An in-depth analysis of their network expansion strategies and the impact on the EU carriers

How the major three Gulf carriers are quickly and steadily drawing a new and different “world map” of aviation …


The condensed market study by PROLOGIS and ch-aviation clearly shows how Middle East airlines are revolutionizing the airline industry and exerting pressure on the traditional market leaders and their alliances. Nothing is as constant as change, but hardly ever before has change been as dynamic as it is today.

Authors: Hanna Schaal (PROLOGIS) and Thomas Jaeger (ch-aviation)


Middle East carriers racing for world market share

To download the following analysis as a PDF file click here.


September 6, 2012 – Emirates and Qantas announce a new global aviation partnership. October 8, 2012 – oneworld officially invites Qatar Airways to become a new member. October 8, 2012 – Air France-KLM and Etihad Airways make their major new codesharing agreement public.

Within the short period of a month, three of the world’s fastest growing airlines are racing for new ways to extend their current networks. But it is not a race that has only just begun. Over the last couple of years, Emirates, Etihad Airways and Qatar Airways, the three big Middle East carriers, have more and more risen to the airline industry’s surface and are now about to position themselves at the leading edge: Aviation’s global market has reached a point where its focus is shifting from the old network carriers to the new airlines from the Gulf. As a result, the European airline industry’s market structure is changing. As the Middle East carriers inexorably spread out their networks, European airlines cannot help but accept the fact that they have to deal with these rapidly growing rivals.

Current developments

So let’s have a closer look at what is currently going on in the global aviation market and how things are changing. The Emirates-Qantas partnership agreement is scheduled to take effect on March 31, 2013. However, the 10-year joint venture agreement goes way beyond being a simple codeshare by including coordinated pricing, sales, and scheduling, as well as revenue sharing on the “Kangaroo Route” (now renamed “Falcon Route”) linking Australia with Europe. Furthermore, Emirates and Qantas are referring to a “benefits sharing model” with joint promises to treat each other’s customers as their own. [1] The Australian carrier will terminate its unprofitable Frankfurt route and only offer two daily A380-800 services from Melbourne and Sydney to London (down from five daily services some years ago). Furthermore, the new partnership with Emirates will replace all Air France-Qantas codeshare flights to Paris, as well as all Cathay Pacific-Qantas codeshare flights to Rome. But most importantly, Qantas is going to quit its joint-service agreement with oneworld partner British Airways after 17 years in March 2013 in favor of the agreement with Emirates.

Just four weeks after the Qantas and Emirates partnership was announced, both Qatar and Etihad, on the one hand, but also Air France-KLM and British Airways on the other had already responded: In New York, oneworld and Qatar unveiled that the Arabic airline is going to join the smallest of the three alliances (#1: Star Alliance, #2: Skyteam) over the next 12-18 months, with Qantas partner British Airways acting as the sponsoring airline. This partnership will extend oneworld’s network by fifteen destinations and three countries [2] and Qatar will be its 14th alliance member. On the very same day, Air France-KLM and Etihad announced a codeshare agreement which allows Etihad to offer its customers a wider network within Europe and gives Air France-KLM access to Etihad’s geographically well located hub in Abu Dhabi. Air France-KLM is Etihad’s 40th codeshare partner; however, it states that this new business deal would be “the first phase of a much larger strategic partnership” [3]. Etihad started codesharing with Air France on flights between Paris CDG and Bordeaux, Copenhagen, Madrid, Nice and Toulouse on October 28; and on the same day on KLM flights between Amsterdam and Abu Dhabi, Billund, Cardiff, Newcastle, Oslo and Stavanger. Air France and KLM currently offer connections via Abu Dhabi to Colombo, Islamabad, Lahore, Mahé, Malé, Melbourne and Sydney. On top of this new partnership, Etihad managed to extend its network within Europe even further by pushing oneworld member Air Berlin, in which it holds a 29% minority stake, into a codeshare partnership with Skyteam member Air France-KLM. It is still too soon to say how well this partnership will work out.

