The Middle East has the least competitive airline industry of any region in the world, with 50 percent of routes served by only one or two carriers, according to a global analysis.
Airline competition has been increasing world-wide, but the Middle East continues to lag behind, the report by aviation technology firm Amadeus says.
Only 10 percent of routes in the region are served by five or more operators, compared to a global average of 18.2 percent.
Four airlines compete on 16 percent of Middle East routes (compared to a global average of 20.1 percent), while 24 percent of routes have three carriers, 28 percent have two and 22 percent are dominated by only one airline (compared to a global average of 11.7 percent).
Asia has the most competitive aviation industry, with 49 percent of routes operated by at least four airlines.
Competition in the Middle East aviation industry, which carried 99m passengers, up from 97m in 2011, is often stifled by governments, which own many of the airlines. In most Gulf countries, only two or three airlines are based in each capital.
Bahrain now has only one carrier after privately owned Bahrain Air went into voluntary liquidation in February, claiming the government was unfairly demanding immediate payment on past government debts related to political unrest in the country.
Saudi Arabia recently granted licenses to Bahrain’s Gulf Air and Qatar Airways, both state-owned, to operate domestic flights within the kingdom because its two airlines are unable to cope with growing demand.
Europe, with 680 million passengers in 2012, also has low competition, with 45 percent of its routes served by only one or two carriers, the report says.
However, globally, the airline industry has become consistently more competitive over the past three years.
“The percentage of air traffic served by just one or two airlines has fallen by 2 percent each year from 39 percent in 2010 to 35 percent in 2012. Concurrently, the percentage of air traffic with four or more competing airlines has also risen consistently from 35 percent in 2010 to 38 percent in 2012,” the report says.
The report also found the Middle East had little representation of low cost carriers compared to other regions, despite their share of traffic increasing from 11.7 percent in 2011 to 13.5 percent in 2012.
The presence of low cost carriers has significantly increased in the past decade, but mostly in traditional markets such as Europe and North America, which had penetration of 38 percent and 30.2 percent, respectively. South West Pacific also had a large share, with 36.6 percent.
The analysis also revealed 15 percent of all Europe to Asia air traffic last year was via one of the Gulf’s three major hubs, Dubai, Doha and Abu Dhabi, which experienced about 10 percent annual growth.
About 50 percent of each airports’ total air travel volume related to a connecting flight, the study found.
“These figures demonstrate the region’s increasingly important role as a hub between Europe and the emerging markets of Asia and the South West Pacific,” the report says.
“When the three airports are taken as a group they already serve around 15 percent of air traffic volume between Asia-Europe and Europe-South West Pacific.
“It is particularly interesting to note that overall traffic volume between Europe and Asia is growing by approximately 7 percent year over year, but traffic volume between these two locations and routed via the Middle East grew by approximately 20 percent between 2011 and 2012.”
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