Middle East majors to dominate international travel?
 

Is it not obvious that the 3 vastly wealthy states are set to take over many of the world's long haul routes once the large state carriers elsewhere have shrunk dramatically? I may be naive about this, but it strikes me that the 3 airlines which are underwritten by sovereign wealth funds can withstand the economic pressures faced by the rest of the world's carriers. Particularly as fuel supplies for the oil-rich states are cheap and limitless.

Clearly travel rules could be altered to prevent this, but it as things stand, the likes of BA, LH, AF, KLM, IB, SK, AZ, CX, JL, and Chinese carriers could stand to lose significant market share. The US, Canadian and South American majors are also exposed on their routes to Europe it would seem.

Now I may be looking at this situation simplistically, but am concluding that state support to keep many airlines afloat and strong is vital for the long run.

All for it in principle as long as these same Companies do not plead poverty and ask for Government hand outs whilst paying out Dividends. Or is that too simplistic?

How does Emirates or Qatar take over LHR - JFK or LAX - NRT?. There still will be a market for direct routes as opposed to staging through the ME.

Emirates already have some flights out of a couple of European airports to North America. Malpensa and Athens if I am not mistaken.

Not to mention, with oil prices in the cellar, those countries may not have as much wealth available...

Gotta love some of the head in the sand responses. The importance of their airlines to these economies is big for sure. Their wealth is enormous, and their employment laws far less limiting, rightly or wrongly. They will protect their investments, and can do so.

And don’t forget that Qatar owns 25% of IAG (British Airways, Iberia, Aer Lingus, LEVEL).

Dubai doesn't really have much in the way of oil revenue these days! Abu Dhabi has far larger reserves. Dubai depends more upon tourism, finance and services for it's GDP.

Just sayin'...

But it isnt much better going from LHR - MXP - JFK than going LHR - DXB - JFK, you are still throwing in an extra stopover.

Unless Emirates get rights to fly direct to the US from the UK how are they going to be much competition to US or UK airlines on that route?.

Also I thought that the latest thinking in the industry was that we were moving away from the Hub model to direct city to city flights.

Watch this space... I've been thinking along the same lines as R Hudd...

Yeah - and you never know, Tim Clark may allow the flight crew overseas basings to carry it out...;)


Christmas might come this year after all..

We will need to wait for the dust to settle and see which airlines survive and which sadly don't and what opportunities may exist. If there is insufficient demand for existing capacity out of their home bases in the Gulf and if traffic rights were secured elsewhere, then it could be a savvy move to deploy surplus capacity to new markets, if demand exists.

What is more complex, is trying to establish what has happened behind the scenes after a number of US legacy airlines lobbied the White House over perceived unfair competition against Gulf airlines. Discussions between Qatar/UAE and the US nearly two years ago, resulted in mixed messages from the US with one of Trump's trade advisers, who is a staunch nationalist and sided with the US airlines, publically contradicting the more toned down State Department version of what was agreed. Cue numerous revised and at times confusing press releases, with the outside world being left to read in between the lines and guess what was agreed.

If the US airlines were complaining during good times, then I can't imagine they will roll over and happily see any of the ME3 look at expanding across the North Atlantic from Europe.

I think it's a little naive to think the European governments will allow their own airlines to fail leading the 100,000s of redundancies and at the same time allow foreign airlines to take up capacity. That's how you lose elections. Obviously it sounds very appealing to those employed by the middle east 3 but for everyone else it stinks.

I’m assuming the one that cannot be named is one of the big 3....

Their foreign airline investment portfolio has made truly spectacular returns. Said nobody ever.

Singapore airlines already flies SIN-MAN-IAH so would it be out of the question for them or EK/EY/QR to fly onward to JFK or even to MCO as the charter fleets are now decimated from MAN and more so if VS go belly up.

It is not about specific routes. Obviously there are many US/Canada -Europe direct routes that will not be of interest to the big 3. Ditto Europe-S. America. And US/Canada-Far East. Those are clear to anyone with a brain. And Europe to Far East trunk routes will stay clear for those few that don't want 3-4 hours in the terminals of Dubai, Abu Dhabi, or Qatar, and can pay for it. . Business travel. But N.America/Europe economy/premium economy travel to ME and Far East will be taken by the sheikhs like never before. Which is a large proportion of international travel, esp from the UK and Europe. That is where our weakened airlines will no longer be free to compete.

