Racing economies in Qatar and the UAE boosted its position further, and with investment came expansion in routes, passenger numbers, aeroplane numbers and the size of their airports.
The dwindling price of oil certainly called this into question and the US ban mentioned above hit the area further. Now that the countries in the region have fallen out with each other it has derailed the upward curve the major Gulf airlines enjoyed. They are finding life a bit tougher at the top.
Their rise was cheered and this period of turbulence is useful in that it serves to remind them that it is always easier to be the challenger upstart, but pressure builds when you yourself turn into an established player in the world’s airspace.