Here’s why the growth of the Middle East’s airline industry augurs well for tourism
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The Middle East’s airline industry is thriving more than ever, fueled by a strategic shift by regional governments recognizing its potential as a powerful economic driver by prioritizing investments and initiatives.?
According to the International Air Transport Association (IATA) , in 2023, airlines in the Middle East recorded a 33% increase in air passenger traffic compared to 2022.
This impressive growth is also fueled by a confluence of factors, including the Middle East’s strategic location as a global transit hub and the region’s dominance of world-renowned airlines.
AIRLINES’ CRUCIAL ROLE
Investments in the airline industry are strategically linked to tourism, fostering a symbiotic relationship where the thriving sector unlocks the region’s vast tourism potential.
About 58% of international tourists travel by air, highlighting the industry’s crucial role in fueling tourism growth. This shared prosperity is evident in the economic impact.?
Tourism contributes $8.8 trillion to global GDP and supports 319 million jobs. The World Travel & Tourism Council forecasts this number to climb to 421 million by 2029. Air travel plays a vital role in job creation within tourism, with an estimated 19.6 million jobs across hotels, restaurants, attractions, and local transport depending on foreign visitors who arrive by plane.?
“The two industries are closely linked. As tourism flourishes, so does demand for air travel, and as countries open their skies for air travel, so does the demand for tourism,” says Adel Al Ali, Group CEO of Air Arabia .
In addition to boosting tourist numbers and visitors, these industries also bolster local retail, hospitality, and entertainment sectors while generating employment opportunities.
It is the critical enabler of the tourism ecosystem. “The tremendous development of the sector in the last few years and the recent strategic moves will have a positive spin on achieving Vision 2030 targets in the tourism sector and its benefits, especially in economic areas,” says Cav. Francesco Pavoni , Partner at the Automotive, Transportation and Infrastructure Practice, Kearney Middle East and Africa .
“Wider connectivity with places such as Europe and China, new airports development, the launch of new carriers and fleets growth will activate further growth in the tourism sector for the Middle East.”
Middle Eastern airlines are starting operations on new routes to gain an edge over untapped markets.
Earlier this year, Etihad Airways unveiled ambitious expansion plans focused on extending its global reach and offering passengers more travel options. The airline expanded its reach in the US, Africa, and India. Qatar Airways, another major regional player, also announced new destinations in Uzbekistan, Portugal, Italy, and Germany.
BUDGET-FRIENDLY TRAVEL
However, there are several challenges in the region. One of the main hurdles is affordability. Economic woes are deepening in the region, with the World Bank downgrading its 2024 growth forecast to a meager 2.9%. This follows a year of already sluggish growth.
With tighter budgets, attracting tourists who can afford to travel becomes a significant challenge. A 2021 GlobalData survey reinforces this concern, with 58% of respondents citing cost as the biggest factor when booking holidays.
A potential silver lining is the rise of low-cost carriers (LCCs), which offer significant savings, with typical fares up to 60% less than traditional airlines. This, combined with the growing trend of “affordable luxury,” could make Middle Eastern vacations more accessible to budget-conscious travelers.
Ali says the recent resurgence of air travel has increased the appetite for travel to regional and international destinations.?
“Low-cost carriers like Air Arabia have been instrumental in catering to the needs of a broader customer base through our multi-hub business model, the value-added product we offer, and our competitive fares. The low-cost business model focuses on cost and operational efficiency, providing airlines with a competitive cost structure.? Recent data show that low-cost carriers now make up nearly a third of global airline capacity.”
领英推荐
Chris RB Brown , Partner and Head of Strategy at KPMG Ireland , states that traditional carriers on long-haul routes should consider route-optimized cabin configurations, including an increased number of premium economy seats, and evaluate the continued relevance of first-class offerings.
SUSTAINABILITY
According to Ali, environmental concerns also take center stage for eco-conscious travelers. It’s the first global industry to set a net-zero emissions target by 2050. This ambitious goal underscores the industry’s commitment to balancing economic growth through global connectivity and significantly reducing its climate impact.
Ali explains that multiple initiatives are underway to achieve this goal. Many airlines are replacing older aircraft with new models that can reduce emissions by up to 25%.?
Although Sustainable Aviation Fuels (SAF) currently account for less than 1% of the fuel mix, they hold significant potential to lower emissions throughout their lifecycle, from production to usage.
Ali says Air Arabia remains fully committed to sustainable practices through its ESG. Its commitment extends to its business model: a new Airbus order for fuel-efficient A320 family aircraft promises a 10-12% reduction in fuel consumption and replacing single-use plastics with sustainable alternatives.
“The shift to recyclable or biodegradable cutlery and packaging materials to serve food and snacks on all flights has significantly reduced our plastic waste.”
Pedro Aguas Fernandez , Principal at the Automotive, Transportation, and Infrastructure Practice at 科尔尼 Middle East & Africa, states that the industry can ensure sustainable tourism-focused strategies?
with higher fuel efficiency aircraft, carbon offsetting programs, and alternative fuels.?
“Additionally, airports strive to reduce their environmental impact by adopting renewable energy sources, deploying electric ground fleets, and providing facilities for sustainable fuels like SAF.”
TOURIST-ATTRACTING STRATEGIES
Brown says that when airlines implement tourist-attracting strategies, the key factors are route networks and pricing.“Much Middle East traffic for long-haul markets is still funneled through a few hubs. Long-range, single-aisle aircraft should enable the expansion of more point-to-point routes,” he adds. “Airports may have less direct control than airlines, but there needs to be broader national coordination. For instance, there is little point in establishing new routes to countries where even short-stay tourists must undergo extensive visa paperwork.”
Pavoni suggests that airlines should expand and modernize their fleets to prepare for impending growth, adapt to more flexible business models that cater to diverse tourist profiles, and explore adjacent segments (such as private aviation, which is expected to surge in the coming years) in coordination with new destinations.
“Airports will also play a vital role in expanding services and facilities. Partnerships with local and international entities can accelerate tourist attraction, tapping into further tourist sources, such as interline agreements.”
Today’s travel experiences prioritize convenience and efficiency. Airport designs and facilities must enhance efficiency for operators and customers, thereby saving time and providing a hassle-free experience, says Ali. By implementing innovative smart airport initiatives and leveraging advanced technology, such as biometric boarding and contactless check-in, the overall customer experience can be significantly improved.
Airlines are also offering flight passes to their passengers. For a flat fee, passengers can book routes without restrictions, make changes or cancellations without penalty, and fly as often as desired, depending on the duration of the pass purchased.
Partnerships between airlines, airports, and other travel stakeholders can be used to attract tourists. Aguas says that ecosystem partnerships between DMCs, carriers, airports, and destinations are in higher demand as tourists increasingly look for seamless travel.
“Planning an integrated customer-centric journey will deliver higher value across the entire value chain. When we think of visitors in the Middle East, we must consider the different segments beyond leisure. For example, religious and business-related travel is a relevant and growing share of the visits. In this sense, the aviation sector must remain connected to the wider travel landscape from booking and visa requests to transportation and hospitality.”
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