How the battle for the Gulf’s skies has intensified

Across and around the Arabian Gulf regional airlines find themselves returning to a very different and increasingly volatile market after the pandemic.

Pre-Covid, aviation in the Gulf and many neighbouring nations was largely defined and dominated by Emirates, Qatar Airways and Etihad. 

Now, as the Big Three pursue resurgence, they are being increasingly challenged, not just by the rapid emergence of new or strengthening competitors, but also a limiting shortage of skilled staff – particularly pilots – and changing expectations from customers.

• Qatar Airways CEO plays down threat of competition
• Profit is not an issue for Neom Airlines … for now

Furthermore, under new management Etihad has signalled a return to aggressive growth, having spent the last half-decade shrinking from a previous tilt towards globalism. 

The airline’s owner, Abu Dhabi Developmental Holding Company, or ADQ – an investment arm of the Abu Dhabi government – has declared ambitious plans to restore the carrier to global prominence, with the new CEO reportedly planning to double the fleet and triple passenger journeys by 2030.

A battle for the skies is under way.

“Post Covid, the growth of low-cost carriers and the reinvention of major long-haul competitors have intensified competition in the market,” says Linus Bauer, CEO of Dubai-based Bauer Aviation Advisory.

“Gulf carriers now face increased competition on various routes, forcing them to improve their service offerings, pricing strategies and operational efficiency to maintain a competitive edge.”

What customers want has also changed.

They are demanding streamlined processes and modular products, enabling them to pay only for the features they need.

Increasingly, they also expect airlines to demonstrate and verify meaningful, consistent progress towards more environmentally sustainable operations.

“The pandemic has led to a shift in consumer preferences. Passengers are prioritising health and safety, flexible booking options, and seamless digital experiences,” said Bauer.

“Gulf carriers must adapt their offerings accordingly as they evolve, so they remain attractive to passengers.”

The highest-profile competition for Gulf airlines is emerging from new, long-haul competitors. They are led by the reinvented and expanded Air India Group and, from 2025, Saudi Arabia’s Riyadh International Airlines, headed by former Etihad CEO Tony Douglas.

Both carriers have signalled significant growth in long-haul and regional markets. This will be underpinned by big orders for new planes and deployment of digital technologies. RIA is targeting 100 destinations by 2030.

Turkish Airlines, already a heavy competitor, plans to double its size within a decade, adding non-stop flights to key Gulf airline markets like Australia.

Meanwhile, that nation’s Qantas is increasingly bypassing the Gulf, with direct Perth-London jets always full, non-stop Sydney-London flights imminent, and plans for flights to Europe. 

Low-cost carriers are providing not only greater choice and lower fares from the Gulf, but also boosting inbound traffic, a high priority for Mena nation building.

FlyDubai, the low-cost partner of Emirates, added 16 routes, 17 jets, and a record profit in 2022. It has flagged further strong growth this year, with additional planes, partnerships, and technologies.

Air Arabia Group, which includes Air Arabia Abu Dhabi, added 24 routes, 10 aircraft and 90 percent more passengers last year, and plans more organic and collaborative growth. The Abu Dhabi unit is a joint venture between Air Arabia with 49 percent and ADQ-owned Etihad with 51 percent. 

And Wizz Air Abu Dhabi, an offshoot of the large and low-cost Wizz Air Europe, is a fast growing joint venture with ADQ. Last year, the Abu Dhabi division doubled its fleet from four to eight jets, and is adding a ninth which MD Johan Eidhagen says will provide 30,000 additional “ultra-low fare seats” per month. 

Other airlines are also on the rise. In addition to increasing existing dominance of its home market, India’s biggest carrier, the low-cost operator IndiGo, is expanding Gulf operations. Full service competitors including Saudia, Gulf Air, Oman Air, Royal Jordanian, and Kuwait Airways, are also resurgent.

