United Arab Emirates

Etihad Airways’ bright profit result against a dark background

Etihad Airways has joined an elite club of airlines in the Middle East, reporting its first ever annual profit. Outside standouts such as Emirates, few of the region’s state-owned carriers have been able to report regular profits. Indeed, state-owned carriers in the region typically report heavy losses, when their results are made public at all.

The result is all the more remarkable in Etihad’s case, because the airline is not only the fastest growing network carrier in history – it only commenced operations in 2003 and today operates a fleet of 63 mostly widebody aircraft, with another 102 on order – managing to report a modest net profit of USD14 million for 2011, which just bettered its target of breakeven. The result comes as little surprise, as the carrier has been reporting month-to-month operating profits for several quarters and forecasting a breakeven result since early last year.

RAK Airways lines up Kathmandu and Bangkok under 2012 expansion

RAK Airways’ expansion is rolling on, with the carrier announcing plans to serve Kathmandu from 15-Feb-2012. Kathmandu will become the carrier’s 11th new route added since it re-launched its operations in Oct-2010 after a 12-month suspension of operations.

The carrier will see competition on services between the UAE and Nepal from Flydubai, Air Arabia and Etihad Airways and Nepal Airlines. RAK will face competition from UAE-based carriers that already have well-established operations to Kathmandu. Air Arabia has operated to Kathmandu since Nov-2006, Etihad Airways launched its operations in Oct-2007 and Flydubai debuted in Dec-2009.

Etihad Airways stake in Air Seychelles gives 'realistic way forward' to the island carrier's future

Etihad Airways's 40% stake in Air Seychelles gives a much-needed second lease of life to Air Seychelles, who says the stake offers a "realistic way forward" for growth, critical as the carrier has scaled back almost its entire network. For Etihad, the opportunity to be a partner in building traffic to the Seychelles, a destination Etihad sees gaining prominence, especially from the alluring Chinese market. Etihad singled out the Seychelles' geographic positioning as a strength in linking the emerging Africa-China market, but it is difficult to see short-term development in that market.

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.

Intercontinental and regional carriers look to serve Zimbabwe in absence of national carrier

Zimbabwe’s indigenous aviation industry has been uncertain at best, underscored by Air Zimbabwe grounding its entire fleet last month. Even if the carrier resumes services, its future is not guaranteed. Instead Zimbabwe will have to rely on intercontinental and regional carriers. In the former category, Emirates will launch services in early Feb-2012, which will help maintain whatever trade links and international relations Zimbabwe has left. From regional African carriers, Air Namibia will resume service and Zambezi Airlines plans to increase its offering, which will help supplement the country’s regional needs. While total capacity in Zimbabwe has dropped since mid-2011, it is expected to increase this year but by May-2012 will still be down 11% from a year earlier.

MAS will achieve its targeted 12% capacity reduction by February, to the delight of Gulf carriers

Gulf carriers and AirAsia will likely emerge as the main beneficiaries of the network restructuring at Malaysia Airlines (MAS). The Malaysian flag carrier has selected several routes to discontinue by early next month, resulting in a 12% reduction in system-wide capacity as it begins implementing its new business plan.