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Founded in 1945, Iraqi Airways is one of the oldest airlines in the Middle East. The carrier is the national airline of Iraq and wholly owned by the Iraqi Government. Based at Baghdad International Airport, Iraqi Airways operates domestic service as well as services to destinations in the Middle East and Europe.
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In a landmark development for their national carriers, Kuwait and Iraq have reached an agreement to the long running dispute over Iraqi Airways' debts to Kuwait Airways. The USD500 million settlement ends a conflict which has plagued the development of both airlines and also paves the way for the development of a joint Iraqi-Kuwaiti airline venture.
The two countries have initialled a final settlement agreement, under which Iraq agreed to pay Kuwait USD300 million in reparations over the destruction and seizure of Kuwait Airways assets during the 1990-1991 Gulf War. In addition, Iraq pledged to provide another USD200 million for a joint airline venture between the two nations. The funds for the joint venture will be paid in 1H2013. It is not yet clear what the new joint venture carrier will look like or what roles Kuwait Airways and Iraqi Airways will play in its establishment.
Kuwait-based premium carrier Wataniya Airways announced it plans to suspend services to Amman, Bahrain, Damascus and Jeddah and reduce the frequency of operations to Dubai. In a major downsizing, the carrier’s fleet will be cut from seven to four aircraft, and it is studying options to cut its workforce. The changes will commence from 05-Dec-2010.
European carriers are becoming increasingly concerned by the Middle East airline threat on their core international businesses. CEOs from British Airways, Air France and Lufthansa have all voiced their opinions lately, as Middle East airlines continue to expand their global networks. But the European flag carriers are not standing idly by. Several are rapidly expanding their presence in the Middle East, to maintain and/or grow their share of this promising market. Emirates is the clear market leader, with a 21.0% share of capacity on Middle East-Europe routes. Qatar Airways is the second largest, with 8.7%, while Lufthansa, British Airways and Air France have just 5.6%, 3.5% and 2.7% shares, respectively.
The interests of airlines based in the Middle East are addressed by an organization known as AACO, Arab Air Carriers Association. Among regional carrier groups, AACO is unusual; only two of the group's airlines are affiliated with one of the three global Alliances; Star claims Egyptair and Royal Jordanian is in oneworld. Furthermore, the number of passengers attributable to those two carriers in 2009 is roughly 9.5 million, meaning that less than 10% of the region’s passengers travel on alliance affiliated carriers. And there appears to be only limited scope for this situation to change in the near future, as this overview reports.
Gulf Air is no stranger to challenges. From a regional airline, with multiple government ownership providing a global service, its national owners have gradually peeled off and started their own flag carriers, each much better funded than Gulf Air; the airline has, meanwhile, been wracked by political intervention, a flaw which became magnified as its financial fortunes dimmed.
Aviation headlines in the Middle East tend to be dominated by the ambitious sixth freedom hub players (the ‘Big Three’: Emirates, Etihad Airways and Qatar Airways). However, there are some major developments at the second tier full service carriers in the region, such as Oman Air, Royal Jordanian, Gulf Air and Middle East Airlines, as featured in this report. These carriers are reshaping competition in and beyond the region and are being reshaped themselves by dynamic change in the Middle East.
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