This is what ME airlines are doing to fight losses
Changing economic conditions are forcing state-backed Gulf airlines, which have moved into many foreign markets from Asia to South America in recent years, to revise their business models and slow their once rampant growth in capacity.
In addition, American Airlines Group Inc., Delta Air Lines Inc. and United Continental Holdings Inc. have prodded U.S. officials for two years to act on their complaints that $50 billion in government support has enabled Emirates, Etihad Airways PJSC and Qatar Airways Ltd. to compete unfairly.
Here are the latest updates on what the Middle East’s major airlines are doing to curb losses:
Emirates, the world’s largest long-haul airline, is stripping costs from its business as it adapts to weaker markets, a stronger dollar and the rise of low-cost long-haul rivals, the carrier’s president said.
President Tim Clark spoke to the media in Berlin on the sidelines of the ITB travel fair in March. He said: “We are subject to market changes like everybody else is. One of the challenges is the rise of lower-cost long-haul travel, which is a gathering storm.”
Emirates will trim service to five American cities after the country banned on-board electronics on flights from some Middle Eastern airports and attempted to block travel from six predominantly Muslim nations.
With fewer flights, some Emirates passengers may switch to big European airlines and their American counterparts for travel from the Middle East and Asia.
Emirates said a thousand members of staff have left the company towards the end of 2016 “largely through natural attrition.”
Clark said: “Job cuts are not in our nature. We are attending to the business in terms of examining, streamlining and stripping costs. It’s not a revolution, it’s an adjustment.” He added that Emirates is one of the “lowest cost operators in the international market.”
The Dubai-based carrier has said it’s looking for ways to improve ancillary revenue including introducing fees to pre-select economy seats and allowing passengers to buy entry to its lounges.
Etihad Airways said last week it was disappointed that despite its significant investments in Alitalia, the Italian airline had entered ‘extraordinary administration’. That is the Italian/European equivalent of Chapter 11 bankruptcy in the United States.
James Hogan, President and Chief Executive Officer of Etihad Aviation Group, said: “We have done all we could to support Alitalia, as a minority shareholder, but it is clear this business requires fundamental and far-reaching restructuring to survive and grow in future. We support the necessary decision of the Alitalia Board to apply for extraordinary administration.”
Hogan added: “We are disappointed that despite Etihad’s significant investments in Alitalia, alongside those of the other shareholders, the airline was unable to proceed in its current form. New marketplace challenges, including greater low cost carrier competition and the impacts of terrorist events on tourism demand, meant further, deeper change was required.”
James Hogan will step down as President and CEO of the company on July 1. Etihad has appointed Ray Gammell as interim group Chief Executive Officer.
Etihad Airways and Alitalia signed a transaction implementation agreement in August 2014, which resulted in a $1.85 billion investment by Etihad and other Italian shareholders to restructure the Italian airline.
The airline said all guests with Etihad bookings on Alitalia, or vice versa, should proceed with their travel plans as normal, as it is expected that Alitalia will proceed with flight operations. Etihad will communicate promptly and directly with its affected guests if that situation changes.
New strategies to boost profits are expected to be introduced in the coming months following restructuring within the management.
Qatar Airways is inviting travellers to turn their layover into a ‘stayover’ with discounted fares and a free-of-charge hotel stay and transit visa when stopping over in Doha.
Travellers can now enjoy discounts of up to 50 per cent on flights on board the airline’s First and Business class, from 9-22 May for travel until 21 June 2017.
Passengers are also invited to add Doha to their travel plans and experience a true taste of Arabian hospitality with a free one night hotel stay in one of the Qatari capital’s four or five-star hotels and a free transit visa.
Passengers can enjoy the world’s best Business Class with fares from Saudi Arabia to United Kingdom (starting from $2,082 inclusive of taxes), USA (starting from $2,626 inclusive of taxes), Malaysia (from $1,500 inclusive of taxes) and Indonesia (from $1,317 inclusive of taxes), applicable from 9-22 May with validity of travel until 21 June 2017.
Qatar Airways Chief Commercial Officer Ehab Amin said: “This unique offer will allow them to extend their layover into a stayover, giving them the opportunity to experience the many delights Qatar has to offer. We encourage all transit passengers to consider adding Doha to their itinerary with this unique offer of a free transit visa and five-star hotel stay in many of Doha’s finest hotels.”
Also read: Why are Middle East airlines losing money?