ANALYSIS: Middle East airline market outlook May 2014

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While the big Gulf carriers continue to be the drivers of global growth, efforts to develop the new hubs required to handle it remain in different stages of readiness.

In Doha, operations at the new Hamad Intenational airport – which will support the growth of Qatar Airways – began in earnest this month. After a soft opening at the end of April – involving 10 airlines switching operations to the new facility – full operations began at the airport, including those of Qatar Airways, on 27 May, in time for the Qatari capital’s hosting of IATA’s AGM.

The airport had officially opened in late 2012 – on 12/12/12 – but full operations were delayed until now after wrangles over completion contracts with suppliers. Qatar Airways’ own premium lounges at the hub are still a couple of months from completion.

In Abu Dhabi, work is in progress on the new hub for Etihad – the Midfield Terminal project. Unperturbed by Doha’s challenges in meeting the 12/12/12 target, it too has found a catchy date target for its opening. The airport is due to open at 07:00 on 17 July 2017.

Construction is already under way. The first steel arch was completed in February, and the rest of the Midfield Terminal’s roof structure will be complete by year-end. The initial phase of construction will deliver a passenger capacity of around 30 million per annum.

Abu Dhabi’s 1970s-era international airport, with its two modest terminal buildings, has struggled to keep pace with the growth of Etihad and slot demand from other airlines. The airport catered for a record 14.7 million passengers in 2012 and Abu Dhabi Airports (ADAC) expects numbers to be nudging 20 million by the time the Midfield Terminal opens.

Just a couple of hours drive down the road, Emirates’ new long-term home is already built but still some way from becoming the focal point of the Dubai carrier’s operations. Dubai World Central – Al Maktoum – took a further step forward last year with the launch of the first passenger services from the airport. Emirates has just begun freight services from the airport, but a move for its passenger airline operations from Dubai International remains some way off. No firm date has been set.

Even an enforced reduction in capacity at its Dubai International base whilst runway improvement work is implemented would not spur Emirates to move capacity down the road. “During the runway closure we have to keep a single airport operation as more than half our business is connecting,” says Emirates chief commercial officer Thierry Antinori.

Longer term, he says, the decision on when to move will come from shareholders: “It’s not a decision of Emirates management, but of its shareholders. But it’s good to have that issue. It’s a fantastic airport, so it’s a good issue to have."

MIDDLE EAST AIRLINE NEWS: MAY SNAPSHOT

Emirates boosted group net profit nearly a third to Dhs4.1 billion ($1.1 billion) in the year ended March 2014 as revenues increased 13% to Dhs87.8 billion.

Etihad Airways unveiled its new product to debut on the Airbus A380 and Boeing 787, which will enter service with the Abu Dhabi carrier at the end of this year. It will debut the Dreamliner on flights to Washington DC, Mumbai and Dusseldorf in Germany;

Gulf Air says it halved annual losses under its restructuring programme, cutting them by more than BD100 million ($265 million). Its management team also claims that the airline’s financial performance exceeded forecasts by BD14.5 million, without giving a revenue figure;

Qatar Airways has sourced eight Airbus A320 narrowbodies for its Saudi subsidiary Al Maha Airways, which it hopes to launch later this year.

MIDDLE EAST AIRLINE CAPACITY: MAY

Underling the fast growth of the leading Middle East network players, the four biggest operators all grew capacity at double-digit rates in May compared with the same period in 2013, Innovata schedules data shows.

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MIDDLE EAST AIRPORTS CAPACITY: MAY

Dubai remains the largest of the Gulf hubs in terms of terms of departing seats in May 2014, Innovata schedules data shows. The two Saudi airports of Jeddah and Riyadh are among the top five Middle East airports, alongside Qatar and Etihad’s respective hubs of Doha and Abu Dhabi.

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MIDDLE EAST AIRLINE FLEET SUMMARY: MAY 2014

The active Middle East airline fleet stood at 1,141 aircraft in May, more than half of which are widebodies.

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