Rise of Middle Eastern Airlines

Impact and Strategy of a European carrier to Compete Due To the Rise of the Mega Carriers of

The Middle East

Impact and Strategy of a European carrier to Compete Due To the Rise of the Mega Carriers of

The Middle East

Introduction:

Recent times have seen a rapid increase in the size of Middle East Airline industry, and the trend has increased to t extend of posing a threat to the European airlines. Although most of the European airlines would argue that there is no market for all these airlines, the facts and statistics contradict the statement. The Middle Eastern countries, by virtue of their location, are all exposed to the current growth market, with Emirates, Qatar Airways and Etihad Airways being the emerging names. The three airlines have also launched new routes in 2012, especially to Rio de Janeiro, Buenos Aires, Argentina, Lusaka, Zambia, Harare and Zimbabwe. The airlines have also started improving on relations with other countries and airlines, with special focus on Europe (Butt, 2011, Pp: 152). The interest of Middle Eastern Airlines in the European countries is evident from the addition of countries like Stuttgart, Germany; Venice, Italy; Sofia, Bulgaria; Bucharest, Romania; Budapest, Hungary; and Brussels to their destination list.

Discussion:

Airports and infrastructure; Development in the past decade:

The last decade has seen a number of infrastructural developments in the Middle East, especially with respect to aviation. In 2002, there was launching of a mega project for the development of airports across Middle East, which ensured an investment boom for the area. There was an allocation of around eight billion dollars for the program, out of which 70 percent was spent in the Gulf Cooperation Council (GCC), and around $3.26 billion was directed towards the development of Dubai, Abu Dhabi and Fujairah airports in the United Arab Emirates (UAE).

By 2008, Abu Dhabi was busy investing $6.8 billion in the expansion of its airport. The main purpose behind expansion was to meet the growing demand of Etihad Airways, which was getting increased number of passengers was on a steady rise and in 2006 the number had increased by 20% (that made almost 6.5 million at that time). At the same time, Qatar was also busy building airport at the land reclaimed from the sea, some 4 KM away from the existing airport. The new airport would probably be functional by 2015 and would be able to handle 50 million annual passengers with 80 contact gates. Moreover, this airport is the first in the world with specific construction that would be able to accommodate A380. The characteristics indicate that Qatar airway might call for more such aircrafts, following the strategies of the remarkably successful Emirates (Communique Airport Business, 2012)

Airline Growth in the Middle East and threat to the European Airlines:

By 2010, the Middle Easter airline was posing a serious threat to the European Airlines, as the former offered better flying rates to passengers from Middle Eastern and African regions as compared to the European airlines, whose fares are comparatively much ...