Business | Analysis

Gulf carriers ease into high-growth routes

Passengers are avoiding flights with stopovers in Europe and prefer transiting through one of the Gulf hubs

  • By K. Raveendran Special to Gulf News
  • Published: 12:29 October 7, 2013
  • Gulf News

When it comes to national security and job losses, all Americans unite. While conceding that the two issues evoke genuinely spontaneous reactions from all sections of the American public, these have also been used at times as bogeys to protect or denounce economic and commercial interests.

How well this ploy had been employed to shout down companies resorting to outsourcing of jobs to cheaper destinations like India merits keen academic scrutiny.

The latest round of hue and cry is about Emirates airline ‘threatening US jobs, American passenger traffic and ultimately the future of US aviation system’. The reason: Emirate’s new route from Milan in Italy to New York’s JFK International airport, which observers see as a daring move by the airline to break out of Dubai on to the wide international arena as the flight does not directly touch the airline’s base. So far, Dubai has remained as the cornerstone of Emirates’ explosive growth as all flights originated from the base.

In fact, on October 1, the Emirates’ global ambitions got into a new mode with three new services connecting four continents taking off on a single day, one of which did not touch Dubai directly. The other two routes were between Dubai and Clark in the Philippines and Brisbane in Australia.

US airlines, including Delta and American, reportedly fly half a million passengers between New York and Milan, but Emirates is introducing a new level of service in the form of the only first-class on this route, compared to business-class on all other airlines. With the new route between Milan and New York, Emirates flies to eight cities in the US, including San Francisco, Washington and Los Angeles and is said to be planning to raise this number to 15.

The Americans see the Emirates threat as the “first step in a long-term strategy by a heavily supported state-owned foreign airline to undercut US airlines and US jobs”.

 

Emirates foray

A statement issued by the Airlines Pilots Association International described the Emirates foray as unfair competition because, according to the organisation, the Dubai airline does not have to abide by the same tax, security and regulatory policies that the US carriers have to follow.

The resistance from US airline sources is similar to the protests raised by Indian aviation players that Emirates is wooing Indian passengers away from other foreign airlines as well as India’s own domestic airlines that fly overseas. Emirates is already the single largest foreign airline operating to and from India and that market accounts for the largest number of Emirates’ flights compared to any other.

European airlines are already ganging up against what they call the Middle East Big Three — Emirates, Etihad and Qatar Airways — and asking regulators not to grant entry to the Gulf carriers.

The three airlines are already snatching substantial business from Europe’s long-haul legacy carriers, which are struggling to meet the cost and quality offered by the Gulf operators.

The convenient geographical location at the crossroads of Asia, Europe and Africa, the prosperous oil economies and the conducive government policies towards the aviation sector have enabled Gulf airlines to put in place a very effective hub and spoke model that helps divert traffic from the legacy carriers of Europe. They have been further aided by the restrictive policies of European regulators in stipulating stringent sound pollution and landing controls, causing undue stopover delays and inconvenience to passengers.

More and more passengers are now avoiding flights with stopovers in European cities and are said to prefer transiting through one of the Gulf hubs, particularly Dubai. Industry reports estimate that Dubai, Abu Dhabi and Doha have already grabbed a 15 per cent share of air traffic from Europe to Asia-Pacific last year, with Europe-Asia traffic routed via the Middle East growing at about 20 per cent a year.

These numbers appear to be set for further upticks and that is no good news for the struggling legacy carriers.

-- The writer is a journalist based in Dubai

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