Will airline consolidation occur in the Middle East?

The importance of consolidation in the aviation industry has been highlighted on more than one occasion by the International Air Transport Association (IATA)
By Robeel Haq
Tue 01 Mar 2011 11:00 AM

The importance of consolidation in the aviation industry has been highlighted on more than one occasion by the International Air Transport Association (IATA) and regions such as Europe and North America have seemingly embraced the concept in recent years.

However, in contrast, the Middle East has adopted a stubborn reluctance to jump on the bandwagon, which is understandable in consideration of the fact that so many of the region’s carriers are government owned. Achieving consolidation is such an environment would be a challenge, to say the least, unless of course a sudden raft of privatisation occurred. Even then, with the unwavering success of Emirates, Etihad, Qatar Airways and the like, what is the motivation?

At the same time, it’s important to remember that the Middle East is not all about government-owned carriers, especially outside the Gulf, and after meeting Royal Jordanian CEO Hussein Dabbas in Amman last month, is seems the case for airline consolidation is not completely lost in the region. Pointing to the successful British Airways-Iberia, Air France-KLM and Lufthansa-SWISS partnerships in Europe, he stressed that the Middle East had to “wake up and understand the importance and benefits of such developments”. And its not only talk either. Dabbas believes a strategic alliance for Royal Jordanian is inevitable in the future – although he admits that future could be anything from a year to a decade away, especially since no official discussions have taken place with potential partners and finding the right match in the region will undoubtedly take time.

Or perhaps that match will be found a little further afield. Remember the speculation last September that International Airlines Group (IAG) – the holding company created as part of the British Airways-Iberia merger – had shortlisted a dozen airlines around the world, including one in the Middle East, which they are eying as possible candidates for future acquisition? Gulf Air was suggested as a prime candidate at the time and responded by stating that it would “consider positively” a tie-in with the group. However, with Dabbas describing the BA-Iberia partnership as “appealing” because it strengthened each party’s operations but retained their individual status as national carriers, perhaps Royal Jordanian’s inclusion in the IAG should not be ruled out.

Robeel Haq, is the senior group editor of Aviation Business.

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