In summary, all of the above mentioned strategic initiatives can be interpreted as the Gulf carriers looking at better access to the European market; and with Air France-KLM, British Airways, and Qantas realizing that they themselves should also make use of the advantages of the business models and hub locations of their competitors in the Middle East. However, this is not a phenomenon that came up only recently. According to this joint study by ch-aviation and PROLOGIS, over the last five years, the three Middle East carriers (Emirates, Etihad and Qatar) have together added a total of 95 new routes (a 46.1% increase of their networks) departing from their hubs. All three carriers pursue the same target: They want to give their networks higher reach in order to attract more customers transiting through their homebases. Nevertheless, their expansion strategies seem to be quite different: Whereas Emirates focuses on organic growth and tries to operate as much traffic as possible with its own aircraft, Etihad invests in bilateral partnerships. It holds equity investments in Virgin Australia (10%), Air Berlin (29%), Air Seychelles (40%), and Aer Lingus (3%). Beyond this, it has over 40 codeshare agreements with a few carriers who have recently moved their flights from Dubai to Abu Dhabi to benefit from Etihad’s willingness to partner (i.e. Garuda Indonesia and Hainan Airlines). With the announcement of joining oneworld, Qatar has decided to take a third route as a member of one of the world’s alliances. Though different, all three strategies will help these airlines to achieve their goal.

To highlight the various expansion strategies and network focus of the three carriers analyzed in this study, we have conducted an analysis of the destinations, frequencies, capacities and ASMs (Available Seat Miles) from the hubs at Abu Dhabi (Etihad), Doha (Qatar), and Dubai (Emirates) for the weeks of Monday, December 3, 2007 and Monday, December 3, 2012. It is based on a combination of schedule data from ch-aviation pro/Innovata (2012) and Cedion/Innovata (2007).

All three carriers – Emirates (EK), Etihad (EY), and Qatar (QR) – have extended their networks, frequencies and overall capacity massively during the last five years, despite the global financial crisis and the Arab Spring at their doorsteps:

Destinations served:

As expected, Asia and Europe are the two markets with the highest number of routes served by the three carriers, with Africa being a distant third. Europe has grown the most in terms of new routes being added (62.5% more routes being served now) among these markets. The Americas are growing much faster but from a much lower base. Emirates has served the most destinations on every continent (with the exception of Asia/Middle East) back in 2007 and still does today, but Qatar Airways has been able to narrowing that margin in Africa and Europe in the meantime. It has also started expanding to Australia and Latin America during the last five years.

Weekly frequencies:

While the three analyzed airlines have grown the number of routes served by 46.1% over the last five years, frequencies have actually increased by 80.4%, showing that the carriers have started to concentrate on serving existing routes more frequently than before. The average weekly frequency per destination has increased from 8.44 to 10.41 weekly flights. Emirates on average offers 12.11 weekly flights to each destination already and has increased frequencies on many European routes for example to at least two daily services allowing connections during its two biggest connection banks in Dubai. This is making the Gulf carriers’ product more appealing to business travelers which value frequency more than leisure travelers.

Weekly capacity (seats):

Weekly Capacity has grown even slightly faster at 83.7%, indicating the deployment of larger aircraft in the airline’s fleets. From the hubs at Abu Dhabi, Doha, and Dubai, the three carriers now offer a total of 853’659 seats per week compared to just 464’729 back in 2007. Emirates has essentially doubled its capacity in just five years’ time with Qatar Airways not far behind. Etihad Airways has grown slower during the same timeframe, showing its more conservative and collaboration driven growth approach.

Weekly capacity (ASM – Available Seat Miles):

Last but not least, the weekly number of Available Seat Miles has grown by 109.8%, clearly indicating that the carriers are starting to increasingly serve destinations further away from their hubs, and have introduced more long-haul routes to their networks. Emirates alone almost offers double the number of available seat miles as the other two Gulf carriers together, also thanks to its high number of non-stop services from Dubai to the Americas and Australia.

