How Do You See The Gulf Carriers 10 Years From Now?

A- DXB / AUH / DOH are super hubs serving the world's largest long haul routes

B- About the same size/market share as it is now

C- Other big carriers/government regulations will clip the Gulf carriers wings, diminish them in size and DXB / AUH / DOH will be quasi-ruins reminiscent of a great past?

Your opinion ..

My answer is B minus some market share because:

1- They can't be the world's super hubs because they depend too much on transit traffic and other major carriers/countries will not allow them to eat their lunch.
2- Now they have the names, expertise, good reputation and backed by their oil-rich governments they will not be allowed to fail.

Depends. The collapse in world financial markets hit them hard, but if they plan properly, they could recover and return to the "A" plan.

At worst, I expect them to be "B".

Probably B. They rely so much on connecting traffic that it's hard to see them ever surpassing the likes of an LHR or LAX.

Their geographical location puts them in the middle of major traffic streams:
Europe - Far East
Europe - Africa
Europe - Middle East
Far East - N/S America
Far East - Middle East
Far East - Africa
Africa - N/S America
Middle East - N/S America

No matter what - they will be there in those markets. Other big carriers can not really do too much to "clip their wings". As long as they can survive while continuing to be perceived as quality airlines and offer low prices, then they can continue to grow. The only thing I see really hurting them would be some sort of political upheaval in the Gulf area which would influence people not to want to travel via that area.
What they are missing to be real mega carriers is full access to major markets like Europe - USA, where this is limited by traffic rights. If we ever get to the point where the Airline industry is deregulated worldwide (which we are at the moment far from, but slowly but surely moving in that direction) and they will have the opportunity to operate wherever they want - then it will not only be A, but even A+.

Until carriers such as EY and QR stop getting subsidised by the govt. etc. I don't believe there should be full "Open Skies". Also, I see too much conflicts with ME carriers and airport operators, etc. as well.

edit: Oh yes, I say somewhere between A and B...

I think the answer is A, except that I don't see the three (QR, EK and EY) in the same boat, at all.

I think Emirates will definitely be in the A+ category as it has the associated airport development plans behind it.

Etihad has to be careful not to turn into another Gulf Air, as it is trying to entice airlines through higher pro-rate contracts, and I'm not certtain that they'll continue to receive subsidies.

Qatar is the big question mark also for similar reasons as Etihad.

How do you entice airlines through higher prorate contracts? Shouldn't it be lower prorate contracts?

Sorry - yes, that's what I meant!

Precisely the argument that Geoff Dixon (ex QF CEO) advanced many years ago .. and was shot-down by many for.

I'm surprised that Bigal's excellent commentary omits the ME-Australia / New Zealand segments, since they are crucial to the likes of EK's strategy of carrying 'through' traffic to Europe. Even EK itself admits that.

Actually Kimshep, I was brought up looking at the world through what I would call IATA glasses - and in that world Australia / New Zealand are in what is called Area 3 - which is another way of saying "Far East". Therefore, I did mention it when I said
Far East - Middle East...
And by the way - thanks for the compliment!!!

EK does indeed discuss their Australia/N.Z. segments quite often. They now however face EY, QR, etc. not to mention the plethora of other carriers which service Australia/NZ routes.

Even though I think Dixon is a bit of a buffoon, his comment was spot on. I think the bottom line is the ME carriers aren't "playing" by the same rules. I say either "play" by the same rules or "you can't always get what you want"......

If you look at the world east and south of DXB/AUH, the penal colonies of NZ/AUS aren't exactly that material relative to the billions of people who live in Asia. Sorry.

In terms of absolute passenger potential numbers, you are indeed correct robertkc. But as Jacobin777 points out :



.. and when they do, it's usually to point out that these routes constitute some of their most profitable and highest yielding routes. While the allure of South East Asia / China is obvious, it is highly unlikely that EK would ever be able to replicate the multi-daily, multi-city frequency / route structure that they have wangled in the Australian and New Zealand markets via overly generous route / frequency grants. There are many regions of the world watching EK and now starting to 'crimp' EK's acquisitive demand for rights.




Personally, I see EY being more of a threat to EK (in the Australian / New Zealand market) due to the recent codeshare and interline agreements between EY and QF. QR is nowhere near the scale of operation of EK or EY in this region .. and is not likely to be. The demand for services between Australia and these ME points is simply not that great ~ and there is only a certain number of ways that the pie can be sliced.



Agreed .. and even the Australian Government (however liberal in granting rights in a push towards local 'Open Skies') is beginning to become wary of EK. It's rejection of EK's demand for rights in late 2007 and the subsequent 'capping' of unlimited frequencies sought by EK is tantamount to the idea that EK may have strained the friendship.

