Assistant Editor Aaron Newman
Growing the Gulf
By Aaron Newman.
A decade ago Emirates, Qatar Airways and Etihad Airways were irrelevant. But these three airlines have become increasingly dominate on the lucrative international long-haul market, causing angst for western legacy airlines and their respective governments. For example, Lufthansa claims its Frankfurt hub has lost nearly a third of its market share on routes between Europe and Asia since 2005, with more than 3 million people now flying annually from Germany to other destinations via Persian Gulf hubs (economist.com).
This global turf war is only going to intensify as the gulf carriers continue expanding at breakneck speed. With hundreds of aircraft deliveries forthcoming (see graph below), Etihad, Emirates and Qatar Airways are destined to initiate new routes, utilizing a large order book of new aircraft scheduled. The major news outlets and our WorldAirlineNews.com have done a great job summarizing the discord between the gulf airlines and their global legacy counterparts. I’m going to use this opportunity to tackle a different question…where will these three airlines expand to next?
In May, Doha based Qatar Airways (below) made headlines, announcing it will begin flying to Atlanta, Boston and Los Angeles in 2016. Qatar Airways also said it will increase service to New York, adding a second daily flight.
Copyright Photo: Antony J. Best/AirlinersGallery.com. Qatar Airways is the launch customer for the new Airbus A350-900. Airbus added Qatar titles to this test Airbus A350-941 F-WZNW (msn 004) pictured at Farnborough.
In late March, Emirates surprised the industry, announcing new daily service from Orlando (MCO) to Dubai beginning Sept. 2015.
Copyright Photo: Antony J. Best/AirlinersGallery.com. Etihad Airways Airbus A380-861 A6-APA (msn 166) departs from London (Heathrow).
And Etihad Airways (above), just finished a six city expansion in the beginning half of 2015 to; Algiers, Edinburgh, Entebbe, Hong Kong, Kolkata and Madrid. Looking at the charts above, it’s easy to see that additional future growth is inevitable. Adding frequencies, upgauging aircraft and expanding to new cities such as the ones listed below is bound to happen given these airlines current trajectories.
Mexico City, Mexico (MEX)
With a population of nearly 22 million people and one of the most important financial centers in Latin America, I foresee a gulf carrier announcing new service shortly before their new international airport is set to open in 2018. Given the distance from the Persian Gulf, this route may need a European stopover city to make this and other Latin America cities work in the future.
Vancouver, Canada (YVR)
A major gateway for pan-pacific trade, Vancouver offers the international diversity and business climate that the gulf carriers are attracted to. Emirates expressed interest in serving Vancouver in years past, those talks quickly diminished after Air Canada expressed concern. If discussions between the Canadian government and gulf carriers were to reignite, Vancouver would be a high priority for any gulf airline.
Sapporo, Japan (CTS)
Japan’s fourth largest city and the largest city on the northern island of Hokkaido; Sapporo’s airport has largely been underserved by airlines outside of the major East Asian hubs (Seoul, Tokyo, Hong Kong and Beijing). Alternatively, Fukuoka (FUK) would also be a viable option for a gulf carrier looking to add routes in Japan.
Stuttgart, Germany (STR)
Emirates has been working hard to make this route a reality, however, the German government is currently limiting the number of routes from gulf carriers into Germany in an effort to protect national carrier, Lufthansa. If the German government ever reconsiders, this will give Stuttgart a much needed long-haul route heading east. Berlin is a potential growth target as well, but I do not see this as a possibility until the completion of the delayed Brandenburg airport—currently scheduled for 2018.
Helsinki, Finland (HEL)
Finland’s largest city and capital, Helsinki offers the large population and thriving economy to make this route work. Competition from state-owned Finnair and the fast growing Norwegian Air Shuttle may be a deterrent to this route. I foresee Qatar Airways being the first airline to launch this route given the mutual Oneworld membership with Finnair.
London Stansted, UK (STN)
A stronghold for the UK’s low-cost airlines, Stansted’s owners and operators, Manchester Airports Group strongly desire to diversify by adding a full-service airline. About 6.7 million people live within a 1-hour drive of Stansted and 12 million within 2 hours. With slot restrictions at Heathrow and Gatwick, could this be a viable option to add frequencies into the London metro area?
Xi’an, China (XIY)
Xi’an’s pillar industries; equipment manufacturing, software development, aerospace technology, and high tech R&D are driving a blossoming economy in Xi’an. This route prediction may be a bit premature, however, gulf carriers will continue to tap into China’s growing middle class and flying to secondary Chinese cities. Chongqing, Wuhan, Xiamen, Kunming, and Qingdao should all be considered as future options.
Detroit, MI (DTW)
Detroit’s automotive industry supplies a large amount of lucrative business travel between Asia and the United States, Detroit also has about 400,000 residents of Middle East origin, the highest total for any U.S. city, with many from Lebanon, Iraq and Yemen. However, this route would be in direct competition with Delta and Skyteam members Air France and KLM. Has this competition kept these three airlines from stepping in?
Bamako, Mali (BKO)
Bamako’s annual growth rate is hovering around 4.5%, which makes it the sixth-fastest-growing city in the world, and the fastest on the African continent. African cities like Bamako have become important for gulf carriers because of their location between the continent and Asia, which are developing commercial links. While few Africa-Asia routes generate enough traffic for direct flights, Persian Gulf carriers can funnel small numbers of people from many places through the airlines’ hubs.
My list above is purely speculation from an industry enthusiast, but I’d also like to hear your thoughts below in the comments section. Where do you see or where do you want to see these airlines expanding to in the future and why?