Qatar Airways

Emirates' Spanish expansion highlights Iberia's long-haul weakness to the east

Emirates' announcement to open a daily service to Barcelona and an additional daily flight to Madrid, after only entering the country in 2010, shows how Spain is unique for Emirates in being a major European market with no incumbent local competition since Iberia operates what it calls a "90 degree hub": its long-haul traffic, a successful operation, is almost entirely to the Americas, leaving Spain's demand for medium- and long-haul services east of Europe to be fulfilled by foreign carriers. Emirates does not target Iberia's Americas network from Spain but does focus on Africa, where Iberia has limited service, the Middle East, where Iberia only serves Cairo and Tel Aviv (the latter of which Emirates will not serve) and Asia-Pacific, where Iberia has no service to at all.

Middle East fleet outlook: widebody popularity increases, Airbus to grow market share

The 163 aircraft ordered at last week's Dubai Airshow will keep the Middle East region with almost as many aircraft on order as in service. While the show was marked by Emirates' order for 50 B777s, adding to the carrier's all-widebody fleet, widebody aircraft currently comprise just over half the region's fleet but are set to grow. Widebodies comprise more than 70% of aircraft on order in the region.

Boeing and Airbus will see their market share increase, but Airbus more so, eventually accounting for more than half of all aircraft in the region and Boeing accounting for just over a third. These latest aircraft orders add to an already substantial order backlog by airlines in the region. Most of the orders are concentrated in the hands of the Gulf region’s three largest sixth-freedom airlines: Etihad Airways, Qatar Airways and Emirates. The 163 orders from the show were from airlines and leasing companies and had a combined total value at list prices of just under USD32 billion.

State of the airframers: Boeing delivers, Airbus delays and new models wait on fringe

It has been an exceptionally busy year for aircraft manufacturers. Boeing delivered its first B787 and B747-8F and launched the B737 MAX, setting its narrowbody strategy for the next decade at least. Airbus went ahead with the A320neo late in 2010 and has been amply rewarded with an avalanche of orders, but has been forced to delay the A350 XWB.

Of the smaller manufacturers, Bombardier is plugging away doggedly with CSeries, trying to break the Airbus/Boeing monopoly. Embraer has just announced that it will stick with the regional jet market, offering a re-engined version of its existing E-jets family instead of venturing into the intensely competitive narrowbody market. Coming soon are COMAC's C919 and Irkut's MS-21.

More Middle Eastern airlines poised for profits

Etihad Airways, Qatar Airways and flydubai are majority state-owned – 100% for Etihad and flydubai, 50% for Qatar – and all three have been among the brightest growth stories in a region already noted for its rapid development.

Now the three look set to join the ranks of Middle Eastern airlines that are consistently profitable.

State-owned carriers in the region typically don’t perform well when it comes to their bottom lines. According to IATA, airlines in the Middle East as a group have had just three years of profitability in the last seven.

After airlines across the region reported a combined profit of USD900 million in 2010, regional profitability returned after a four-year absence. The outlook for 2011 and 2012 is strongly positive, even with the impact of the Arab Spring.

Middle Eastern LCCs driving growth into Eastern Europe, Russia and CIS

Russia, the CIS nations and Central and Eastern Europe have been receiving a great deal of attention from Middle East-based carriers in recent months. Full service and low-cost carriers have announced or added a flurry of routes into Eastern European destinations over the past few weeks. Airlines in the Middle East are looking to tap into the underserved region, which is still showing strong economic growth despite troubles in several European markets and strong growth in business and tourism traffic.

Homegrown LCCs Air Arabia and flydubai are leading a push into the regions, but so too is Qatar Airways. Additionally, Oman Air plans to launch services to Moscow. While Middle Eastern carriers have long dominated traffic into western Europe, they now comprise the majority of traffic between the Middle East and central Europe, eastern Europe, Russia and CIS.