Boneheads please stop picking routes that won't be of interest to the ME 3. They are obvious.

AFAIK some of the ME3 airlines already have rights for UK -USA, at least at UK regional airports. Certainly one has looked at it in the past but decided not to take the rights up. With the landscape now changing maybe there are some opportunities...

Seems that Emirates are expecting demand to rebound fairly soon. For some reason I suddenly cannot post links but the full story is on the front page of the livetradingnews-dot-com

Emirates is busy protecting and readying the world’s largest all wide-body fleet

While the world yearns to travel once again, meet and hug loved ones, seek new adventures and close those business deals, Emirates is busy protecting and readying the world’s largest all wide-body fleet to take to the skies. This could have proved daunting, but Emirates Engineering, a division of the airline and one of the world’s most technologically advanced aircraft maintenance facilities, has it all covered – literally! Ahmed Safa, Emirates’ Divisional Senior Vice President Engineering said: “Emirates moves to a different drumbeat – one where the highest standards are absolutely fundamental to our entire organisational rhythm. Everything we do ladders up to ensuring the best customer experience and people feeling safe and reassured while flying with us.

https://cimg7.ibsrv.net/gimg/pprune....844c513058.jpg

[/QUOTE]Everything we do ladders up to ensuring the best customer experience and people feeling safe and reassured while flying with us.
[QUOTE]

Hmmm.....pity that doesn't extend to paying their suppliers' bills; demands for 4 months credit, followed by excuses for further delay....I wonder how many simply give up and refuse further orders?

Bit like another well-known - notorious - large operator, this time in in Europe.

This propaganda doesn't quite stack up against some of the posts we read here about Emirates professional standards !

"BA's one weakness here is that given a long enough downturn, they will require government support of some kind (above and beyond the furlough scheme). In fact, IAG have already blinked slightly and weakened their position by accepting the spanish government loan, highlighting their hypocrisy to the more observant MPs."

Isn't this weakness equally the weakness of the employees who will will suffer it five-fold ? As for the Spanish subsidy, isn't that simply a recognition of the weakness of those parts of the business and is totally irrelevant as far as BA is concerned ? It has often been quoted here that BA has reserves/draw-down facilities up to € 9 Bn, so there is no way they can reasonably approach the British government for any kind of specific company subsidy/loan/guarantee.

I don't think that many national governments, after throwing huge amounts of cash at their national airlines, will let the ME3 take all remaining slots and routes... Makes no sense.

So yes. Maybe in the UK it will happen. The rest of Europe and the US very unlikely.

You're not thinking long term enough. BA will burn through the cash and eventually be forced to seek state aid. It's just happened a lot quicker at some other airlines.

I'd agree with this - the rise in Nationalism especially in the US and some parts of Europe will make it very difficult for Governments there to allow the ME3 to access to 7th Freedom Rights.

The big Middle-Eastern airlines are mostly not based in oil rich kingdoms. The still-oily parts of the ME are Saudi, Kuwait, Iran, Abu Dhabi, and Oman (with the former 3 being by far predominant). Those are actually the places without the large airlines, except for Etihad in Abu Dhabi (and Etihad is busy failing).

Dubai has very little oil (that is why they run on foreign credit and Vegas-of-the-East marketing image), and Qatar has gas but little oil. Abu Dhabi's oil is not enough to sustain a large economy on its own. Qatar and Abu Dhabi have better things to do with their gas or oil money than permanently subsidise an airline. They are, all of them, trying (cack-handedly but increasingly desperately) to build a non oil-supported economy before the oil (or gas) runs out.

They will not, for they can not, supply more of their dwindling oil money into cheap fuel for their airlines. Their airlines have to stand or fail paying global prices for fuel. Cheap fill-ups forever is a myth.

Now, that doesn't preclude a lot of other support: low interest long term loans, very favourable regulatory environment for airport development, favourable route allocation, keeping the staff servile and subdued, and so on. But not cheap fuel.

