Three of the Middle East’s biggest airlines are struggling amid embargoes, U.S. travel restrictions and global price wars.
Emirates, Etihad and neighboring Qatar Airways are reporting sinking profits or even losses, which is leading to staff layoffs, streamlined routes and canceled plane orders, German business daily Handelsblatt reports.
The International Air Transport Authority also reports that the Middle East experienced the slowest growth of all world regions in January, with traffic growing just 1.5% compared to January 2018. This was still a slight improvement from December 2018, however, when traffic dropped 0.1% from the previous year.
Overall, Emirates reported a slight increase in its passenger numbers from 2017 to “over 59 million” in 2018, but profits in the first half of the current fiscal year have plummeted by 86% to $62 million.
Meanwhile, Etihad has cut its orders of Airbus A350s from 62 planes to just five, and of Boeing 777Xs from 26 to six in an attempt to alleviate an expected $3 billion in losses for the current fiscal year, Aviation Analyst reported in February.
Qatar has faced the even bigger obstacle of a trade embargo from Saudi Arabia, Bahrain, Egypt and the United Arab Emirates since 2017, who accuse the country of supporting terrorism. The airline reports its operating costs have increased by 20% because of the blockade and recorded a loss of $69 million in the fiscal year ending March 2018 — while the fiscal year ending this month will also end with losses, Handelsblatt reports.
In February, Qatar Airways canceled a number of planned routes to Africa, but it has added seven new destinations in 2019, with another seven to come.
One of the factors affecting the companies is a worldwide decline in first-class travel, The Economist reports. Emirates and Etihad have received lots of positive press for featuring real beds and luxury showers in their first-class cabins but the ultrawealthy are increasingly turning to private jet operators for their international trips, while commercial travelers are more likely to pay for business class.
Emirates offers more first-class seats than any other carrier and says first- and business-class account for 12% of passengers but 40% of revenue. It was also forced to cut flights to the U.S. in 2017, following President Trump’s increased restrictions on travelers from certain countries.