Carriers from the Middle East have been the fastest-growing long-haul airlines in recent years - and the trend looks set to continue, the report says. Although Middle Eastern carriers currently own just 9 per cent of long-haul seats, they are responsible for nearly a quarter of global long-haul aircraft orders.
Emirates is the largest buyer, placing around 70 percent of all new Middle Eastern long-haul orders and planning to triple its capacity over the next eight years. If it succeeds, Emirates will become the world's largest long-haul carrier by 2012.
James Goth, a manager in BCG's Sydney office and a co-author of the report, said that although Middle Eastern carriers enjoyed significant cost, capacity, and ownership advantages over incumbent competitors, they had not won the game yet. "While the Middle Eastern juggernaut cannot be stopped in toto, individual European, Asian and North American carriers can still play a strong role in influencing where and how - and in some cases, whether these carriers become their competitors."
Incumbent carriers need to start with a full understanding of which of their routes are likely to face pressure from Middle Eastern carriers. Once this is understood, they should establish, on a route-by-route and carrier-by-carrier basis, where the competition will be most potent.
"Finally, and most importantly, airlines need to think about their revenue competitiveness against Middle Eastern carriers. They need to maintain and bolster their presence on routes where their ability to attract premium and business traffic is highest, and then leverage that advantage onto other city pairs," said Goth.
The report identifies a set of "sweet spot" routes on the Europe-to-Asia corridor characterised by large numbers of business travellers. "If high-end carriers leverage these sweet spots to attract hubbing business travellers from thinner city pairs, we believe that they can win and 'quarantine' up to 30 percent of Europe-Asia passengers from significant Middle Eastern competition," according to Goth.
Source: The rise of Middle Eastern carriers: Meeting the new challenges of the airline industry
The Boston Consulting Group, September 1 2006
Ross Love and James Goth
Reviewed by: Nick Loney