The latest figures released by the International Air Transport Association (IATA), covering November 2006, show that the Middle East remains the fastest growing aviation region. Passenger numbers during the month were up 18.3 per cent across the region compared with the same month in 2005, while capacity grew by 20 per cent year on year.

However, the fact that capacity outstripped demand for the second month in succession has prompted warnings that greater measures to liberalise and deregulate the industry will be needed across the region.

'At airport and airline level, investment is running ahead of the demand they have been able to capture,' says IATA chief economist Brian Pearce.

With a number of Middle East airlines increasing their fleets and infrastructure projects boosting capacity on the ground, passenger numbers will also have to increase to match this expansion.

Airlines are expanding to compete on long-haul routes to the US, Europe and Asia. Most recently, Abu Dhabi-based Etihad Airways has confirmed that it will begin flights to Australia within the next few months. The carrier did not disclose which cities it will fly to, but said it expects to make further announcements later in January. Australia is a coveted destination for Gulf-based airlines seeking to develop the region as an aviation hub bridging East and West. Dubai-based carrier Emirates plans to double its number of flights to Australia by adding four daily flights to Sydney, Brisbane, Melbourne and Perth.

But Pearce warns that this alone will be insufficient. 'Increased liberalisation and deregulation would utilise the assets from airport expansion to the benefit of all,' he says. 'We have seen in the US and Asia in the past that this would increase traffic and give a boost to economic activity. Governments should be looking at open skies agreements and allowing greater foreign ownership of airlines.'

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