x Abu Dhabi, UAEMonday 24 July 2017

Bridging the great air divide

Gulf carriers are moving swiftly to connect emerging markets with Europe and Asia by offering their airports.

When the founders of Emirates Airline and Qatar Airways were planning their start-up carriers in the late 1980s and early 1990s, they could never have predicted how advantageous their geographical locations were. At the time, it was long established that the Gulf sat directly under the flight path for trips between Europe and Asia, including the popular so-called "kangaroo route" linking the UK and Australia. As it did in ancient times, with caravanserais traversing the sands between India and Europe, the Gulf formed a bridge between East and West. Also in those days, the Gulf served as an important crossroads linking points in the north and south, and that is true today, too. African nations, Russia and the former Soviet-era republics are now important emerging markets. Their economic growth and the resulting surge in trade and disposable income are having profound consequences on international air travel. At a time when the global financial crisis has brought growth in air travel to a four-year low in the Middle East, the emergence of the Gulf as a travel axis for countries to its north and south is becoming an important boon for the region's ambitious and rapidly expanding carriers. "Normally, we're thought of as an East-West hub. But Russia, the former CIS [Commonwealth of Independent States], Iran and Africa - we are all developing these markets very fast," says Maurice Flanagan, one of the founders of Emirates Airline and the executive vice chairman of its parent company, Emirates Group. "It's been an interesting new dimension." Things were not always so promising. When Mr Flanagan was preparing to launch Emirates with two Boeing 727s gifted to the airline from the Dubai Government in 1987, flying East to West was really the only option. At the time, Africa was thought of, truthfully or not, as a place of corruption, famine and exotic diseases, rather than as an emerging economic powerhouse. But with Africa's vast stores of natural resources such as oil, bauxite and copper, China and other nations have turned to the continent for long-term contracts. Today, Africa's economic potential is the best in recent memory. Across the continent, GDP has risen steadily since 1992, when the regional economy shrank by one per cent. The International Monetary Fund predicts the region will grow by 6.3 per cent each year until 2011. This new-found dynamism has had a direct effect on air travel. Africa boasts one of the fastest growing airports in the world - Bole International Airport in Addis Ababa, Ethiopia, according to the consulting firm Arthur D Little. Gulf nations and their state-owned carriers have sought to capture this demand from African carriers by routing long-distance travel from Africa to Europe or Asia via the Gulf. These carriers bring to the table superior safety records and multibillion-dollar airport improvements. Emirates has the greatest footprint on the continent compared with its younger rivals, Qatar Airways and Etihad. The Dubai carrier serves Alexandria, Cairo, Tripoli, Tunis, Casablanca, Abidjan, Lagos, Accra, Addis Ababa, Khartoum, Entebbe, Nairobi, Dar es Salaam, Cape Town, Johannesburg, and soon Durban. Emirates also has dedicated cargo flights to other points in Ethiopia and Kenya to cater to the cut flower industry. "You name it - if it's on the continent, we cover it," says Mr Flanagan. With a name like Qatar Airways, no one would mistake the Doha-based carrier for an African airline. But that has not prevented Akbar al Baker, the chief executive, from hatching plans to exploit opportunities throughout the continent. "Don't forget that Africa is still a hugely untapped market," Mr Baker says. "In West Africa they have diamonds and timber, and the economy is in good shape, but they don't have a proper airline. In central and southern Africa, it's the same story. "Angola, Zambia, Botswana, Mozambique, Madagascar - all are not served properly." Mr Baker says while the airline currently flies to a dozen destinations in Africa, and only one in West Africa - Lagos - he expects it to grow considerably in the coming years. Etihad Airways, too, has recently begun looking into Africa to develop new routes, particularly to its oil and gas centres. The Abu Dhabi carrier is set to launch new non-stop flights to Lagos, Nigeria's commercial capital, adding to its existing African destinations of Cairo, Khartoum and Johannesburg. A similar transformation has been taking place to the north. Two decades ago, the citizens of Russia and its neighbouring countries were still shrouded behind the protective veil of the USSR. But since the fall of the Iron Curtain, Russia enjoyed nine straight years of growth until 2007, for an average of seven per cent a year. As a sign of Russia's economic might, Moscow this year eclipsed New York for the most billionaires in one city - 74 of these super-rich live in the Russian capital - according to Forbes magazine. Not surprisingly, Russia's nouveau riche like to travel. "Moscow is terrific," Mr Flanagan says, adding his airline will launch a double-daily flight there this winter. "We're short of capacity all the time - we know we could serve Kiev and Saint Petersburg," he says. Gulf airlines that fly into Russia are "packed", Qatar Airways's Mr Baker says. "It's not just in middle class, but in the premium class seats, too." Brisk business is also being experienced at Royal Jet, where Shane O'Hare, the chief executive, says he has witnessed a considerable rise in VIP travel to and from Russia. "The Gulf countries are popular holiday and business spots for wealthy Russians and Africans - plus, the Gulf carriers aren't competing with quality carriers on many of these routes," says Richard Aboulafia, an aviation analyst with Teal Group, based in the US. "A choice between Emirates and Air Abkhazia isn't particularly difficult." It is not only Russia, but also the Central Asian countries that are thriving. UAE investment into Kazakhstan now totals in the billions of dollars, and Etihad is following these investment flows with a new non-stop service to Almaty launching in December. This winter it will also begin serving Moscow and Minsk, Belarus. Etihad's recent additions of Lagos, Almaty and Minsk "are because of growing commercial ties with Abu Dhabi, especially in the fields of oil and gas", says Iain Burns, the vice president of corporate communications at the airline. But the additions of Etihad and its Gulf peers come at a perilous time for airlines worldwide. More than 30 airlines have gone bankrupt this year amid falling demand, tightening credit and record oil prices. And the Middle East saw a 2.8 per cent decline in air traffic demand last month, compared with the same period a year ago, according to the International Air Transport Association. Mr Flanagan, for one, says hope may lie in opening up these emerging markets, which in many cases is a modern leveraging of age-old trading links with the Gulf. igale@thenational.ae