Aviation

World Cup, Russians and business travel help airlines rebound

June 10, 2022

Qatar Financial Center (QFC) said on Monday that it has pledged $100 million to fund a new platform aimed at recovering distressed assets

Capacity among Middle East airlines rose 101 percent year-on-year
Aviation sector recovery still just two thirds of where it was in 2019

Middle Eastern airlines reported a 265 percent year-on-year increase in demand in April, according to the latest monthly data from the International Air Transport Association (IATA).

Industry analysts also reported that while demand in the region is still operating at around two-thirds what it was pre-pandemic, the upcoming FIFA World Cup in Qatar, Russian tourists and an anticipated upsurge in business travel is likely to spur a recovery in the region.

The IATA data showed that capacity among airlines in the Middle East rose 101 percent year-on-year in April, with average load factor rising 32.2 percentage points to 71.7 percent.

“With the lifting of many border restrictions, we are seeing the long-expected surge in bookings as people seek to make up for two years of lost travel opportunities. April data is cause for optimism in almost all markets,” Willie Walsh, IATA’s director general, said in a press statement.

Digging deeper into the numbers, London-based David Tarsh, a spokesperson for ForwardKeys, a global travel data and analytics company, said the region still had some way to go to recover to levels seen in 2019.

“Currently, air travel in the Middle East region has recovered to just over two thirds of where it was in 2019. In normal, non-pandemic times, such a fall in travel demand would be considered to be dire market conditions,” Tarsh told AGBI.

“However, given the dreadful damage done to aviation in the past two years, one has to see the current recovery trend as encouraging,”

Raheesh Babu, chief commercial officer at Sharjah-based travel portal Musafir.com, has seen similar growth trends.

“Q1 has been very promising for the Middle East market, which has recovered by 65 percent as compared to pre-covid,” said Babu.

“With similar projections witnessed by Musafir.com in the first quarter, we anticipate that, by the end of 2022, the Middle East market would have recovered 80 percent of its pre-Covid numbers.”

While demand has returned, Babu has also seen flight fares rising, by as much as 50 to 60 percent per quarter on some routes.

Tarsh expects rising oil prices, the Ukraine war and inflation, which has seen UAE businesses hit with costs rising to a three-and-a-half year high, to impact the global aviation sector, but a number of trends would work in favour for airlines in the Gulf region.

“Most important is strong pent-up demand,” he said. “Next, are a couple of scenarios unique to the Middle East – one is the upcoming World Cup, which will likely attract positive attention for Qatar and an extraordinary number of visitors.

“Another is the unusual influx of relatively affluent Russian visitors, who are choosing to go to the Middle East (and Turkey) this summer, largely because other traditionally popular destinations are off limits.

“Finally, business meetings are reappearing in the calendar later in the year so it is possible we will see a revival in business travel in the autumn, although it is too early to predict that right now.”

The Russian tourist market has indeed remained “strong” for Dubai in particular, according to the the head of the emirate’s tourism body.

“Russia has always been in the top 10 markets, in the top six I would say,” Issam Kazim, CEO of Dubai Corporation for Tourism and Commerce Marketing, told delegates at the Arabian Travel Market in Dubai last month.

“Even now, when we look at the Q1 latest [visitor data] for 2022 they are still within those numbers, they are still strong,”

According to data from the Dubai Tourism website, Russia was the emirate’s fourth largest source market with 137,000 overnight visitors in the first two months of this year, up 142 percent year-on-year.

The World Cup, due to start in Qatar in November, is also likely to give a boost to the regional aviation sector.

Last month, Qatar Airways announced that Gulf Arab airlines would operate more than 180 daily shuttle flights to Doha during the tournament, allowing fans to fly in from nearby cities.

Qatar said it hopes the sports event will attract roughly 1.2 million visitors, almost half its entire population.

Speaking at the Arabian Travel Market, some travel leaders in the aviation and hospitality sectors pointed to a rebound in business travel in the region.

This comes on the back of news that Dubai has been named the number one global destination globally for association meetings in 2021 by a report of the International Congress and Convention Association (ICCA).

Dubai was ranked the top city in 2021 both for the number of meetings organised by international associations and estimated participants at these events.