OAG Travel News

If you only listened to the news coming out of this week’s Farnborough International Airshow, you wouldn’t believe that airlines are facing what British Airways chairman Martin Broughton said was “the biggest crisis the aviation industry has ever known”. Earlier this week, an airline announced one of the biggest commercial aircraft orders in history – 205 planes worth $43 billion, with half coming from Airbus and half from Boeing. This wasn’t a one-off either – another airline announced an order for 50 new planes at the show.

In fact, British Airways’ “biggest crisis” and these massive orders have one thing in common – oil. While BA is struggling under the impact of a barrel of oil costing almost $150, the producers of that oil in the Gulf region are watching billions of dollars pour into their already swollen bank accounts. It should come as no surprise that the airline buying the 205 planes was Etihad – the airline of Abu Dhabi – and the one ordering 50 was FlyDubai – a new regional no-frills carrier set up by the ruling family of the neighbouring emirate of Dubai.

So what will this all mean for business travellers? Old-school airlines are having to cut back on the number of flights they operate and ground their planes in order to cope with slowing demand and record oil prices. Even the no-frills new kids on the block are being forced to do the same.

By contrast, the rapidly expanding airlines of the Middle East have little to fear about the price of oil. On top of that, many of them don’t have to operate by the same business rules as other airlines. This means they can spend virtually whatever they like to make the on-board service some of the best in the world.

The introduction of so much new capacity into the market over the next decade and a desire by the airlines of the Middle East to expand further around the globe will put more pressure on the fares those old-school airlines can charge. On top of that, the emirates are investing huge amounts in new airport infrastructure.

It seems certain that flying with Etihad via Abu Dhabi or Emirates via Dubai rather than with BA via Heathrow or Lufthansa via Frankfurt will become far more common in the years to come. It’s probably time to start thinking about signing up for their frequent flyer programmes.

Source: http://www.timesonline.co.uk By Mark Frary