More detailed statistics on the airlines’ network growth are provided below by carrier (maps generated by Great Circle Mapper highlighting new routes in yellow and routes cut in red):


Emirates network changes by Continent:

Africa (4+1):

Added (6): Cape Town, Dakar, Durban, Harare, Luanda, Lusaka

Dropped (2): Alexandria, Tripoli

Future Additions (1): Algiers

Asia (7+1):

Added (7): Baghdad, Basra, Erbil, Guangzhou, Ho Chi Minh City, Kozhikode, Madinah, Tokyo

Dropped (1): Nagoya

Future Additions (1): Phuket

Europe (10+1):

Added (10): Amsterdam, Barcelona, Copenhagen, Dublin, Geneva, Lisbon, Lyon, Madrid, Prague, St. Petersburg

Future Additions (1): Warsaw

North America (5):

Added (5): Dallas/Fort Worth, Los Angeles, San Francisco, Seattle/Tacoma, Washington D.C.

Oceania (1):

Added (1): Adelaide

South America (2):

Added (2): Buenos Aires, Rio de Janeiro

Etihad Airways

Etihad Airways network changes by Continent:

Africa (4+1):

Added (4): Lagos, Nairobi, Mahé, Tripoli

Future Additions (1): Addis Ababa

Asia (18):

Added (18): Ahmedabad, Almaty, Astana, Baghdad, Bangalore, Basra, Beijing, Chengdu, Chennai, Colombo, Erbil, Hyderabad, Kozhikode, Malé, Nagoya, Seoul, Shanghai, Tokyo

Europe (6):

Added (6): Athens, Dusseldorf, Istanbul, Larnaca, Minsk, Moscow

North America (1+1):

Added (1): Chicago

Future Additions (1): Washington D.C.

Oceania (1):

Added (1): Melbourne

South America (0+1)

Future Additions (1): Sao Paulo

Qatar Airways

Qatar Airways network changes by Continent:

Africa (5):

Added (5): Benghazi, Entebbe, Kigali, Kilimanjaro, Maputo

Asia (12+5):

Added (15): Ahmedabad, Amritsar, Baghdad, Bangalore, Chongqing, Erbil, Goa, Guangzhou, Hanoi, Kolkata, Kozhikode, Madinah, Phuket, Shiraz, Tokyo

Dropped (3): Cebu, Damascus, Nagpur

Future Additions (5): Chengdu, Gassim, Najaf, Phnom Penh, Salalah

Europe (14):

Added (15): Ankara, Baku, Barcelona, Belgrade, Brussels, Bucharest, Budapest, Copenhagen, Nice, Oslo, Sofia, Tbilisi, Venice, Warsaw, Zagreb

Dropped (1): London Gatwick

North America (2+1):

Added (2): Houston, Montreal

Future Additions (1): Chicago

Oceania (2):

Added (2): Melbourne, Perth

South America (2):

Added (2): Buenos Aires, Sao Paulo

Fleet Growth and Expected Fleet Plans

The Gulf airline’s network extension is also reflected in their fleet development. With regard to fleets, ch-aviation data from 2007 and 2012 reveals that the three carriers have jointly added a total of 177 new passenger aircraft (Emirates: 83, Etihad Airways 38, Qatar Airways 56). Meanwhile the passenger fleets of their European counterparts Air France-KLM * (from 580 to 574 aircraft) and International Airlines Group ** (IAG, the holding owning British Airways and Iberia) (from 391 to 383) have decreased. Only Lufthansa *** and its subsidiaries were also growing their fleets (from 591 to 618 aircraft).

* Including subsidiaries Brit Air, Cityjet, KLM cityhopper, Régional, Transavia, Transavia France and VLM.
** Including subsidiaries BA CityFlyer, Iberia Express and Open Skies.
*** Including subsidiaries Air Dolomiti, Austrian Airlines, Edelweiss Air, Eurowings, germanwings, Lufthansa CityLine, Swiss, Swiss European Air Lines and Tyrolean Airways.

Taking publicly available information about planned aircraft retirements into account, Emirates, Etihad, and Qatar Airways combined are still planning to add another 213 new aircraft to their fleets over the course of the next five years (excluding freighters). In contrast, Air France-KLM, IAG and Lufthansa have all announced their plans to cut costs and capacity in response to the current competitive situation in Europe (pressure from LCCs, on-going financial and economic crisis and the growing competitors in the Middle East).

