Are the Gulf's skies becoming too crowded?

The likes of Emirates, Qatar Airways and Etihad Airways are seldom out of the spotlight but recently Oman Air has been fighting for column inches with its plans for expansion. The airline will launch its first European route, to London, this autumn and, like so many of its larger rivals, it is hell-bent on ramping up its fleet size, with plans in place to double its number of aircraft to 25 by 2011.

A sober lesson

Oman Air's ambitions are never likely to reach the giddy heights of some carriers but its regionally focused network could be expanded significantly to include several other European and South East Asian routes. But the airline should tread very carefully as it moves forward because it needs to look no further than Gulf Air, in which Oman's government had a 50 per cent share until recently, to see that not every Gulf based carrier is rapidly building up its list of international destinations.

Gulf Air is one of the oldest airlines currently operating in the GCC but the advent of new, well-marketed carriers flush with cash and full of ambition has eaten into the airline's share of the market and, over the years, one by one, three of its four original partners - Qatar, Abu Dhabi and, now, Oman - have gone off to form their own airlines.

But now Gulf Air is in real trouble. It is said to be haemorrhaging more than $1m a day and has embarked on a major cost-cutting exercise. The Bahraini flag carrier's fleet size is to be reduced, its number of routes has been cut back and more emphasis has been placed on regional flights rather than long-haul destinations. A stringent programme of job cuts was shelved after the country's Crown Prince declared that no Bahraini national would be made redundant.

Could it happen again?

But if such a well established carrier can find itself in such a fix, it is possible other airlines could face similar consequences, especially considering that there are so many huge airlines located in such a small geographic region.

The UAE is about a third of the size of the UK and yet it alone currently has two major airlines with global aspirations in Emirates and Etihad and a fast growing budget carrier in Air Arabia. But there is also the yet to be launched RAK Airways and now the newly unveiled Kang Pacific, which will roll out services from Fujairah this October using leased 20 year old aircraft. If this wasn't enough, Doha, the home of the hugely ambitious Qatar Airways, is less than 200 miles away from Abu Dhabi, Etihad's hub.

Despite the close proximity of so many airlines, the order books of the Gulf's main flyers are also immense, with Emirates having committed more than $30bn to new planes and Qatar Airways well over $20bn. Some aviation experts have expressed concern that such rapid and aggressive expansion could leave these airlines exposed if the arrival of these new aircraft, which will occur over several years, were to coincide with a recession in the industry.

The recent slump in world stock markets as a result of the subprime mortgage crisis in the US sparked fears from some pessimistic quarters of the start of a possible global recession and, while that may seem remote, if it were to happen the travel industry will be a sure-fire casualty of belt-tightening. A number of prominent Gulf based airlines could then find themselves receiving planes they don't really need at that point in time.

Low-cost advantages

Speaking at a press conference in Dubai earlier this year, Qatar Airways CEO Akbar Al Baker suggested that the budget airline concept wasn't really suited to the Gulf region and inferred one or two low-cost carriers might soon have to make some 'painful decisions', while established flag carriers should all be able to maintain their expansion policies.

But if a downturn in the aviation sector were to occur, the low cost base and aggressive pricing strategies of budget airlines ought to hold them in good stead to deal with the need to economise. Indeed, the Gulf's lifeblood is its low-paid expatriate workforce and the more familiar no-frills airlines like Air Arabia and Kuwait's Jazeera Airways will surely always attract a steady flow of passengers on their routes to the likes of India, Pakistan, Iran, Syria and Egypt. But it would be interesting to see how the Kang Pacifics of this world would fare in a subdued market.

As Oman Air looks to expand in an already highly competitive marketplace, it would do well to see that effective growth strategies are invariably more steady than spectacular. The Gulf's skies may be becoming increasingly crowded but that doesn't mean one of the region's many established, or start-up, airlines couldn't inadvertently end up flying a little too close to the sun.