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The aviation sector is due for a cull

The regional airline market is saturated. It's time for consolidation and a strategic rethink

Middle East airlines Emirates
As large airlines like Emirates grow, smaller airlines fail to turn a profit

If you’ve ever had to sit in the middle seat of three in an economy cabin for a long-haul flight, you may have an idea of how some CEOs of Middle Eastern airlines are feeling at the moment. 

While Emirates, Qatar Airways and Riyadh Air are grabbing headlines, the rest of the market faces a battle to survive. Some of the smaller carriers may not make it. 

Mid-table mediocrity in the airline industry can be a difficult place to sit – especially when others around you are growing and pushing forward.

Emirates and Qatar Airways’ international networks support the millions of seats and thousands of flights due to be taken this summer to the end of October. 

For Saudia, at least for the next few years, a large domestic network and religious traffic to Jeddah will keep it afloat.

The “big three” dwarf the region’s other legacy carriers in terms of capacity. Etihad Airways is fourth by this measure, but its scheduled airline capacity for summer 2023 is about one third of Qatar Airways’ figure.

Smaller airlines in the region have less chance of making a profit than of being a burden on taxpayers and various sovereign investment programmes.

Kuwait Airways has not made a profit in the past 30 years. Oman Air has consistently been loss-making. Royal Jordanian has lost over JD70 million ($98.7 million) per annum for the past two years and remains a long way from profitability.

The smaller airlines can survive if they persuade their owners to invest continually in the business. In many cases, profitability has been a noble ambition rather than a necessity. The airlines in question are largely operating as flag carriers and extensions of national status, even if that means they’re loss-making. 

For many of these airlines, local market demand is insufficient. They can generate some supplemental revenue by offering connectivity through their hub airports, although typically this will be at low-fare levels. See the table below.

Top connecting traffic flows, Royal Jordanian and Kuwait Airways 2022

Royal Jordanian via AmmanKuwait Airways via Kuwait
Istanbul-Jeddah, 13,866Dhaka-Jeddah, 24,122
Beirut-Dubai, 12,942 Dhaka-New York JFK, 19,301
Beirut-Riyadh, 11,544Delhi-London Heathrow, 16,626
Beirut-Detroit, 11,534Mumbai–London Heathrow, 14,905
Jeddah-London Heathrow, 9,895Cochin-London Heathrow, 14,352
London Heathrow-Medina, 9,128Mumbai-New York JFK, 11,275
Bangkok-Tel Aviv, 8,216Delhi-Riyadh, 9,964
Beirut-Dammam, 8,133Delhi-Milan, 9,213
Erbil-London Heathrow, 7175Delhi-Jeddah, 8,970
Source: OAG Traffic Analyser

For the moment, these mid-market carriers are likely to remain in business regardless of their losses but the real question is: “Do they need to survive?” And when we ask what would happen if they no longer existed, the answer is: “Not much.” 

Airline failures and collapses are a regular occurrence. Every year several carriers fail around the globe. Some restart life anew and some leave a space that others enter. 

All the Middle Eastern markets are of sufficient size to attract outside global carriers, perhaps as part of a new base operation, such as Wizzair Jordan, or as part of a pure network expansion.

Inbound airlines could also increase frequencies of service. For example, British Airways could move to twice daily on London Heathrow, or Turkish Airlines could add a second daily frequency to Bahrain. The possibilities are endless. 

Critically, new options may come without the requirement for state aid to prop up loss-making airlines with no hope of providing a return to their owners. 

Unfortunately, the Middle East aviation sector has many sacred cows. Is it time for a rethink in the market?

John Grant is partner at UK consultancy Midas Aviation

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