The Gulf is home to what is likely to be the greatest concentration of globally ambitious airlines in the world, rivalling the boom in South East Asian airlines in the 1970s and 1980s. The big three of Emirates Airline, Qatar Airways and Etihad Airways are the most well known and established, but there are other large airlines with extensive networks such as Gulf Air, Oman Air, Saudi Arabian Airlines, and Kuwait Airways, along with a growing number of budget airlines.
Most are thought to be unprofitable, either hampered by the heavy competition because of ageing fleets and business models, or because of heavy investments in building up young brands, say analysts. "There are so many airlines with global aspirations in this region, which does not seem to have the passengers to sustain all of them," said Perry Flint of Air Transport World. Among the big three, only Emirates reported its financial results. Last year it was one of the most profitable airlines in the world, with net income of $963.5m after traffic rose by 24 per cent. The airline's results are for its year ending in March, and they include the performances of more than 25 associated companies in fields such as hospitality and retail. A key to its success has been the growth of its transcontinental traffic, taking market share from European and Asian airlines, while the Dubai Government simultaneously developed the emirate into a destination in its own right.
"Emirates has done amazingly well," Mr Flint said. "They are making Dubai a wonderful stopping point between Europe and Asia." The airlines acknowledging the heaviest losses last year - the worst year in aviation history, according to industry associations - were Kuwait Airways and Oman Air, with write-downs of US$189.6 million (Dh696.1m) and $167.3.m, respectively. Last year, Kuwait's traffic grew by 3 per cent, measured by revenue passenger kilometres, a key industry metric. The number of passengers it carried was up 2 per cent to 2.6 million.
Kuwait Airways and Saudi Arabian Airlines are two established airlines that have sought to privatise parts or all of their business in recent years. Last year, Saudi Arabian did not disclose its financial results, although it sustained losses of $479.4m in 2008, according to the ATW-Ascend report. Mr Flint said it was an "extremely challenging" time for these types of state-owned, legacy airlines. "At a time of great dynamism in the private sector, there is pain as you try to make a transition," he said.
Oman Air, meanwhile, is being transformed from a small regional airline into the nation's flag carrier, after the 2006 decision by the sultanate to end its shareholding in Gulf Air, which had acted as a pan-Gulf carrier owned by many states. Oman Air expects several more years of losses before swinging into profit in 2014, as new aircraft and routes become established and the global economy recovers from the downturn. Last year, its traffic grew by 19 per cent.
Unlike the Big Three, Oman Air plans on primarily serving traffic to and from its home country, rather than serving the huge travel flows between Asia and the West. It is a strategy being shared by Gulf Air, now solely owned by Bahrain. The airline recently hired a new chief executive known for creating profitable airlines with a regional focus. Traffic for Qatar Airways and Etihad, measured in revenue passenger kilometres, both grew in the double digits last year, above the industry norm.
"They blew the world average away," said Mr Flint. Neither disclosed financial results. Etihad, for its part, is aiming to end its loss-making performance next year after heavy investments in new aircraft and luxury cabins.