Gulf airlines to lead the world: a variety of factors, not least its "near perfect" geographical location as a hub will project the Gulf region to the forefront of international aviation. Massive expansion programmes are already underway, involving new multibillion dollar orders from the world's leading aircraft manufacturers, with further expansion into the next decade and beyond, very much on the cards

Middle East, The, March, 2008 by Pamela Ann Smith

THE GULF REGION is set to outstrip the US and Europe to become the world's leading centre of aviation within the next decade, new analysis by industry experts indicates. Carriers based in the region, such as Emirates, Etihad Airways, Qatar Airways, Gulf Air and Oman Air, are all expected to benefit, along with airport hubs, smaller privately owned airlines, neighbouring population centres such as Amman and Cairo, and the tourist sectors in the Gulf Cooperation Council (GCC) states. Dubai-based Emirates Airlines alone is expected to outstrip the world's number-one carrier, American Airlines, as early as 2015. And, in a sign of how much global air power has shifted eastwards, the airline has been busy denying rumours that it has set its sights on acquiring a significant stake in the UK giant, British Airways.

The Centre for Asia Pacific Aviation (CAPA) explains that while the traditional benchmark for a region's importance in aviation has usually been its population size, the Gulf is benefiting from its geographic location in a model that is creating new historical precedents. This "near-perfect geographic position as a hub" has been enhanced in the past five years by two other main factors, the Sydney-based consultancy CAPA maintains: aviation liberalisation and the introduction of long-haul aircraft.

The liberalisation has allowed intermediate ports in the GCC states to become valuable crossroad hubs, while the long-haul aircraft mean that airlines in the region could provide a non-stop service from almost any point in the world. As a result, the Middle East, and the Gulf in particular, has now become the only place on the globe where a traveller can, with a single stop, travel between any other two points in the world."

[ILLUSTRATION OMITTED]

Equally important, according to CAPA's managing director, Peter Harbison, is the growth of GCC airlines and their huge fleet of aircraft. Gulf carriers are shifting "the balance of power very much to the Middle East for long-haul connections", he said. Gulf carriers will become major competitors for Asia-Pacific airlines on the vital long- and medium-haul routes, maintains Tom Ballantyne, chief correspondent of Orient Aviation magazine, meaning they will increase their share of the growing intercontinental traffic between Asia, Europe and the US. Estimates by US investment bank, J.P. Morgan, indicate that Gulf states' airlines will increase their available seats by 140% within the next six years.

Figures produced for last year by the International Air Transport Association (IATA) appear to back up these expectations. In 2006, it reported, the Middle East was the world's fastest growing region in terms of passenger and cargo growth, rising by 15.4% and 16.1% respectively. Between 1991 and 2005 passenger traffic at Dubai's international airport alone soared by 400% to 25m.

Last year, 6.9m passengers used Abu Dhabi International Airport, a rise of 31%. By 2010, industry experts say, the total is expected to reach 10m, not least because of the emirate's growing attraction as a destination for business and tourism as well as being the base for the rapidly growing national carrier, Etihad. A $6.8bn expansion programme, which involves building a virtually new airport complex, is also underway. The scheme will allow the airport to handle 20m passengers initially but by the middle of the next decade, as Abu Dhabi develops as a major Middle Eastern transport hub, the experts say passenger traffic could top 50m a year, nearly seven times the current figure.

The capacity of Al Maktoum International Airport, also in the UAE, is also being upgraded to 120m people, with construction costs estimated at $8.1bn. Similar "mega-projects" are also underway at international airports in Jeddah, Saudi Arabia and Doha, Qatar.

Yet it is the Gulf's airlines that act as the most fitting barometer of the region's ascendancy. Etihad Airways, which began operations just four years ago, carried 4.6m passengers last year, two-thirds more than the 2.8m achieved in 2006. In 2007, seat occupancy to its 45 global destinations averaged just under 70%. Etihad currently operates a fleet of 37 aircraft, having added 13 last year. Part of Etihad's impressive success stems from its servicing the rapidly growing Indian market, where its seat occupancy last year averaged 80%. With visitors from India to the UAE increasing by almost one-third annually, Etihad forecasts that its revenues from India will rise from 12% at present to 20% annually.

[ILLUSTRATION OMITTED]

Emirates has placed a ground-breaking order for more than 246 planes, with a combined value of some $60bn, which, once delivered in the next decade, will make it the world's biggest airline in terms of size. These include 58 double-decker "super jumbo" A380s from European manufacturer Airbus, many of which have been designed specifically for the airline's own needs. Further orders have been placed for the new generation Airbus A350, with possibly still others to come for US manufacturer Boeing's 787. "We are already one of the world's top three airlines," chairman and chief executive, Sheikh Ahmed bin Saeed Al Maktoum, said in January. "But we need some time. It is not just about buying aircraft. It is about being number one ... in terms of the service that we offer, not just in size."