Skip to content Skip to Search
Skip navigation

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

Latest articles

More than 24 million people visited the World Expo event at Expo City Dubai between October 2021 and March 2022

Construction begins at Expo City Dubai site

Construction has begun on the first residential properties at Expo City Dubai, part of a mixed-use master plan to repurpose the legacy site after the world fair came to a close two years ago. Master developer Expo City Dubai announced last week that it has awarded four key contracts for its Mangrove Residences. UAE-based USF […]

Saudi housing costs rose nearly 9% year on year in May

Saudi housing costs rise but inflation remains steady

Housing costs in Saudi Arabia rose nearly 9 percent year on year in May, but it was not enough to push overall inflation in the kingdom over 2 percent. The latest data from the General Authority for Statistics showed the annual inflation rate in Saudi Arabia was 1.6 percent in May, having remained at this […]

OTB Group has a presence in Dubai with its Maison Margiela store in the Dubai Mall

Chalhoub Group in venture with Italian luxury brand

Luxury distributor Chalhoub Group has entered into a joint venture with Italian fashion conglomerate OTB Group to expand the brand’s footprint in the Gulf. OTB (which stands for Only The Brave) owns the Diesel, Jil Sander, Maison Margiela, Marni and Viktor&Rolf brands, the Staff International and Brave Kid companies, and holds a stake in the […]

Arid conditions brought about by the drought in Morocco are affecting the cost of sheep

Drought pushes up sheep price for Eid in Morocco

The price for a sheep in Morocco for the annual sacrifice at Eid al-Adha has increased on average at 10 times the 2.2 percent rate of inflation. A medium-sized female sheep costs MAD4000 ($400) as opposed to MAD3000 last year. This puts it out of range for many families in the country where a high […]