Air Arabia shelved plans for more bases outside of Sharjah—one of the United Arab Emirates—mainly because of the political situation and had to redirect growth to other markets. CEO Adel Ali says it is unlikely that will change any time soon. But as long as new routes can be developed from its Sharjah base, Air Arabia is still in good shape compared to others.
The situation is far worse for Gulf Air, one of the region's oldest airlines. Shortly before his long-expected departure, then-CEO Samer Majali renegotiated large aircraft orders with both Airbus and Boeing in light of its precarious state. The airline cut its orderbook dramatically as it retreated from an ambitious expansion plan.
The new agreement between the airline and Airbus “ultimately permits” it to convert an order for 20 Airbus A330-300s into a new commitment for eight A320s and up to 16 A320NEOs. The A320s are to be delivered before year -end and the NEOs will arrive in the “latter part of the decade,” says Gulf Air.
The carrier also is likely to reduce its Boeing 787 order. It had 16 787-8s on firm order and is reducing that to 12-16, depending on “strategic requirements,” it says.
Gulf Air has been recording huge losses for some time, with periods of expansion interspersed with restructuring efforts, and it has suffered from legacy problems. The airline was once jointly owned by Qatar, Bahrain, Abu Dhabi and Oman, but eventually all shareholders except Bahrain pulled out. It went through a series of management changes that took it from downsizing to rapid growth and back to downsizing again. A cost-savings program initiated by Majali showed some effect in 2010. But, like Royal Jordanian, Gulf Air has had to suspend a significant number of routes lately due to regional unrest and violence in Bahrain.
One of Majali's major achievements in addition to the fleet downsizing agreement is avoiding a merger of Gulf Air with Bahrain Air, another local airline in serious financial trouble.
With Etihad, Qatar Airways and Emirates much less exposed to the regional markets than their smaller peers, the Arab Spring has also been less of a challenge for them. The Big Three have access to fresh money when they need it, too, although infrastructure is an issue they all face.
Emirates has the most pressing need to grow airport capacity, and it made a major step forward in early January through the opening of Concourse A at Dubai International Airport, the new home base for its A380 fleet. Concourse A will be phased in slowly to allow for teething problems to be resolved.
Runway capacity remains a constraint, however: Dubai International Airport has two runways on which aircraft cannot operate independently due to their close proximity, and Emirates can only move to the new World Central Airport once it is big enough to handle the carrier's entire operation.