Emirates has mainly focused its growth in the last five years on the B777-300(ER) (increase from 29 to 80 aircraft) and on the A380-800 (from 0 to 27). It will continue to concentrate on these two aircraft types for the next five years and plans to triple its A380-800 fleet in that timeframe, while almost doubling its B777-300(ER) fleet. It is instead expected to retire its lower capacity A330-200, A340-300, A340-500, and B777-200 subfleets, showing an indication of its strategy to increase capacity and traffic volumes on existing routes as one of its key growth drivers. Looking at the overall capacity of Emirates’ fleet, it is expected to grow its passenger volumes even faster within the next five years, presuming it sticks to its current aircraft delivery and disposal plan.

Emirates Fleet:

Etihad has more than doubled its fleet during the past five years, and plans to do so again in the next five years to come. However, unlike Emirates, about half of this growth has come from building up a fleet of currently 18 narrowbody A320 family aircraft, after initially launching operations with a fleet of just widebodies. This has allowed Etihad to increase frequencies and the number of its destinations within its regional network from Abu Dhabi to the Middle East and the Indian subcontinent. This is more reasonable with narrowbodies, also given the fact that Abu Dhabi is still a smaller Origin & Destination market than Dubai. Etihad will however have to significantly increase its growth rate going forward, if it plans to go ahead with the deliveries of its 10 A380-800s, 7 B777-300(ER)s, and 25 B787-9s by 2017. This increase is a much bigger jump from where the airline stands now, compared to what it has reached within the past five years.

Etihad Airways Fleet:

Qatar Airways has grown in a comparable fashion to Etihad, with 28 new A320 family narrowbodies joining its fleet in the last five years. These have also been used for its major expansion into Eastern Europe within the same timeframe. Qatar has also introduced the B777, taking delivery of a total of 27 aircraft with additional 7 B777-300(ER)s on order. As the first Middle East carrier it has taken delivery of the first B787-8 “Dreamliner” last month. The airline is planning to operate with 30 B787-8s by 2017. Qatar Airways also has outstanding orders for 43 A350-900s, 37 larger A350-1000s and 50 A320neo family aircraft, which eventually will partially replace its existing fleet beyond 2017. The majority of its growth over the course of the next years will initially come from B787-8 and B777-300(ER) deliveries. This shows the expected capacity increase or the launch of more long-haul routes, temporarily moving up the ladder with less short-haul narrowbody expansion than in recent years.

Qatar Airways Fleet:

How did they get this far?

The fact, that the Gulf carriers have impressively grown and spread out their networks within the past five years, is quite obvious given by the analysis results above. But what is their secret of success which has helped them to reach their current positions fairly quickly?

The three largest Gulf carriers essentially capitalize on a set of very favorable geographical conditions, coupled with very aviation friendly policies of their respective governments. Their hubs (Dubai, Abu Dhabi, Doha) are located in a strategically very advantageous position in the world with most of Africa, Europe, the Middle East, Indian subcontinent, and much of South East Asia within 6-8 hours flying time. This gives them access to a large percentage of the world’s population and traffic patterns between these regions. In addition, the three cities allow long-haul flights non-stop to Australia and the Americas. So essentially, any relevant destination around the world can be reached from their hubs non-stop. This puts the carriers into the position of being able to compete for connecting traffic on many ultra-long-haul city pairs with high demand (i.e. London-Sydney, San Francisco-Mumbai, Tokyo-Sao Paulo etc.) and one-stop service. And most of their competitors have no competitive advantage, as they cannot serve the markets non-stop either.

Based on the ch-aviation and Prologis study, Air France-KLM currently offer flights to 23 destinations in the Asia-Pacific region from Europe, International Airlines Group (British Airways/ Iberia) 15, and Lufthansa together with its subsidiaries Austrian and Swiss 21. Their three Gulf based counterparts currently can offer between 33 (Etihad) and 40 (Qatar) destinations from their hubs and consolidate demand from Africa, the Americas, Europe and the Middle East for these services. Thanks to their hub’s relative proximity to markets with large populations, they can offer one-stop itineraries on smaller city pairs, i.e. itineraries such as Birmingham-Ahmedabad, Milan-Sydney, Vienna-Kuala Lumpur etc. On many such city pairs, European carriers cannot easily compete. They are often not in a position to offer a comparable one-stop service from any European airports other than their hubs.

