Location, location, location

The Middle East has long been a traditional point of contact for commercial and cultural exchanges between Europe, Africa and Asia. Today, through vision, commercial focus and the availability of the right tools for the job, in terms of the latest aircraft and technology, the region is beginning to take full advantage of its geographical location, which is quite literally at the very centre of the world.

JPGPDF JPGPDF

Likewise, short-range single-aisles are well suited for operations between any point of the CIS to East Africa or from Central Europe to the Indian Subcontinent. Therefore, more new low-cost carriers are expected to initiate their operations, within an initial zone which has 2.5 billion people to target their operations.    

The region has always been of interest to people wanting to visit ancient sites like Babylon and Petra, but today, new luxury holiday resorts and hotels also draw tourists looking for desert safaris, water sports, shopping or beach holidays. Commerce, which has always been central part of life in the region, is taking on new modern dimension, with banking, property development and today even a growing film industry.

JPGPDF JPGPDF

Such activities, combined with the benefits from the region’s natural resources, have seen Gross Domestic Product (GDP) in the Middle East grow at a healthy average of 4.8% per year between 2000-2006. Five countries could be described as the locomotives of economic development in the region, with GDP growth ranging from 6% to 8%. These five countries account for just 7% of the region’s population, but have been responsible for as much 32% of its total GDP.

Since the year 2000, traffic to, from and within the Middle East has almost doubled, showing an annual average growth of 11%, which is much higher than the average world traffic rate of 4.1%.

As a result of strong business and leisure activities within the region, the intra-Middle East traffic has increased by more than 70% since 2000. Domestic traffic increased by a more modest, but never-the-less impressive 50%.

Long-range traffic to and from Asia-Pacific and Europe has doubled in the last six years. The Middle East has become attractive as an alternative hub between the Far East and Europe or Africa, as well as between the Commonwealth of Independent States and Africa. Traffic to North America has shown more moderate growth, currently limited to the East coast markets. Still, future deliveries of aircraft capable of flying more than 8,000 nautical miles (14,900 kilometres) will enable Middle Eastern airlines to reach the west-coast destinations and offer convenient connecting opportunities.

JPGPDF JPGPDF

The latest statistics from IATA clearly show that the total traffic growth to, from and within the Middle East, was generated by seven major international operators domiciled in the region.

The combined international operations of these seven airlines generated nearly 110 billion Revenue Passenger Kilometres (RPK) growth, in comparison to the 124 billion RPK total traffic reported by all airlines flying there in 2000. The Gulf Emirates’ airlines contribution alone accounted for 84% of this growth, demonstrating the attractiveness of their service and the catchment area’s potential as state-of-the-art hubs. Interestingly, airlines in the region who have purchased the A380 were responsible for 83% of the regions’ growth in traffic, growing at 31% per annum.

This growth is even clearer when the position of one of the region’s most prominent cities and airports is examined in relation to other key world’s hubs. In 1997, Dubai was positioned 28th worldwide by the number of international Available Seat Kilometres (ASKs) offered to other regions. By 2002, the city had risen ten places to 18th position. In 2007, as a result of activities by the region’s airlines and the region growing importance worldwide for tourism and commerce, the city took its place amongst the top ten hub cities worldwide, with still the potential to continue its rise through the rankings.

During the next ten years, traffic is expected to double again growing at 7.7% per annum, even faster than Asia. The intercontinental network in particular will continue to grow quicker than the regional one, as more very long-range and very large aircraft join the fleets of the leading airlines of the region.

The total passenger and freighter fleet of airlines domiciled in the Middle East will grow from 564 aircraft with more than 100 seats today, to 1,622 by the end of 2026.

In addition, the rapid development of cargo operations at the region’s major hubs means that the freighter fleet will have to grow from 31 dedicated aircraft in operation today, to 106 large freighters by 2026.

The region’s global airlines, of which there are three today, are expected to continue their current domination of growth makets over the next 20 years. Share distribution by market segment will not change dramatically as intercontinental traffic will continue to grow quicker than average.

Current LCC growth might not be impressive in terms of market share, due in large part to the relative importance of long-haul traffic volume, however their traffic volume is expected to increase at 9% per annum as a minimum.

JPGPDF JPGPDF

Given the low number of LCCs in the region currently, and the pace of liberalisation, new LCC entrants will more than likely further stimulate traffic. The region’s ideal geographical location near to growing markets like those of India, the CIS and Eastern Europe in particular, combined with the capabilities of modern aircraft, such as the A320 Family will also serve to provide opportunity for airlines and continue to stimulate growth.

JPGPDF JPGPDF

JPGPDF JPGPDF