Middle Eastern Airlines are not there just to be commercially viable and turn a profit. As long as we need to keep buying oil from the Arabs they'll have the money to run at a loss.
Dubai is planning for when their oil runs out, they want to be a world business center - Singapore in the Middle East. An airline serving the world will help them achieve this and eventually contribute to Dubai Incorporated
Abu Dhabi has plenty of oil and the largest sovereign wealth fund in the world. It can't be upstaged by Dubai so starts an airline Etihad, to rival Emirates. If it turns a profit, great. If not even, British Airways scale losses are only a few days interest earned by their US $800 billion government portfolio.
A few years ago most people wouldn't have been able to find QATAR on a map. Now every body's heard of QATAR Airways and their numerous awards.The sheik can hold his head up at the Arab summit meetings and with their massive LNG reserves he can afford to stay in the "arms race".
Just be grateful Saudi Arabian haven't jumped on the band wagon. Older equipment (but big orders in), no alcohol and an aversion to western tourists visiting the Kingdom hold them back. But with their oil reserves there's no time limit on how long they can stay in the game.
Airlines such as Egypt Air, Royal Jordanian, Oman Air etc either lack the financial muscle, capability or the will to join in. As long as they can serve neighbouring countries, migrant labour sources, the major shopping and financial centers in Europe and a long range destination or two in North America or the Far East they'll be happy.