Besides the geographical advantage, the governments of the emirates of Dubai and Abu Dhabi as well as Qatar have early on looked at aviation as one of their key industries as part of a general strategy to turn their countries into business, financial and tourism centers. And this obviously cannot be achieved without having significant air links. Emirates publishes its financial reports and has been consistently profitable for the past two decades, according to its audited financial statements. The carrier often publicly states that it has never directly received capital from the government again since it originally started operations. In fact, it is now a very profitable airline, typically outperforming its competitors in Europe and Asia.

It is an open secret, however, that both Etihad and Qatar have received a lot of additional capital from their governments to finance initial losses, while building up their large networks. Although, both are stating they are now profitable, they have yet to publish audited financial results which would substantiate these claims. Be that as it may, it is, however, probably too easy for European and North American carriers to point their fingers at their fast-growing competitors in the Middle East, given all of the government bailouts which the carriers have directly or indirectly received over the past decades. Moreover, the legal framework in North America has allowed all carriers there to get rid of unwanted obligations through bankruptcy protection. Presumably from an economic perspective, these massive government investments in the aviation sector will eventually pay off as part of their general master plans.

Another advantage of the Gulf carriers to consider is the aviation friendly legal and business framework in Qatar and the United Arab Emirates: No night flight bans, new airports and terminals being built to accommodate capacity, no trade unions, the ability to easily employ foreigners from third world countries at lower wages, no taxes, and so on. These benefits theoretically would also be available to other carriers in the region. But combined with what has been said above, Emirates, Etihad, and Qatar could establish themselves as the key players in the region.

And last but not least, a success factor of all three Middle East carriers is comparably higher product quality. Qatar Airways has been Skytrax’ “Airline of the Year” in both 2011 and 2012 – an indicator for Passenger Satisfaction levels based on passenger surveys. Etihad and Emirates were among the 10 best airlines both this and last year. According to these surveys, none of the old network carriers like Lufthansa, British Airways, Air France-KLM, American, Delta or, United can compete with such high quality and service levels. To quote USA Today [7]: “[…] the Gulf airlines have positioned themselves atop global customer-satisfaction rankings by flying new planes and offering luxurious international service to an increasing number of destinations.”

In conclusion, all three carriers certainly benefit from an advantageous geographic position and favorable legal and business frameworks, and on top of that, are able to win customers by offering a high quality product yet reasonable in price.

Impact on European carriers

The ch-aviation and Prologis analysis was able to review the impact of the massive growth of the three big Gulf carriers on European Union scheduled carriers (excluding leisure carriers such as Blue Panorama, Condor, Thomson Airways etc.) to destinations in Asia (excluding the Middle East and Central Asia) between 2007 and 2012.

All EU carriers combined have barely changed the total non-stop capacity in these markets in five years. Between 2007 and 2012, Air Berlin (long-haul routes were still operated by LTU back in 2007) and Malev have left the market of non-stop services: Even prior to its bankruptcy, Malev cancelled all long-haul routes; and after Etihad’s acquisition of a large minority share in Air Berlin, the German carrier’s network was restructured. Asian services are now routed through Abu Dhabi (Phuket is currently still served daily by Air Berlin, but from Abu Dhabi and not non-stop from Germany). LOT has instead entered the market currently only serving Beijing from Warsaw.

In contrast to the development of EU scheduled carriers, Emirates, Etihad Airways, Qatar Airways and Turkish Airlines (see below) have meanwhile been able to almost double their capacity on routes between their hubs and Asia (from 176,106 to 353,722 weekly seats). This shows that the European airlines have not necessarily lost traffic volume but have simply not been able to participate in the growth in these markets. It would be unfair to assume that the entire increase in capacity between the Middle East and these Asia-Pacific markets analyzed would come from European passengers. Anyhow, the proportions show how different capacity developments have been between the two groups of carriers.

