Can the new Gulf airlines really fly?

Air Arabia is modeled on the successful discount carrier business plan and hopes to emulate the success of low-cost US and European airlines, such as Easyjet and Ryan Air. Its Internet reservation service and demand based pricing structure is straight out of this business model.

It is unfair to cast judgment on a start-up venture but fair enough to examine the challenges it faces. First, will the discounts be big enough to tempt passengers to Sharjah Airport which is a fair hike from downtown Dubai, for example?

Will there be enough flights to enough destinations to win passengers? Can Air Arabia really compete successfully with Emirates, widely admired in the industry as one of the world's best airlines?

Etihad Airways faces a slightly different set of hurdles. It is going for the premium economy, a new innovation in this region, and business passengers and aims to do so with excellent service.

A limousine collection service for premium economy passengers may help to ease the inconvenience of flying from Abu Dhabi for business travelers based in Dubai. And indeed, check-ins at Abu Dhabi can be faster than in larger airports.

But Abu Dhabi is already the home of Gulf Air and that has not prevented Emirates Airline capturing the lucrative UAE business traveler market, even in Abu Dhabi.

There is also a problem of size. Etihad starts with a service to Beirut and will add Damascus soon. It will never have the extensive international network, or even the local network, to compete with Gulf Air or Emirates.

This is what the business traveler requires and demands. Service actually comes second to routing and integrated networks, and that is where Emirates and Gulf Air both score very strongly.

Where both these larger airlines are vulnerable is in pricing. Heavy discounts by Air Arabia and Etihad could make an impact in the regional market.

But with any business start-up the economics of operation are usually pretty finely balanced, and how far the new UAE airlines are prepared to go in cutting prices to gain market share will be interesting to see, and experience.

On the whole, competition in any market is usually a good thing. But in Europe the number of carriers in the market is shrinking and not expanding these days, and surely in due course the Gulf airline market will also consolidate.