Next year, Oman Air will join the global Oneworld alliance. Qatar Airways and Royal Jordanian are already members, along with the world’s biggest airline, American. They will join existing members: Alaska Airlines, British Airways, Cathay Pacific, Finnair, Iberia, Japan Airlines, Malaysia Airlines Royal Air Maroc, and SriLankan Airlines.

Benefits include network growth and greater connectivity through codeshare partnerships with other member airlines, opportunities for Oman Air’s frequent flyers to earn and spend mileage points on the flights of other alliance members (and vice versa), and reciprocal access for top tier passengers of Oman Air and fellow other carriers to each other’s premium airport lounges. 

For now, Emirates, Qatar and Etihad are focused on reinstating their best performing routes and building capacity with more frequent flights, more and larger planes, and new or expanded partnerships, including between themselves.

• Labour woes and debt clip the wings of Mena aviation
• Clark: Sustainable fuel on long haul flights is miles off

In a rare display of commercial collaboration, Emirates and Etihad have agreed to enable passengers of either airline to enter the UAE through Dubai, the home of Emirates, or Abu Dhabi, Etihad’s base, and to leave from the other airport, using one ticket. 

Although neither airline flies to the home base of the other, they have an interline agreement, enabling single ticket travel on multiple carriers, giving their passengers the flexibility and convenience to use two gateways in the UAE.    

Emirates has also activated a strong commercial partnership with US giant United, the world’s third biggest airline, to provide extensive additional codeshare access to destinations across the US.

And Etihad has signed a memorandum of understanding with China Southern, which is both the biggest carrier in China, the world’s fastest growing market, and the biggest in Asia, the fastest growing region.

The two are now investigating a broad range of joint activities. Among these are: codeshare network growth beyond each other’s hub airports, mutual procurement of supplies, shared ground handling and bonded warehousing, and collaboration on catering, aircraft maintenance, and repair and overhaul in both Abu Dhabi and China. 

Where they make sense, new routes are also being added by all of the major Gulf carriers as quickly as possible.

“Customer demand has been very strong, and our forward bookings are also robust,” said Adnan Kazim, chief operating officer of Emirates. “We are working hard on several fronts to bring back operating capacity as quickly as the ecosystem can manage, while also upgrading our fleet and product.” 

Emirates is reconfiguring 120 aircraft from three to four class cabins, providing a new price-and-service offering, and enhancing in-flight wifi, starting on 50 new Airbus A350 jets arriving from next year. Etihad is upgrading business class suites and introducing free access to messaging apps WhatsApp, (Facebook) Messenger, and Wechat, across its widebody fleet.

Etihad’s return to super growth, reportedly outlined by CEO Antonoaldo Neves during a recent visit to India, includes tripling passenger journeys to 30 million per year, an almost-doubling of fleet to 150 aircraft, and a focus on strengthening its presence in the booming markets of India, China and southeast Asia. It will also exit or avoid unviable routes, including ultra long-haul sectors.

That presupposes that the airline can secure any additional approvals needed to ramp up access to its target markets, and obtain the extra fleet it seeks amidst a global shortage of new aircraft, aggravated by Covid-induced supply chain failures. Lessors also report soaring new requirements for fleet as air travel takes off again, sending aircraft lease rates sky high.  

Many of the Airbus and Boeing aircraft production slots reserved by Etihad’s CEO James Hogan, then cancelled by his successor, Tony Douglas, have since been reallocated to other carriers. Ironically, that may include some that Etihad is now preparing to fight.

But before any progress can be achieved, it is critically important for airlines everywhere to rebuild sufficient skills to enable not just recovery but growth, with few employee groups in such high demand and short supply as experienced pilots.

While global recruitment campaigns continue, Emirates – keen to re-secure the pilots it stood down during the pandemic – reportedly reinstated their pre-Covid employment benefits. It’s something that hasn’t been replicated by other Gulf airlines, some of whose crews have returned to lower seniority and salaries, fewer benefits and more challenging rosters.

“What Emirates has done is simple and smart,” said one returned long-haul pilot. “They’re not just buying loyalty. They’re buying certainty.”