Transport Airlines

Big Three Gulf Airlines Chart a Path to Global Dominance

Jun 08, 2014 12:00 pm

Skift Take

Non-Gulf airlines don’t yet have a clear strategy to slow down these three rivals. They need one soon.

— Jason Clampet

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Ahmed Jadallah  / Reuters

A flight attendant of Etihad Airways holds a model of the Airbus A350 during the Dubai Airshow. Ahmed Jadallah / Reuters


The blazing June heat meant that the only people walking outside in Doha were migrant workers, mainly from the Indian subcontinent, in hard hats and high-vis jackets, labouring to construct the ever-growing Qatari capital.

Safely inside the air-conditioned Ritz Carlton, the International Air Transport Association was holding its annual meeting last week. On stage, it was gently pointed out to Willie Walsh, the boss of British Airways parent company IAG, that Qatar had built a whole new international airport in less time than he had spent vainly arguing for a new runway in London.

That’s why an increasing number of Britons have been travelling via Middle Eastern hubs on their journeys worldwide – and also being tempted to linger en route, as new resorts and attractions are built. On first descent through the haze over apparently limitless empty sand baking under 50 degree celsius heat, airline passengers might wonder what inhospitable terrain awaits, but the volumes of traffic continue to grow.

Three airlines now compete to pull Britons and millions of others travellers worldwide to their Middle Eastern operations: Emirates, the trailblazer and now elder statesman with its unparalleled fleet of giant aircraft in Dubai; Etihad, based in the neighbouring emirate of Abu Dhabi; and the ever more prominent Qatar Airways.

As major airlines and airports take root in the United Arab Emirates and Qatar, so do the attractions that are persuading millions of visitors to use their hubs. In places where little infrastructure existed decades ago, the abundant oil wealth is being converted into global status symbols such as the Burj Khalifa skyscraper in Dubai, alongside Abu Dhabi’s planned Louvre and Guggenheim museums, and bespoke pitches by the sea for visiting Manchester City players. And in the latest sign of the region’s surge to global prominence – and controversy – the 2022 football World Cup will see Qatar host an influx of vistors on a massive scale.

If few but Fifa can see why football should go to Qatar, the logic for aviation to hold its annual shindig there was clear. In a few short years, the three Gulf hubs have moved to centre stage in the global air transport network, where Heathrow once resided. The Gulf is at the crossroads of Europe and Asia, but also tapping into the growing importance of China and Africa.

Their associated airlines have not only grown rapidly but tied up the bulk of orders for the new generation of aircraft that the industry hopes will be transformative for fuel efficiency and range: Emirates has an unparalleled fleet of Airbus A380s, the supersized double-decker planes, with 48 of the 132 flying worldwide and 92 still to come. Qatar Airways was the first to operate Boeing’s troubled Dreamliner into Heathrow, and will be the first airline anywhere to fly Airbus’s nearest equivalent, the A350, now in its final trials. Last month it started an all-business class flight between London and Doha.

Meanwhile, Etihad has picked up shareholdings in an abundance of airlines around the world. The UAE airline’s stakes include holdings in Air Berlin and Aer Lingus, while it looks likely to make the maximum permitted 49% investment in the troubled Italian flag carrier, Alitalia. It is a strategy which divides opinion, as analysts question whether Etihad will ever be able to control these companies, but could potentially reap rewards should current restrictions on foreign ownership of airlines be relaxed in the future. In short, says one analyst, it is a long game only for investors with deep pockets and patience, which exactly matches the profile of the state-owned Gulf airlines.

The airlines have benefited from the same kind of blank canvas that allows architects to throw up buildings or, indeed, build a new airport in the Gulf, which can receive the newest planes and has the newest infrastructure. And also, at the more cutthroat end, not having the “legacy issues”, as Etihad chief executive James Hogan has put it, of thousands of cabin crew on traditional contracts.

The chief executive of Qatar Airways, the combative Akbar Al-Baker, has made no secret of his disregard for established rights. On an Iata stage this week, he described trade unions as “a pain in the ass”. For the unions’ part, the International Transport Workers’ Federation submitted a case against Qatar in Geneva this week, accusing it of violating United Nations labour conventions, for restricting female cabin crew from marriage and allowing them to be sacked if pregnant. The ITF has documented Qatar Airways practices including curfews, surveillance and dismissal. Acting general secretary Steve Cotton said: “Qatar Airways already has an unenviable reputation for severe employment practices, even among industry professionals.”

Responding to those allegations last year, when they were first aired, a Qatar Airways spokesman said the union was “making inaccurate allegations”, adding: “Candidates applying to work are fully aware of the rules and regulations prior to joining and it is entirely their choice whether to join our five-star airline or not.”

Meanwhile, Heathrow last month hurried to disassociate itself from outbursts by Al-Baker, who is a board member at the airport by virtue of the Qatar state’s 20% stake in the business and had described west London residents as having “excessive” freedom to complain about aircraft noise. In Qatar, the new Hamad International airport was opened – at a substantially greater distance from Doha homes than Hounslow’s are from Heathrow – in the nick of time for the aviation industry bash. Al-Baker denounced European contractors for the delay.

If national carriers always matter to governments, the Gulf takes it to another level. Qatar Airways claims to count for 11% of the state’s GDP, and is an integral part of the country’s economy, with the prime minister and the Emir of Qatar both in attendance for the official opening of the Iata conference.

Yet for all the lavish investment – Qatar served up lobster and a Kylie Minogue appearance to startled airline execs more used to a self-service buffet – the Middle East hubs have run up against an unexpected constraint: airspace. Qatar Airways has admitted its operations face regular delays as the region’s airlines compete with military operations for slots in the air. Analysts don’t believe it is an insoluble problem. But for now, there’s a shred of hope for the likes of Heathrow and BA that the new global forces in aviation might face some capacity problems of their own.

This article originally appeared on guardian.co.uk

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