The ME2 (Etihad won't thrive) will succeed by being Bling-Ryan-Air - dense aircraft crewed by cheap staff operated by a company squeezing every advantage and support that it can out of airports, simply bigger and nicer-looking than Easyjet/Ryanair/Wizz/Southwest - not by being fuelled for pennies from the Sheikh's own well.

You're right IMO. offer a good business class with lounges and personal attention done by cheap labour and dense the **** out of economy class and you have a solid product.

Regularly fly Emirates Economy A380 to Far East from Gatwick, plenty of leg room, modern clean aircraft with good service, 30kg luggage and free meals/snacks/drinks. And well priced! A very solid product!

Dubai is not a sovereign state and does not have a sovereign wealth fund. At the time of the financial crisis, entities owned by the Government of Dubai had collective debt exceeding USD 120 billion.

I’m going to dive right in and use this thread as an example of the problems with forums like this.

Either the OP was simply trying to wind people up by being nasty, or he/she has no sense of how to communicate online. (I suppose there is also chance the OP is suffering some sort of Covid-19 isolation related breakdown, which, if the OP confirms it, I’ll show more compassion.)

Some quotes from the thread-starter:

First, you (the OP) posed this question: “Is it not obvious that the 3 vastly wealthy states are set to take over many of the world's long haul routes once the large state carriers elsewhere have shrunk dramatically?”

In the context of giving your own thoughts on the matter, you said, “I may be naive about this” and later, “I may be looking at this situation simplistically”. Both of those phrases served to indicate you were looking for input and discussion of points of view different to your own.

All sounded good and reasonable as a basis for a debate on the topic. But... as soon as people started responding with their own thoughts on the question, you turned into a noxious bully.

After the first four responses to your original post – all of which were simple, polite comments or thoughts related to your original question – you opened with: “Gotta love some of the head in the sand responses.”

Next, after another seven or eight contributors added their thoughts – and reasonably debated each other’s points – your next post started by stating unequivocally what the answer to your original question was – then adding “Those are clear to anyone with a brain” and ending with calling some of the contributors “Boneheads”.

In summary, I don’t understand how or why people who (one assumes) would not treat others this way in real life, turn into passive aggressive Pitbulls online. I’m losing confidence in the ability of these sorts of forums to survive if they are not built on a framework of reasonable, courteous discourse. After all, who wants to be insulted or bullied?

You know what, Grizzled? You are right. I am short on patience these days, and it has shown. Courtesy is not so common on these threads, but that does not excuse my discourtesy. Deep breath......I was frustrated with folk not reading my question and simply picking routes which the ME3 could not compete on...and then writing about comfy seats on aircraft, still ..could do better.....I will endeavour to do so.

Thank you for your erudite heads-up.

Now please do not put a picture of my idiotic head on your punchbag :)

What’s an “OP ‘ ?

Old Prunite …….. Original Poster

Hi Roy.

Thanks -- a lot. Your response has rekindled my faith in these kinds of forums. Indeed we all have bad days (this grumpy old man included!).

In these strange times we are all less patient so you definitely don't qualify for the punching bag treatment.

:ok:

PS: Tried to send you a PM as well but could not. Cheers.

To think the MEA3 are just going to walk in and take over all these markets is naive. Each country is going to do their level best at recouping the money given as a bail out . All carriers are in the same situation with spare capacity and crew at their disposal.

The Middle East 3 could become the ME 1.5. A merger between EK and EY with the routes rationalised would make sense, operations could continue from both home airports, which in terms of travelling time aren't much further apart then LHR and LGW. Dubai has the brand, Abu Dhabi has the money and the oil. In the aftermath of COVID-19 there will be reduced demand for long haul travel and important markets such as India will take an extended time to be at an acceptable level of risk. Once travel opens up again, direct flights will be preferable rather than connecting ones where pax mix with others from all over the world. If non stop isn't possible, then a simple refueling stop with a crew change and continuing on the same aircraft could be the new normal. Travel "bubbles" such as the one being proposed between Australia and New Zealand would severely limit hub airlines which rely on connecting pax. An airport might be restricted to transits between virus clear countries and couldn't mix flights with those from countries still virus affected for example.

