Daily Management Review

Woes For Gulf Airlines Deepened By The Arab Rift


Woes For Gulf Airlines Deepened By The Arab Rift
Exposing the sensitivity of Gulf hubs to regional uncertainty and creating openings for rival airlines - at least in the short term, a bust-up between Arab powers has dealt a blow to supercarriers already hurt by low oil prices and laptop bans.
Passengers of Qatar airlines were left stranded and its high-profile chief executive was forced to bail out of a meeting of airline bosses in Mexico by the unexpected closure of most surrounding airspace to Qatar's airline and restrictions on travel for its nationals.
"It completely surprised all of us," Alexandre de Juniac, head of the International Air Transport Association, said after overseeing the meeting of around 200 airlines.
Over its alleged support for militants, Saudi Arabia, Egypt, UAE and Bahrain severed diplomatic ties with Qatar on Monday.
As the world's second-richest nation per capita found itself almost boxed in by no-fly restrictions, Qatar Airways was forced to reroute dozen of flights through Iranian airspace as it has been plunged into a diplomatic row for the second time in three years.
This carrier has clashed with U.S. rivals over its breakneck expansion and has splashed tens of billions of dollars on jetliners and it was a dramatic reversal for this once unstoppable carrier.
"The whole business model is based on being a hub. They have invested in the airport, invested in state-of-the-art aircraft. They are losing a key source of (traffic) feed from major local markets," British aviation consultant John Strickland said.
"With the overflight ban, it is not only a headache to reroute some of the operation, but it will make flights longer due to more circuitous routes. It adds time and cost and disrupts the schedule in terms of making connections."
He said that some demand may shift to other carriers. as well as UAE heavyweights Emirates and Etihad, European carriers and Turkish Airlines could benefit, IATA delegates said.
The political complexities underpinning the diversification from oil into an East-West transit point were laid bare and the region's wider aviation growth was also left looking vulnerable in the eyes of some industry watchers by the disarray between Gulf allies.
"It has been a reality that they have adapted to and lived with. That said, there has always been a significant concern that this (Gulf aviation) is, if not on a knife-edge, then on a fairly narrow plane," said Peter Harbison, a former Australian aviation trade negotiator and chairman of consultancy CAPA.
"It certainly does destabilize things that little bit further. Do you get to a tipping point? I don't think so."
Reluctant to wade publicly into the row was the IATA, whose members include national carriers of all the affected states.
"Nations all over the world can close their borders and close or open their (airspace). But we would like the normal connectivity to be re-established, the sooner the better," de Juniac said.
The right to overfly another country for civil transport is enshrined in international law through a 1944 transit accord even while air travel between nations is governed by bilateral pacts.
But disputes with Saudi Arabia has to be settled through negotiation before exercising the right to close airspace for limited reasons because it is not a member of the treaty.

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