Special Report: Aviation - Airlines brace for tough year ahead

15 February 2009

Gulf airlines are running the risk of overcapacity in the wake of the worldwide downturn in air travel.

The Airbus and Boeing factories in Toulouse, France, and Seattle, US, have become used to welcoming Gulf clients to their deal rooms in recent years. The fleet expansion programmes of UAE airlines Etihad and Emirates, and Qatar Airways, have been providing the aircraft manufacturers with a steady stream of work for the past six years.

Qatar Airways plans to boost its fleet to 110 aircraft by 2013, from 65, and is regarded by both aviation leasing companies and manufacturers as being in the strongest financial position of all the Gulf airlines.

While Qatar Airways operates separately from the state, banks are willing to support it because of the emirate’s solid sovereign rating. Etihad too is able to continue with its expansion programme, which has already taken it from a standing start in 2003 to having a fleet of 42 aircraft. But the airlines’ expansion strategies may not be sustainable if the downturn in passenger and freight traffic hits the Middle East with the same force as it has already hit Europe and the US.

Emirates, Etihad and Qatar Airways all offer competitive fares, but with trade between Asia and the West predicted to shrink by about 5 per cent in 2009, the airlines could find that no matter how low their fares, there will still be less cargo and fewer business travellers - and many empty seats.

Index of all stories in Aviation special report

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