Looking at destinations in particular, the EU carriers have especially sustained losses in markets where they were geographically most exposed to competition by their three rivals from the Gulf (in India, the Maldives, the Philippines, Thailand, as well as the China’s South).

Instead they have been able to compensate for these losses further north where for geographical reasons the four southerly hubs of Abu Dhabi, Doha, Dubai and Istanbul are less of a threat with Kuala Lumpur and Singapore being the only two exceptions to this rule.

The growth of the four carriers has therefore had a significant impact on EU carriers on routes where they are directly exposed to one-stop connections from the new hubs.

How do European carriers react?

In response to these developments over the course of the last five years, European carriers have started to change their competitive strategies. Both Alexandre de Juniac, chairman and CEO of Air France and Sir Martin Broughton, chairman of British Airways admitted that the old adage ‘if you can’t beat them, join them’ applies to their current strategic behavior: It was only last year when Jean-Cyril Spinetta, the previous CEO of Air France-KLM group, said: “The Gulf companies are killing our industry.” [8] Now the former enemy has become codeshare partner. And instead of any further complaints about unfair competition due to government support, British Airways, through its parent IAG, decided to invite one of the rivals on board its worldwide alliance. According to Sir Martin Broughton this decision came along with a “strategic shift” of British Airways in order to meet its customers’ demands. [9]

With Air-France-KLM and Air Berlin partnering with Etihad, and British allying itself with Qatar through oneworld, Lufthansa is the only one of Europe’s three big carriers who does not cooperate with any of the three big Middle East counterparts. Albeit, strictly speaking the former German flag carrier was first to partner with one of the Gulf carriers: After almost 13 years Lufthansa ended its cooperation with Qatar Airways on January 1, 2012. The airline justified the decision saying that the business deal did not provide a win-win situation to it anymore [10]. Although Lufthansa does not preclude a new partnership with one of the Middle East carriers invariably, the German airline is currently in talks with its Star partner Turkish Airlines about an even closer partnership combining the strategic advantages of both carriers.

Spotlight on Turkish Airlines

Istanbul-based Turkish is Europe’s third largest carrier by passenger traffic, and currently operates approximately 850 flights a day to 205 destinations with a fleet of 194 passenger aircraft, according to data from ch-aviation. It has been capitalizing on its equally well positioned hub to capture a massively growing number of transfer traffic from Europe to Africa, Central Asia, the Middle East, and the remainder of Asia. Similar to the three major carriers in the Arabian Gulf, Turkish brings together a combination of a lower cost base (thanks to Turkey’s relatively cheap labor), its advantageous geographical position, strong inbound tourism demand, and aviation friendly government policies (the Turkish government still owns a large minority share of approximately 49% in Turkish Airlines). Although the country has also been hit by the recession which followed the beginning of the world’s financial crisis, it has reversed its negative GDP growth rate of -4.8% in 2009 growing 9.2% in 2010 and 8.5% in 2011 according to the World Bank. Unlike Emirates, Etihad, and Qatar Airways whose domestic air travel being fairly (UAE) or totally (Qatar) irrelevant, Turkish is able to capitalize on its GDP growth on the domestic market in Turkey. Solely on its domestic services from Istanbul Atatürk, the airline has increased its available capacity by 26.8% between December 2007 and December 2012, offering 801 weekly departures to 32 destinations this month.

To a large extent, Turkish still is a short-haul carrier serving Europe, Central Asia, the Middle East, and Northern Africa. However, with its already delivered and still outstanding long-haul aircraft orders (see fleet analysis below), this is changing. Turkish has made a massive push into Africa during the last 2-3 years, and is quickly establishing itself as a major force in many markets. It is thereby making use of the geographically more advantageous location of Istanbul for connections from Europe to Africa. Between December 2007 and December 2012 weekly flight frequency from Istanbul to Africa increased more than fourfold from 30 to 153.

