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Middle East Temperatures Begin to Cool Down…First Signs of Global Warming Slowing!

The delivery of Emirates 100th A380 last week was well publicised, especially by Airbus seeking to squeeze the last drops of confidence in the aircrafts’ future. The arrival of the IATA Winter Season suggests that for all the positive spin around new aircraft deliveries the market may be cooling down.

This Winter season four of the five largest carriers in the region will operate less capacity than the previous season. Emirates, Etihad and FlyDubai have all shaved capacity by a few percentage points whilst Qatar Airways operations remain subject to various restrictions year on year.

For many years, these carriers have been expanding their networks, adding new frequencies and taking new aircraft but suddenly, and perhaps slightly unexpectedly, that growth is slowing down. Is the competition getting tougher, has the market changed or is this just a short-term blip?

Projected Aircraft Deliveries

Certainly, from a competitive perspective this winter a near 11% increase in non-stop frequencies between two of the Middle East’s major sixth freedom connecting markets suggests more competition. Jet Airways are the single largest carrier reporting growth, ironic – at least if you are Etihad, with carriers such as Finnair and Alitalia also stoking up frequency.

The market has clearly changed in the last few years with the emergence of long-haul low cost; the entry of Scoot and Norwegian has increased consumer choice. Long-haul low cost still only accounts for 2% frequency share in the Europe – Asia market; far less than the levels reported on Transatlantic services.

As for the market changing, there is little to suggest that demand has eased year on year. History tells us it is very hard for an airline to match its capacity growth to market growth. The two just never seem to align.

Perhaps the reality is that recent rapid growth has just peaked and the major carriers are pausing for breath. The table below shows that this year there will be 31 aircraft delivered to the top five Middle East carriers. With over half of those planned to a network constrained Qatar Airways, 2017 is likely to be low point in terms of aircraft growth over the next five years.

Winter Season Capacity 2015-2017
Number of EU Nonstop Services
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