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  • OPINION: Is Gulf carrier expansion finally at an end?

OPINION: Is Gulf carrier expansion finally at an end?

When Emirates recently announced a surprise 75% fall in first-half profit, group chief executive Sheikh Ahmed bin Saeed Al Maktoum blamed “increased competition and the sustained economic and political uncertainty in the world”. He added that “the bleak global economic outlook appears to be the new norm, with no immediate resolution in sight”.

After the recent good times enjoyed by the fellow Gulf carriers, this is proving to be a difficult period for these global network players. While they have watched the travails of legacy carriers – and compounded them through their own expansion – it illustrates they are not immune from the same cost and market pressures.

There are headaches too in Abu Dhabi, which has sought to fast-track its expansion through acquisition. After more than five years of empire-building, Etihad’s James Hogan faces a massive challenge to make his European investment strategy deliver on its profitability promises. Even this wealthy state-run carrier may have bitten off more than it can chew with a strategy Hogan insists is to build scale and market access, rather than to mimic that of failed Swissair.

These issues, together with speculation on Emirates’ Airbus A380 delivery deferral, indicate that there may be some let-up in the Gulf carrier’s expansion.

But 2017 will show whether this is a genuine pause or just wishful thinking on the part of its rivals

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