It has been three years since leading European airlines had a heated confrontation with their Gulf counterparts. The confrontation was led by some European and Canadian airlines along with Qantas against UAE and Qatari airlines after accusing them of undercutting prices, thanks to the support they receive from their governments. These European companies are now calling for cooperation with airlines in the Gulf Cooperation Council (GCC) — a move that reflects a new practical approach.
This campaign reached its culmination after a German official said that “the GCC countries only know how to use the oil money in setting up airlines in the desert”. It seems that the German official never visited any GCC country to see modern cities that are on par with European cities in all aspects. However, the official apologised later for his statement, which demonstrates Western companies’ dissatisfaction with the success achieved by Emirates, Etihad Airways and Qatar Airways on the global level.
The new approach by Qantas, which was once the most critical about GCC carriers, is aiming at cooperating with Emirates through establishing an alliance with the airline.
According to a report in the Australian newspaper Financial Review, the potential alliance will allow Australia’s loss-making carrier to reach a larger number of cities as well as to benefit from Emirates’ operations centre in the Middle East.
This cooperation, if it happens, does not necessarily mean acquisition, as Shaikh Ahmad Bin Saeed Al Maktoum, President of Dubai Civil Aviation and Chairman and Chief Executive of Emirates airline and Group, stressed.
Over the past few years, GCC airlines have acquired significant stakes in European airline companies, such as Etihad Airways which acquired a stake in airberlin — Europe’s third largest airline. This allowed the German company to benefit from the geographic location of Abu Dhabi to increase the number of passengers from Germany and Europe to East Asia.
Also, Etihad has a stake in Air Seychelles, which would thus enhance the status of GCC airlines in international aviation.
This collaborative approach is rational, reflecting changes sweeping across the aviation and air transport sector across the world. In fact, airlines in the Arabian Gulf and the Middle East are growing at high rates after they reached 16.5 per cent in the first five months of 2012, the highest growth rate in the world, according to Tony Tyler, Director-General of the International Air Transport Association. Meanwhile, airlines in Europe grow by 5.6 per cent and US airlines grow by 1.3 per cent.
The expected cooperation between Qantas and Emirates will provide great potential for both companies. Such cooperation will enable Emirates to expand in the Australian market after its decision to open its fifth destination in Adelaide. Also, the Australian carrier will be able to shift its transit station for Europe from Singapore to Dubai, allowing it to take advantage of the significant growth of air traffic in the region.
The Canadian Government can draw a lesson from the Qantas-Emirates cooperation, especially that Canada still imposes severe restrictions on GCC airlines planning to expand in Canada.
This new approach can lay the foundation for establishing normal relations that serve all parties, as the success achieved by UAE and Qatari companies does not depend on the government support alone as promoted by competitors. Rather, it is a result of making the most of opportunities imposed by logistic and geographical factors as well as by sound financial policies that made airlines in both countries among the fastest-growing and most profitable companies in the world.
As evidence of this progress, the aviation and tourism sector constitutes a large proportion of the GDP in the two countries. In the UAE, the contribution of the tourism and aviation sector to GDP is 15 per cent at present, compared to no more than 7 per cent ten years ago, which bears testimony to the UAE’s approach to diversify sources of national income.
Companies, including airlines, across the world are taking a global nature now, and it is difficult to stop this or hamper it because this globalised form of companies serves consumers and passengers. This can clearly be noticed through the number of passengers using the services of GCC companies though their travelling between the Americas and Europe on the one hand and Asia and Australia on the other.
Therefore, the Western and Australian airlines can benefit from the strategic location of the GCC airports and thus should enhance cooperation with the GCC airlines , rather than confronting them, which have not brought about the desired results and may cause damages in the light of globalisation and open markets to trade and business in the world.
