New economics disrupt Gulf aviation's disruptors

19 November 2019
The region’s airlines must learn to share their airspace with a growing diversity of private, low-cost carriers

After two decades of relentless expansion, Gulf aviation is facing a challenge that it has not previously had to deal with, namely becoming cost efficient.

Since the early noughties, huge government-backed investments in the region’s airlines and airports have seen Gulf flag carriers transform the global long-haul travel market, disrupting the established order. GCC airlines today are among the world’s best-known travel brands thanks to high-profile sports and cultural sponsorship deals.

Meanwhile, investment in the region’s airport infrastructure has made the Gulf a global travel and transit hub, and home to some of the most modern aircraft fleets in the world.

But now, the disruptors are themselves being disrupted.

A slowdown in regional growth coupled with new aircraft technology and the spread of the low-cost carrier model has introduced a new set of factors that require the Gulf’s aviation sector to rethink its strategy.

In this new environment, we can expect continued investment in bigger and better airports, with Dubai’s $33bn Al-Maktoum International airport as the beacon for the region’s next generation of airports.

But we should also expect to see greater focus on operational efficiency with new technology, and the outsourcing of operations and maintenance to private companies.

The region’s airlines meanwhile must learn to share their airspace with a growing diversity of private, low-cost carriers. And they must increase their focus on being more competitive.

The upshot of this shift will be fewer announcements about huge aircraft purchase agreements and more about strategic partnerships, collaborations and codesharing.

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