Turkish Airlines network changes by Continent (Routes from Istanbul Atatürk only):

Africa (19+4):

Added (19): Abidjan, Accra, Alexandria, Benghazi, Dakar, Dar es Salaam, Djibouti, Entebbe, Hurghada, Kigali, Kilimanjaro, Kinshasa, Misurata, Mombasa, Mogadishu, Nairobi, Nouakchott, Sebha, Sharm el Sheikh

Future Additions (4): Douala, Niamey, Ouagadougou, Yaoundé

Asia (24+2):

Added (10): Aden, Aleppo, Baghdad, Basra, Dammam, Dhaka, Erbil, Guangzhou, Ho Chi Minh City, Islamabad, Jakarta*, Kabul, Madinah, Mashad, Malé, Mosul, Najaf, Novosibirsk, Osh, Shiraz, Sulaymaniyah, Taif, Ulaanbaatar, Yanbu

Future Additions (2): Isfahan, Kermanshah

* Turkish Airlines has launched Singapore-Jakarta as an extension to its Singapore route from Istanbul Atatürk, the route has been intentionally removed from the map above to make its size fit this format.

Europe (21+1):

Added (23): Aalborg, Adler/Sochi, Bilbao, Billund, Birmingham, Bologna, Bremen, Edinburgh, Genoa, Gothenburg, Gyandzha, Leipzig/Halle, London Gatwick, Lviv, Malaga, Nakhichevan, Naples, Podgorica, Thessaloniki, Toulouse, Turin, Ufa, Valencia

Dropped (2): London Stansted, Strasbourg

Future Additions (1): Santiago de Compostela

Turkey (4)

Added (4): Amasya, Hatay, Igdir, Küthaya, Sinop

Dropped (1): Eskisehir

North America (3+1):

Added (3): Los Angeles, Toronto, Washington D.C.

Future Additions (1): Houston

South America (1+1):

Added (1): Sao Paulo

Future Additions (1): Buenos Aires

Within the same time period, the airline has doubled its fleet from 92 to 194 passenger aircraft (growing its long-haul and short-haul fleets in a similar fashion) including the B737-700s and B737-800s operated under the AnadoluJet brand on domestic low-cost carrier services. It has just recently announced that it has given up plans to order A380-800s or B747-8s instead opting for another 100 narrowbody aircraft to be ordered before the end of 2012 or in early 2013. This move underlines its strategy of increasing the short- to medium-haul business in line with its long-haul services. 15 additional A330-300s and B777-300(ER)s will bring its long-haul fleet to 63 aircraft by 2017 according to current plans (assuming the retirement of its ageing A340-300s).

It is obvious that Turkish as “Europe’s Best Airline” (Skytrax Award 2011 & 2012) and with its network and strategy is already a feared rival to the Middle East carriers. Should the contemplated tie-up between Turkish – one of the fastest growing airlines in the world – and Lufthansa – Europe’s largest airline in terms of passengers carried – really become true, it would constitute the second largest airline group after Delta Air Lines based on capacity with roughly 3.8 million weekly seats compared to 3.9 million for Delta. [11] According to [12] Turkish’s CEO Temil Kotil wants to get to a decision regarding the possible close alliance within the first quarter of 2013.

However, let’s not forget the Emirates-Qantas joint venture starting in April 2013. Even though, for now the arrangement is mainly focusing on European connectivity, future global extensions are likely to follow. So on the one hand, there are Emirates and Qantas partnering outside any global alliance. On the other, there is Etihad having bilateral agreements with both Air Berlin in oneworld and Air France-KLM in Skyteam (with both now also codesharing, following Etihad’s strategic lead).

Will the role of the worldwide alliances change?

With regards to these new partnerships, it is a legitimate question to ask how the role of the three worldwide alliances is affected due to the current developments. It does not seem like Emirates shows interest in joining any of the “big three” in the near future. The airline labeling Star, Skyteam and oneworld as an “anachronism” [13], better suited to the nineties, where they came up as an answer to financial difficulties of network carriers is highlighting Emirates’ attitude towards the alliances very clearly.

