The National - News

Airlines expect to ride out turbulence­s by end of 2019

- DEENA KAMEL

Arabian Gulf airlines say they expect to face further headwinds in the next 12 months but are optimistic about growth in 2019 as demand for travel remains strong.

Airlines in the region foresee oil price volatility, currency fluctuatio­ns, escalating trade tensions and increasing­ly fierce competitio­n clouding the industry outlook next year. However, the companies said they remain bullish as they focus on expanding into new markets, keeping costs in check and growing their fleet to cater to rising passenger demand for travel.

“We are optimistic about our own growth in 2019,” Tim Clark, president of Emirates airlines, told The National this week. “We’ve seen that the global appetite for travel remains resilient, in spite of the patchy economic growth or geopolitic­al turbulence. People still want to travel. Consumers will simply re-calibrate their travel plans and we have to stay agile in how we deploy our capacity to best serve that demand.”

Middle East airlines’ annual earnings are expected to grow by one-third in 2019 to $800 million (Dh2.93bn), up marginally from $600m in 2018 when higher oil prices inflated jet-fuel bills and Gulf hubs faced rising competitio­n, industry body Internatio­nal Air Travel Associatio­n said in an outlook report this month.

The trade body expects a “slow recovery” for the Mid-

dle East aviation industry next year as Gulf airlines restructur­e their businesses to address challenges and intense competitio­n from other super-connectors as well as lowcost long-haul operators, said Brian Pearce, chief economist of Iata.

Fuelling their recovery is the improving passenger traffic between the Middle East and North America after a 2017 US administra­tion’s ban on electronic devices and passengers from majority-Muslim countries in the region crimped demand, he said.

“We expect faster growth in Middle East airline’s business driven by reasonably strong growth in travel demand in 2019,” Mr Pearce noted.

Uncertaint­y, however, remains as to how far a drop in oil prices will affect the airlines’ home markets and slow down their recovery, he said. The biggest factors to watch out for in 2019 is the direction of oil prices, strength of US dollar, global trade wars slowing down cargo volumes and congested airspace over the region.

Abu Dhabi’s Etihad Airways, which posted its second consecutiv­e annual loss this year, said it expects the slowdown in growth in the fourth quarter of 2018 to extend into early next year, but the company is upbeat about the outlook for the remainder of 2019.

“Etihad Airways has enjoyed a period of steady growth in the first and second quarters of 2018, however as the global market softened, this growth slowed in the fourth quarter,” an Etihad spokesman said. “This is of course not unique to Etihad and is reflective of the situation across the industry. We predict that this trend will continue for at least the first quarter of 2019, however, remain cautiously optimistic for the rest of the year.”

Dubai’s Emirates, the world’s largest airline by internatio­nal traffic, said despite the geopolitic­al tensions and volatile oil prices dogging the aviation industry, it will continue to focus on organic growth by connecting city pairs that make “commercial sense” for tourism and trade while eyeing travel connection­s through its partnershi­p with sister budget-airline flydubai.

“Through such codeshare arrangemen­ts as well as our own operations, Emirates will continue to seek opportunit­ies to unlock new markets, tap on under-served demand, and stimulate growth,” Mr Clark said.

Flydubai expects this year’s “challengin­g” operating conditions from a strong dollar, rising oil prices and higher interest rates to continue into 2019, Ghaith Al Ghaith, chief executive of the airline, told

The National. The no-frills airline, remains upbeat about the next 12 months as it continues to expand its partnershi­p with Emirates and invest in its fleet.

“Our focus will remain on improving our cost performanc­e, broadening our distributi­on and optimising our network while continuous­ly keeping our cost management plan under constant review,” Mr Ghaith said.

“We remain optimistic about the new year as we continue to invest in our fleet and operations.”

Middle East airlines’ annual earnings are expected to grow by one-third in 2019 to $800 million says Iata

 ?? Reuters ?? Etihad expects slow growth in Q4 to extend into early 2019
Reuters Etihad expects slow growth in Q4 to extend into early 2019

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