GCC airlines growth beat global industry average

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Growth of GCC carriers beat global industry average.

Growth of GCC carriers beat global industry average
GCC airlines show strong growth in 2013, outperforming all other airline markets, with 2014 set to be another record year. Dubai International Airport. Photo courtesy: Dubai Airports

Growth of Middle Eastern aviation has surpassed the global average and this trend will persist backed by an array of growth tactics such as fleet expansion, with Emirates as the leader, according to industry analysts.

The International Air Transport Association (IATA) representing some 240 airlines comprising 84 percent of global air traffic, recently said that Middle East airlines had by far the strongest year-over-year traffic growth in October at 14.0 percent.

“Capital kept pace, however, rising 13.9 percent, and load factor stayed flat compared to the year-ago period at 75.5 percent. The airlines in the region have benefited from strong demand for business-related premium travel, particularly to developing markets such as Africa. Solid performance in key economies like Saudi Arabia and the United Arab Emirates has supported strong expansion in business and leisure travel,” the IATA says in its latest report.

GCC airlines grow their business by adding new routes.

Industry analysts say that a main catalyst for this growth has been routes by Middle East carriers to developing with countries long ignored by traditional carriers and by offering an alternative to local airlines — linking Europe and India, Africa and Russia, China and the Middle East. As an example, Emirates is running its new routes through Dubai, instead of flying through traditional hubs like London, or Frankfurt, Germany.

“October traffic results reinforce expectations for a strong fourth quarter traffic performance in line with rising business confidence and better economic performance in the major advanced economies,” said IATA’s Director General and CEO Tony Tyler.

Analysts say that low-cost carriers are inclined to chase growth through business model renewal such as dropping short-haul fares, establishing national subsidiaries, and starting new avenues of access to air transport services.

IATA’s global passenger traffic results for October saw a total revenue passenger kilometers (RPKs) rising 6.6 percent compared to October 2012, an improvement over the September increase of 5.2 percent. A capacity increase of 6.5 percent meant that load factor was virtually flat at 78.9 percent.

“In 2013, the airline industry will carry more than 3 billion passengers in a year for the first time. And on 1 January 2014, we will celebrate a century of scheduled commercial aviation. These twin landmarks provide an opportunity to reflect on the enormous contribution aviation makes to all of our lives. That contribution comes not from the fees and taxes with which governments continue to burden aviation and air travelers, but rather from the ability to bring people together, connect people to markets and to create opportunities for greater understanding among cultures,” Mr. Tyler was quoted as saying.

IATA said that October international passenger demand was up 6.9 percent compared to the year-ago period with airlines in all regions recording growth. Capacity rose 6.6 percent and load factor scaled 0.2 percentage points to 78.4 percent.

European carriers’ international traffic saw a rise by 5.4 percent in October compared to the year-ago period, on a 4.6 percent rise in capacity, driving load factor up 0.6 percentage points to 8.10 percent.

“The Eurozone economy stopped contracting in the second quarter and has continued the modest recovery in the second half of 2013. The pace of economic growth has slowed, however, from 0.3 percent in the second quarter to just 0.1 percent in the third, as the recovery remains fragile and patchy,” the IATA release added.

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