IATA (International Air Transport Association) CEO Tony Tyler recently said: “Alliances help airlines offer very competitive fares on other airline networks. So consumers can go around world at competitive prices.” [14] Will the three alliances be able to maintain this unique role? Or will new giant partnerships such as Emirates and Qantas, or Etihad, Air Berlin, and Air France-KLM be able to compete with the alliances by offering joint networks with global reach as well based on bilateral agreements? For now, what we know for certain is that due to the Emirates-Qantas partnership, the Australian carrier is going to end its close cooperation with British Airways in Europe after 17 years (the carriers will still continue to codeshare). And as mentioned above, Qantas will also cut its already very loose links with Cathay Pacific by dropping the codeshare agreement for the only route where the carriers have recently cooperated (Hong Kong-Rome). As BA and Cathay Pacific are both members of oneworld, this means that the alliance loses traffic to Emirates. And also Skyteam’s network is affected by the new match due to Qantas ending the Air France codeshare on the route to Paris. To sum up the new Qantas-Emirates partnership has an effect on the alliances, and it does not look like it is a positive one.

The Etihad – Air Berlin – Air France-KLM cooperation will most certainly have some kind of impact on both oneworld and Skyteam.

The critical airline to look at is Air Berlin – on the one hand oneworld member since March 2012, on the other now cooperating with Skyteam member Air France-KLM as a by-product of its Etihad partnership. So Air Berlin is somehow caught in the middle. And Etihad does not care – which is not surprising given its successful strategy of entering into bilateral agreements as opportunities come up, regardless of alliance boundaries. Does the German carrier’s split position reflect the Gulf carriers’ emerging power towards the worldwide alliances? The airlines themselves are talking about an increasing flexibility towards global alliance membership. Both development and consequences of this flexibility remain to be seen but there seems to be an early indication that bilateral agreements and joint ventures, globally or for specific markets, might just as well be more important than alliance membership going forward.

Nothing is constant except change …

… and this also applies to the development of the three big Middle East carriers. This article outlined how Emirates, Etihad, and Qatar were able to reach their top positions within the world airline industry. Based on the ch-aviation and Prologis analysis, we have been able to demonstrate how the three airlines have managed to pass their European rivals in certain markets and positioned themselves at the leading edge within just a few years. The airline industry is in the midst of yet another revolution, and a new era within global aviation lead by the three big Middle East airlines is about to start. But again – nothing is constant except change. So even though it looks like Emirates, Etihad, and Qatar are currently looking toward a bright future, eventually, no one knows if this envisioned future will come true or is subject to change, for example if all of the additional capacity to be made available from their hubs over the next decade will prove to be excessive.

To download the analysis as a PDF file click here.


About Prologis and ch-aviation


PROLOGIS ranks as one of the world’s leading management consultancies that specialize in the aviation industry thanks to its more than 15 years of experience and over 45 airline customers served.

With an average of 7 years of practical experience working for airlines, airports and ground handling companies, the PROLOGIS consultants are recognized experts on the following topics:

          Distribution & Revenue Management

          Ground Operations & Airport Processes

          Revenue Accounting

          Network Planning & Scheduling

          IT Services (System Migration, Evaluation and Implementation)

          Financial Controlling and Data Warehousing

Thanks to the many international projects on behalf of network, regional, low-cost and charter airlines from more than 30 different countries, PROLOGIS offers best practices and integrate these into their customers’ existing structures and cultures. Whether it’s strategies, processes or systems, the PROLOGIS team works together closely with the customers to find the best possible solutions for the challenges at hand.  


ch-aviation is managed by a team of passionate aviation professionals from Switzerland, Germany and Austria. Since 1998 offers a wide range of tools and search options targeted at aviation industry professionals to get access to the most extensive and up to date airline knowledge base in the world. It provides comprehensive weekly news updates covering global airline industry developments with a focus on strategic network and fleet developments, airline start-ups and bankruptcies as well as mergers, acquisitions and strategic partnerships. Weekly Airline Route Network Update systematically track network changes of over 700 airlines worldwide. ch-aviation also tracks more than 37.500 individual aircraft, in excess of 5.500 airports and airlines with access to worldwide airline schedules and route networks.


Copyright @ 2012 PROLOGIS AG & ch-aviation GmbH

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