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Not all good news for MENA carriers

Not all good news for MENA carriers

New routes, new planes, more profit – lately, airlines in the region seems unstoppable. But some news today should at least give them pause for thought.

October 21, 2010 4:54 by

There remains good news for MENA carriers, of course. That $400 million profit is a big deal in a difficult industry, particularly after the huge losses of 2009. And even if $100 million is knocked off profits next year that still leaves $300 million in the black.

And airlines will be further buoyed by reports in the National that tourism and passenger numbers are up in Dubai, one of the Middle East’s major hubs. Passenger numbers at Dubai International Airport climbed 25 percent in a year from 3.1 million to nearly 4 million.

New likes this translates into unmistakable optimism from the MENA carriers, with IATA confirming that the region will spend in the region of $200 billion on planes in the next ten years. At the Farnborough air show earlier this year, the focal point of the aviation year, $16 billion of aircraft orders were placed in a buying spree that was largely driven by Middle East carriers.

But this optimistic and often aggressive strategy is an attitude that has seen them butt heads with some of the biggest air carriers in the world, however. Just last week, a dispute arose between Middle Eastern carriers and Europe, when Air France headed efforts to have European law makers restrict the invasion of the younger airlines. There is widespread belief both inside and outside the industry that the playing field for the two sets of airlines is not level, with MENA companies like the government-backed Emirates receiving cheaper fuel and financing, and cheaper staff thanks to their legal inability to form a union. The Emirates President Tim Clark said last week that if subsidies to Emirates could be proven, “I will resign the next day.”

Meanwhile the Canadian government’s efforts to protect Air Canada from the encroachment of UAE carriers by refusing the emirates extra landing slots has triggered a serious diplomatic spat.

Whether airlines like Emirates or Etihad get financial support or not may be unproven; that they have the unquestioned support of the UAE government is clear.

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