Headwinds of change

After more than two years there are finally encouraging signs the pandemic may be on the wane. The airline and travel business has taken a beating and nothing can be taken for granted, but the Omicron variant, while highly infectious, has proved to be much less severe in terms of illness, hospitalisations and mortalities.

However, just as the light at the end of the pandemic tunnel appears to be brightening, we now face the war in Europe.

This is bringing further challenges for the industry, including some airlines being prohibited from using Russian airspace, important for many European services to Asia, while others have had to switch routings around Ukrainian airspace.

The conflict has further caused a rapid rise in fuel prices, adding to airline costs at a time of fragile demand when it is difficult if not impossible to pass these on in higher fares.

In the Gulf region there are many encouraging examples of how airlines have adapted to the challenges of the last two years.

The large network airlines such as Emirates Airline, Qatar Airways and Etihad Airways have used the cargo capacity of their largest aircraft to good effect where demand has been strong. They have been able to partially compensate for the lack of passenger traffic.

In addition, they have equally flexed their networks to tap into sources of strong demand, where these have been available.

Qatar has operated a diverse network throughout the pandemic, able to use a good variety of aircraft sizes in its fleet to optimise the capacity offer.

It has also maintained availability of flights on routes where, in some cases, other airlines have not been flying.

This way it has successfully positioned its on-board product and ease of transfer at its Doha hub, Hamad International.

It has been an investment in gaining potential repeat business in the future.

Unfortunately, Emirates has seen much less transfer traffic compared to pre-pandemic, which was truly expected as many important markets have been shut, especially in Asia.

However, the airline has benefitted from Dubai’s careful and progressive reopening to tourism and conference traffic.

Dubai has long benefitted from a substantial local market, and this has been getting increasingly important lately.

It has also been boosted by Expo 2020, which ran from October 1 2021 to March 31 2022 and attracted some 24 million visits. The strength of traffic recovery has allowed Emirates to return to service 100plus of its large A380s. Some important destinations including the UK are now back to an almost normal schedule.

Although Etihad decided to downsize to become more of a mid-size airline by modifying and reviewing its business model, it has been able to continue its business, strangely helped by the pandemic. Etihad has further performed well in carrying cargo and recently placed an order for Airbus A350 freighters, indicating the importance of the nonpassenger segment for the future.

We have also seen a rapid and agile development by a number of the region’s low-cost carriers.

Air Arabia, the largest and longest established LCC in the Gulf, has continued to grow and opened a new unit in Abu Dhabi where it has partnered up with Etihad to deliver feeder traffic. Remarkably, despite the demanding market conditions, it has delivered a profit over the last year. flydubai, which in addition to the pandemic had to deal with the grounding of its Boeing 737 Max aircraft, has seen these returned to service and has focused on developing a few new leisure destinations from Dubai, many of which that have never been done before. Therefore, it too has returned to profitability. flyadeal in Saudi Arabia is the only LCC in the region to have a large domestic market and this has buoyed its recovery and expansion of activity.

Kuwait’s Jazeera is yet another carrier to restore profitability, which has used its new A320 Neo fleet to open new routes, including to London Heathrow.

An LCC newcomer in the region is Wizzair, which has now established a subsidiary in Abu Dhabi. Wizzair sees the pandemic as an opportunity for growth and has recently announced that it will double the number of aircraft in Abu Dhabi from four to eight. It’s good to see the dynamism of the Gulf market and the agility of its leading airlines in turning a terrible crisis to opportunity.