ANALYSIS: November 2017 – Middle East capacity insights for the month

2 November, 2017

In the continuation of a regular new series, The Blue Swan Daily offers a capacity snapshot in time and looks at the month ahead to highlight some of the key network trends across Europe, the Middle East, Africa and now the South Pacific.

In the case of the Middle East, a downward capacity growth trend that started in May-2017 will continue for a seventh consecutive month with only a modest growth being recorded for the month ahead, partly linked to the continued Qatar blockade which has ended all air connectivity between Qatar and Bahrain, Egypt, Saudi Arabia and the United Arab Emirates (UAE) and is now entering its sixth month.

Overall network capacity from the Middle East will be up just 1.2% in Nov-2017 versus the same month last year, according to start of the month schedules, its slowest monthly rate of growth in 2017 and down notably on the year average that now stands at 6.0% and the significant double-digit highs recorded in Jan-2017 and Apr-2017. This marks the continuation of a downward growth rate trend since May-2017 after a minor uplift in Aug-2017.

CHART - Network capacity growth from the Middle East will fall to its lowest rate in Nov-2017 with just a 1.2% rise expected versus the same month last yearSource: The Blue Swan Daily and OAG

The impact of the Qatar blockade is clear to see with departure capacity from Hamad International Airport in Doha down -17.4% for the month ahead versus the same month last year and Qatar Airways' own departure capacity in the Middle East down -20.8% during the same periods (down -9.3% network wide).

Looking more closely at intra-Middle East capacity and these restrictions have seen Qatar Airways's share of traffic decline from 10.7% in Nov-2016 to 4.6% in Nov-2017, falling from the second largest operator in the market behind just Saudia, to the fifth largest behind Saudia, Emirates Airline and low cost carriers flydubai and flynas.

In the five full months since the blockade was introduced at start of Jun-2017 intra-Middle East capacity has declined -1.4% with Nov-2017 expected to be down -6.7% on the same month last year, with a significantly weaker performance than the four previous months.

CHART - The ten largest airlines in the intra-Middle East market have seen a vastly different performance levels over the last five months, many significantly impacted by the Qatar BlockadeSource: The Blue Swan Daily and OAG

The Blue Swan Daily analysis of OAG data shows that Qatar Airways' own intra-Middle East inventory has fallen by more than a half during this period from over 5.1 million seats to just above 2.4 million. In total, six of this markets largest carriers have a reduced capacity during the period, also including Etihad Airways (-15.8%), flydubai (-12.7%), Gulf Air (-11.1%), Emirates (-10.1%) and Oman Air (-6.4%). Most of these carriers were also directly impacted by the suspension of flights due to the Qatar blockade.

The airlines showing growth comprised a rejuvenated IranAir emerging from the shackles of significant sanctions (+2.8%), Air Arabia (+3.5%), flynas (+2.3%) and the market's largest operator Saudia, which despite also being directly impacted by the blockade, has boosted capacity +13.3% during the period. This is its own organic growth and doesn't take into account its new low cost entity flyadeal which took to the sky in late Sep-2017 on domestic routes.

Interestingly, Saudia has now seen 29 months of continuous year-on-year intra-Middle East capacity growth that dates back to June 2015. In fact, since the start of 2014 it has only recorded three months (Apr-2015, May-2015 and Jun-2015) with year-on-year capacity declines.

CHART - Saudia has almost doubled its intra-Middle East capacity since the start of the decade and recorded double-digit year-on-year growth in ten of the last 13 monthsSource: The Blue Swan Daily and OAG