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25 April 2024

Clear blue skies, or bumpy ride ahead, for Gulf airlines?

By Frank Kane



It was all good news from the Middle East Aviation Outlook Summit, which opened in Abu Dhabi on Wednesday, and the industry in the region has lots to be proud of. The UAE in particular can point to the huge strides made by Emirates Airlines towards breaking into the very top level of global aviation, and Etihad’s expansion also augurs well for the UAE’s ambitions to be a world travel hub.


But there is a just a little bit of turbulence ahead in this otherwise clear blue sky. According to the International Air Travel Association, growth in Middle East passenger numbers has slowed from its previous double-digit levels. Iata says that the January figures were sharply down on the levels of last year.


The reason for the fall was not entirely clear, however. On the one hand, Iata claimed “slower growth in capacity” was behind the drop, implying that people were still willing to fly to and from the Middle East’s airports but could not find seats. Time for the airlines to hurry up those multi-billion orders from Boeing and Airbus then.


But Iata also said the “sharp shift in demand growth patterns makes it clear that the US credit crunch is negatively impacting air-travel”. This suggests that all those deal-doing businessmen are not prepared to fly round the world to get business. Even an investment banker’s expense account has to end somewhere.


One month’s figures are not enough to declare a trend, much less a recession in the air travel business. We will have to wait until at least the middle of the year until a clear pattern emerges. In the meantime, I suspect, the region’s airlines will carry on with record-setting aircraft orders, making it pretty clear the expert industry view is still very optimistic.