India-Gulf traffic tipped to surge

(New Delhi: 30 May 2007) Short-haul air traffic

in the Middle East and to/from India is tipped to expand at double-digit rates

each year for the remainder of this decade, according to a new report from the

Centre for Asia Pacific Aviation, to be released next month.

The “Middle East Aviation Outlook” report states that all ingredients for “extraordinary” short haul, intra-regional growth are present, including a youthful and affluent population. The pre-requisite: the removal of access restrictions.

One of the report’s author’s the Centre’s Executive Chairman, Peter Harbison, stated that the upside is “difficult to predict”.

“But, applying the recent experience in the Asia Pacific market, especially SE Asia, it is reasonable to assume that most “reasonable” forecasts will fall well short of the mark. Much will depend on the depth of the liberalisation programmes followed by the region’s governments – and, by the end of 2007, there should be a more solid basis for longer term projections in this short haul sector”, he said.

Boeing and Airbus expect the Middle East market as a whole to expand by 5.5% and 6.2% p/a on average until 2025.

But the Centre’s assessment, based on prevailing government attitudes and current airline marketplace dynamics, is in fact for considerably higher intra-regional short haul growth over the next five years (particularly when this is extended to India-Middle East routes). If correct, this would have significant implications for single-aisle aircraft sales (both new and used), as new entrant airlines appear.

“As access limits to the subcontinent are relaxed, we would also anticipate the introduction by some operators of increasing numbers of widebody aircraft on Indian routes – including the A380 in high density configuration by early in the next decade”, said Mr Harbison.

According to the report, the early part of the 21st century has delivered greater steps towards airline liberalisation than occurred in the previous 50 years (with the possible exception of the internal EU aviation market in the late 1990s). The Centre sees the Middle East as a major beneficiary of these developments, when added to its ideal geographic position, highly supportive “Inc” policies, with excess airport capacity, and the advent of very long haul aircraft.

“Removal of archaic airline nationality rules – unevenly, but strongly supported particularly among the Gulf states – effectively guarantees remarkably different rules governing the right of establishment within the next decade. In practical terms, this means that innovative moves such as the ones currently being floated by AirAsia and Air China, to establish “hubs” at Gulf airports, will become commonplace by the middle of the next decade (and possibly well before that)”, said Mr Harbison.

Ahead of the report’s release next month, Mr Harbison added, “if this prognosis is correct, the implications for expansion cannot easily be projected. They are beyond forecasting along traditional lines. Even if the process of change is slower, the pressure for airlines to establish themselves in such a generally hospitable and globally competitive aviation environment will certainly ensure at least a considerably higher growth rate than presently being forecast. It will only require one or two airlines to make these moves, for others to recognise the value of following suit”.

Meanwhile, the Centre will hold its annual India and Middle East Investor Summit on 11-12 June 2007, followed by the India LCC Symposium on 13 June 2007 in Mumbai. The confirmed speakers at this MUST-ATTEND event, include: