OAG Unveils Analysis of India and the Middle East Aviation Markets

SINGAPORE, Nov. 22, 2011 /PRNewswire/ -- OAG, the global leader in aviation intelligence and a UBM Aviation brand, today released the results of the OAG India and the Middle East Aviation Market Analysis, which reveals a striking contrast of opportunities and challenges in two of the world's fastest-growing travel markets.

With consistently growing demand for air travel, a surge in aircraft orders, steadily increasing inbound tourism, spectacular airport development plans and the enthusiasm of investors for the sector, the Indian and Middle Eastern commercial aviation sectors are expected to achieve overall annual growth of 9% and 10% respectively for several years to come, and together will account for 11% of the world's total aircraft deliveries over the next decade. However, both markets face immense challenges in meeting the expected future growth in passengers and aircraft operations, which require massive expansion of infrastructure and high-performing aviation systems.

The Middle East

In the Middle East, airlines, airports, and air traffic control will need to successfully serve more than four times the 120 million passengers served this year -- yet even the existing aviation systems do not fulfill current demand. In many Middle East countries, aviation systems' quality and efficiency levels are well below international markets such as Europe and Asia. Heavy regulation also has resulted in limited service in terms of route frequency and destinations, as well as high consumer prices.

"In the Middle East, markets such as Dubai have set the stage for reforming their aviation systems, and the region has demonstrated its ability to develop world-class aviation players, such as Qatar Airways and Etihad. However, the region's slow rate of liberalisation and the uncoordinated regional competition for passengers are barriers to continued reforms," said Mario Hardy, Vice President - Asia Pacific, UBM Aviation.

India

In India, the government's open-sky policy has attracted many foreign aviation leaders to enter the market, spurring rapid industry expansion boosted by the growing population and an the increased demand for international travel and trade, as well as an increasing VFR (Visiting Friends and Relatives) market. However, airlines must contend with insufficient infrastructure and challenging political bureaucracy. It is estimated that in the next decade the Indian market will absorb approximately 316 commercial jets and need three times the number of airports that it has today, whilst at the same time the country doesn't have enough skilled labour to maintain or to fly the aircraft. Additionally, intense foreign competition prevents domestic carriers from international expansion, deeply affecting balance sheets.

"India is amongst the world's most promising aviation market, and the region has already taken steps to address some issues through the recent privatization of airports. Skilled aviation personnel in developed nations with stuttering economies may want to look east for opportunities, but the region is not without risk -- there is significant progress yet to be made in airport modernisation, aircraft maintenance, pilot training and air cargo services. It remains to be seen whether the Indian aviation industry can handle the region's relentless growth, with its Middle Eastern, oil-rich neighbors all too keen to take on more capacity with new fleets of super-jumbos based in the Gulf and hundreds more on order," said Hardy.

Summary

The OAG market analysis of India and the Middle East concludes that in order to cut costs, boost efficiencies and spur competition, mergers of the more than 30 competing airlines in the Middle East and India will be necessary. However, mergers of the Middle East carriers are unlikely in the short term because most are government-owned, and therefore more likely to form alliances due to the geographical proximity of many of the carriers including Saudi Arabia Airlines, Qatar Airways, Gulf Air, Fly Dubai, Emirates Airlines and Etihad Airways, all being within 500 miles of each other. These alliances can offer carriers opportunities normally afforded by a merger, such as access to new routes and efficiency savings.

In India the first step toward carrier consolidation is already complete. On June 1, 2011, the merger control provisions of the Competition Act 2002 were brought into effect, allowing "acquisitions of one or more enterprises by one or more persons or merger or amalgamation of enterprises." While this is a significant milestone, companies undertaking mergers or acquisitions must prepare for the challenges:  with more competition in the aviation market, fares will soon be slashed, and the resulting low margins will not cover all expenses and costs, which will create a situation when many of domestic airlines simply will stop operating. Only mergers and acquisitions can solve the problem, but the competitive nature and national pride of the Indian region are currently standing in the way.

A more detailed review of the OAG Analysis of India and the Middle East Aviation Markets -- including information, commentary and charts about specific events and regions worldwide -- is available to download now at http://www.oagaviation.com/Solutions/Reports-Guides/IME/IME.  

OAG also publishes the monthly OAG FACTS (Frequency and Capacity Trend Statistics) report, which provides a visual snapshot of airline activity around the world and uses interactive graphs to display 10-year performance trends, sourced from OAG's consolidated database of global airline schedules. OAG FACTS reports can be accessed at www.oagaviation.com/OAG-FACTS/.

About OAG

OAG, a UBM Aviation brand, is the trusted source for aviation information and analytical services, with data sourced from OAG's comprehensive and proprietary airline Schedules, Flight Status, Fleet, MRO and Cargo Logistics databases.  Our airline schedules database holds future and historical flight details for over 1,000 airlines and more than 4,000 airports. Our aggregated data feeds the world's global distribution systems and travel portals, and drives the internal systems of many airlines, airports, air traffic control systems, aircraft manufacturers, and government agencies around the world.  For more information, visit www.oag.com.

About UBM Aviation

UBM Aviation, a UBM company, brings together buyers and sellers of air travel and transport through our portfolio of products and services.  We specialize in the supply of data, analytics, consulting services, events and media related to the global aviation industry. Our leading brands include the official provider of aviation data and analytics, OAG;  a leading provider of solutions for the air freight industry, OAG Cargo; the world-renowned provider of airport route development forums, marketing and networking events, Routes; the leading route development consultancy firm, Airport Strategy & Marketing (ASM); an international program of aviation exhibitions and conferences including the Airline Purchasing & Maintenance Conference & Expo; and must-read aviation publications such as Aircraft Technology Engineering & Maintenance and Airline Fleet Management.  For more information, visit www.ubmaviation.com.

SOURCE UBM Aviation