Qatar Airways will be badly affected as it is a hub airline with no domestic routes and very little origin/destination traffic, they need a recovery in the long haul premium sector which will be the last area to pick up. The blockade was already causing substantial losses and the airline isn't as integral to the country as EK is to Dubai or CX to Hong Kong. With depressed oil prices there may be a limit as to how much money the rulers will put in if they can't see any payback. The airline might downsize to what is sufficient to fly the migrant workers in and out, and to take the locals shopping in LON/PAR/NY, similar to Saudi Arabian or Kuwait Airways.

The sole reason for the existence of ME3 is cheap and cheerful long-haul flights between the US/EU and Asia/Africa/AUSNZ.

With AUSNZ keeping the borders shut into 2021, and the appetite for Americans and Europeans to take vacations in Asia and Africa vastly subdued in the same timeframe, their entire businessmodel is in the ****ter.

My experience over 25+ years transiting through DXB/AED is that a significant majority of pax on EK and EY are migrant workers and small-scale traders from South and South East Asia (and to a lesser extent Africa) commuting to and from work in the ME. Observationally, long haul tourists seem to make up probably only 10 - 15% of pax load once east / south of DXB. Business travellers fill the front cabin, with ME royalty (and associated parasites) in 1st class.

Since ME citizens are highly unlikely to want to do the jobs currently serviced by Indian/Bangladeshi/Philippino/Thai migrant workers, I suspect that a core part of the ME3's business will be secure once we are past the 'crisis' phase of the pandemic and into the 'management' phase. Certainly not enough to sustain the entire fleet, but probably enough to keep at least one of EK/EY alive.

Why would you think that the US or the EU would allow this?
In a situation in which the wheels have fallen off the global economy the rules of the past couple of decades or so won't apply.
Neither the American nor the various EU governments are going to bail out their airlines only to see them trampled by Emirates.

The ME3 don’t compete on the lucrative routes between Europe and North America. Many of their city pairs can be flown non stop or have other options, eg LHR - BKK with BA or TG, and LHR - SYD with CX or SQ.

The main advantages of going via the sand pit were:

1. Convenience - One stop connections rather than 2 or 3.
2. Price - Usually cheaper than a non stop between major cities.
3. Better travelling experience than many other airlines, eg Air India.

With reduced demand for long haul international, flight frequencies will be reduced and an agreeable two hour connection in Dubai could turn into an eight hour one which may be enough to persuade pax to pay the extra $150 for a non stop on their national airline.

The previous premium price for a non stop could drop if airlines are battling to fill seats.

Travel “bubbles” between virus free countries may require direct flights with no mixing of transit passengers.

The ME3 are heavily reliant on long haul premium traffic which will be the last sector to recover. They have no domestic flights and their origin/destination traffic is largely low yield migrant workers.

EY and QR are already in significant financial difficulties and their governments may not be willing to keep on contributing money, unless there is likely to be a strong turnaround.

A merger between EK and EY would make sense with routes rationalised and operations from both airports. QR could downsize to cover local needs, ie migrant workers and rich locals shopping in London and New York.

Krismiler's points above are all valid and well-presented. They point towards the shrinkage rather than expansion or domination of the big three.

An additional consideration, however, is the relative importance of the ME3 carriers to their states' economies. They all provide a much greater percentage contribution to the GDP of each state. Furthermore, Dubai has become a highly-developed tourist destination. Qatar and Abu Dhabi are endeavouring to follow suit. The airlines provide frequent direct services to their base states.

For those two additional reasons, it may well be that the ME3 will receive a disproportionate level of state support, both direct and in the form of subsidies, which could give them a competitive edge. It is certain that they will be unwilling to concede hard-won market share without a fight.

At this moment, it is hard to predict what may happen, My recently-acquired knowledge is that EK claim to be ready to start full ops within 48 hours. I find that hard to believe, but I may be wrong in my beliefs. QR are still operating widely, with light loads. EY seem to be in the weakest position of the three.