Passenger traffic figures are up again this summer: it’s good to see that travelers are now back in airports and on planes, and that most flights have acceptable or even very good load factors.
While the Covid crisis is still not over, and has now lasted for over 18 months, it’s time to take stock of its impact, particularly onairlines that are rather weakened, namely the three major Middle Eastern airlines : Emirates, Qatar Airways, and Etihad.
But why are these three airlines more affected than the others? Who’s doing best among these three airlines? Is there an outsider outside this zone who can benefit from this crisis? That’s what this article is all about.
A crisis that is having a major impact on Middle Eastern airlines
Middle Eastern airlines are particularly sensitive to air transport crises of all kinds.
In fact, these airlines rely on East-West passenger flows, which were largely interrupted by the introduction of major travel restrictions, particularly in Asian countries and Oceania. Unlike most European, American or Asian airlines, regional traffic is rather limited. This limitation is reinforced by the fact that business travel has been totally halted since the outbreak of the COVID crisis, and is now being slowed down considerably.
Indeed, according to a recent study by the Montpellier Business School, 70% of business travellers say they are reducing their trips very significantly right now. Already, all the players in the sector are counting on a 40% reduction in business travel over the long term.
As a result, these airlines had to find strategies to survive the crisis, and wait for time to pass.
The super-hub concept adds to these airlines’ difficulties
The hub concept emerged in the 90s, and has been implemented by all the major European and American airlines. It’s about offering connecting slots between medium-haul and long-haul flights to transport passengers from point A to point B via point C, the famous connecting hub. Although this concept was created in the 90s, it has been used extensively by the Gulf airlines to develop their networks since the early 2000s.
In a major hub like Dubai or Abu-Dhabi, passengers arrive from many different places, mix and mingle, only to depart on other flights to another location. It is this phenomenon, for example, that has led the UK to leave the United Arab Emirates and Qatar on its red list, not because of the spread of the virus in these countries, but because of the cross-fertilization caused by the hub.
The other point is passengers’ fear of traveling on connecting flights, which potentially encourage the mixing of people and the spread of the virus, for fear of being infected. This leads to point-to-point air routes, served less often, and with smaller aircraft.
The extent to which ME3s are affected varies greatly, with very different crisis management strategies.
Competition between the Middle East’s three major airlines has been fierce over the past 10 years, and was further intensified between Emirates and Qatar Airways during the COVID-19 crisis.
During the pandemic, Qatar Airways maintained a number of flights and destinations while its competitors virtually stopped operations… Last week, Qatar Airways was leading the way with almost 450 flights a day, while its competitor Emirates had a ceiling of 230 flights. Etihad is far behind, with just under 130 flights.
Qatar Airways
Since the beginning of this international crisis, Qatar Airways has found its place as largest international airline in seat-kilometres travelled: the airline not only maintained most of its existing routes, but also opened new ones in the midst of the pandemic, in particular on all the American destinations that Emirates left out during the crisis. Seattle, Toronto, San Francisco.
This summer in particular, most American destinations are served twice a day. Huge!
In addition to this, Qatar Airways has operated a large number of flights to repatriate citizens stranded abroad to their countries of origin.
All these expansions nevertheless cast doubt on the commercial viability of these route openings, a doubt countered by the airline’s General Manager for the past 24 years, Akbar Al Baker, who says he wants to ” use every possible opportunity to generate sales for your airline “also indicating that it is likely to be ” the airline that received the fewest injections of funds from its shareholders, no subsidies, and that all the money received represents a capital increase that will benefit all shareholders ». A criticism of many European airlines!
Emirates
For a very long time, Emirates’ main asset was the Airbus A380. But since the start of the pandemic, when it was much harder to fill planes due to passenger fear and travel restrictions, the A380 has become a real nuisance for the airline, and there are very few markets in existence today that can support an aircraft such as the European firm’s superjumbo: Paris, New York and perhaps San Francisco. All other markets are either closed or highly restricted in terms of immigration.
Nevertheless, the airline is forced to continue operating its A380s on certain routes, sometimes with virtually empty flights, to continue training the few remaining pilots (90% of pilots were made redundant between March and September 2020), and maintaining the aircraft.
The A380 was already virtually dead before the pandemic, but the pandemic killed it… Will Emirates be able to re-operate as before, nothing is less certain!
Nevertheless, Emirates still has a considerable advantage over Qatar Airways in that its origin/destination traffic is higher than in other Middle Eastern cities, driven both by the local market and by the visitor market in Dubai, which has remained open almost constantly since the summer of 2020.
Etihad
The Abu Dhabi-based airline had already begun downsizing since 2016. Particularly because of its lack of cash, generated by the disastrous alliance strategy implemented by some of the Emirati airline’s managers.
In April 2021, they’ve even announced that the airline’s flagship Airbus A380 will be leaving the fleet, including one of the best first-class products in the industry, called The Residence, which we’ve already told you about on TravelGuys. More seriously, they have also announced the withdrawal from the fleet of the Boeing 777, which is nonetheless quite nimble to operate.
This means that Etihad’s first product will only be present on a small part of the fleet, namely Boeing 787-9s equipped with a suite that is far less prestigious than the one featured on the A380.
The airline’s CEO has already announced that it is a medium-sized carrier, not capable of conquering anymore against Emirates or Qatar Airways.
Will the arrival of the A350-1000 (with First) in the next few weeks change things? Not sure.
Bottom line: could salvation come from another airline?
It’s anyone’s guess which Middle Eastern player will emerge victorious from the Covid crisis, but clearly Qatar Airways has the upper hand over the other two Gulf airlines. Etihad remains on life support, and the fate of Emirates is closely linked to the resumption of traffic and the usability of the Airbus A380s, which are not due to leave the fleet any time soon.
However, there is another airline that could well come out on top. It’s not technically located in the Middle East, but a few thousand kilometers to the north. It is Turkish Airlines. Bertrand and I have some experience of this airline, and we can tell you that it’s excellent, both from a hard and soft product point of view.
Specifically, long-haul and very long-haul service of excellent quality, equivalent to that of a Gulf airline.
Strategically, it has the great advantage of having a much more varied fleet than the Gulf airlines, with both medium-haul and long-haul aircraft, and a very dense European, Asian and Middle Eastern network, offering countless connection possibilities. What’s more, the airline offers itineraries from Europe to the United States, which are not usually offered by Gulf airlines.
All this generates much greater traffic, and the airline has proved impressively resilient during the Covid crisis. Will it be the new mega-hub?
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