Aviation growth in the Middle East – impacts on incumbent players and potential strategic reactions

In order to wean their economies away from declining oil reserves some Middle Eastern countries pursue substantial investments into their aviation sector. The bulk of these investments concentrates on the United Arab Emirates and Qatar and comprises fleet expansions stoked by massive airport extensions and development projects. Following an assessment of current growth processes in the Middle East, this paper analyzes the impacts of this development on flight patterns as well as on the incumbent airlines and airport operators. Furthermore, fields for potential strategic reaction are presented. Our results show that Middle Eastern carriers will soon emerge as serious global competitors to the established carriers. Since there is no sufficient regional demand to fill their capacity, these carriers aim at redirecting international traffic flows from Europe and the Americas to Asia. As a result, major players particularly in Europe and Asia will be directly affected. However, our results also indicate that for some markets Middle Eastern players are unfavourably positioned concerning parameters like flight time and required connection flights.