I suspect that the Middle East carriers will collapse under the weight of their A380 payments, particularly when countries such as China begin advancing their own overseas national interests. With the legs available for the 777, 787 and A350, there will be little requirement to land in the desert and without their central stopover position their raison détre ceases to exist. Think back 40 years to the B707/DC8 era when all ATlantic flights landed at Gander. Now picture a fictional Air Gander developing the same type of fleet using B747s (new at that time) to capture the overseas market. Good for a little while but take Gander out as a required landing base and Air Gander ceases to exist except to serve the actual Gander market. That market doesn't require a B747: hence the financial collapse of Air Gander. Doha, Dubai and others may be great financial and oil capitals, they may offer great golf courses and other attractions but no one goes there unless they need to. IMHO anyways

And yet if governments deny EK the frequencies they need to use their A380s as blunt weapons to bull their way into markets and club local carriers, then they won't need 60-100 A380s so they'll just cancel part of their order.

EY (10) and QR (5) both have significantly less exposure, so they can sit on their current order books without too much worry.

And that will END any hope of the A380 ever breaking even.

That it will not turn a profit is a given, IMHO.

But for the sake of argument, let us consider your preference:
1. You have one market to sell, lets us say from Paris to Singapore. You can fill the flight with passengers flying from Paris to Singapore and back - or from Singapore to Paris and back;
2. You have a flight that goes Paris-Gulf point-Singapore. You can fill the flight with (a) passengers flying from Paris to Singapore and back - or from Singapore to Paris and back; or you can fill the flight with (b) passengers flying from Paris to Gulf point and back plus from Gulf point to Singapore and back or a mixture of a and b, helped with Revenue management systems to optimize the revenue per flight.

Which one would you chose?

Answer: none of the above. Option A suggests a limited market only going to Singapore. Option B implies that I need to go to Gulf point before I go anywhere else. I don't want to stop in Gulf point. I want Paris Singapore or Paris to a third destination but always direct: no intermediary stopover. This is the trend that Boeing has been pursuing with all of their ER developments and the Airbus is tacitly agreeing with their 350 development. Your argument suggests that there is a need to go to Gulf point. Why? If I want to go to Gulf then I buy a ticket direct to Gulf. If I want Singapore I buy a ticket to Singapore. Why should half the passenger load be exchanged at the midpoint in the flight? Why should an extra 2 hours be added to the flight just to permit such an exchange? As a passenger it is an inconvenience. I routinely fly Toronto Brussels. The only carrier offering this service is Jet. Everyone else has a stopover. So I put up with a slightly inferior cabin service to BA or KLM in order to save 3 hours. The 380 gives me the opportunity to have a shower. Sorry, BA provides shower facilities at either end and I save 3 hours on the direct flight. I'll pass on the in-flight shower.

You have one market to sell

I really should read more carefully. With only one market to sell, option B is your best choice. Unfortunately for you, going through Gulf point will cause people like me to bypass you in favour of the guy who offers the direct run. That is why, to get back to the question in the thread, I think the Gulf states will collapse as a gateway. There are too many others offering the same service plus others to keep them in business at the level which they are trying to reach.

I have to agree here, for the waaaaaaaaaaaay foreseeable future, I don't see South East Asia nor China haing the yields/scale which EK wants. But I think EK doesn't mind getting low-yielding revenues/margins. As long as their 1 Dirham investment is >1 Dirham in return, they are happy..IMHO of course.

I base this comment on all of their flights to lower-yielding destinations such as KHI, DEL, etc.



Now it would be nice that if with even all of the havoc regarding AA/BA/ATI/JL, etc. OneWorld lands EY. While RJ is in OneWorld member, I dont' see them as a strong Middle East partner.. EY will have the scale, routes, backings, etc. to make OneWorld strong in the Middle East. AA and EY have now started to codeshare in USofA-AUH flights as well.

QR IMHO is a "wanna' be". I don't see them being as competitive as EK and EY are. EK is the 500lb gorilla however.







I find it ironic that EK doesn't "play fair" yet they have a problem with various alliances.



They might "bully" European regulators, but I don't see how it effects other non-European countries. Not only that, I don't think BA, AF nor LH will really care what their country leaders think...i.e.-such as AF's B77W versus A346 decision.

Those flights may not be the most solid foundation to base your comment on... It is at least arguable that EK flights to KHI, DEL, and even SE Asian points like MNL aren't run to generate a return on investment, rather to transport the slave labour. Kinda like certain flights by TN aren't for generating profit, but rather for transporting high-value tourists who will have a positive impact on the tahitian economy as a whole.

Well supposedly EK is "independent" of the Dubai Govt. If those flights are not for ROI then why fly those routes? It's not EK's problem to transport the slave labour..

Yes... supposedly...

Exactly...'supposedly"...