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UAE airlines face multiple and growing challenges

Tuesday, July 30, 2019

Significance

The renewed dispute with US competitors adds to the increasingly strong headwinds faced by airlines in the United Arab Emirates (UAE) after a decade of rapid growth. Higher fuel prices, a strong dollar and weaker demand are also squeezing profits, while overcapacity and new competition are forcing a more radical restructuring.

Impacts

  • Etihad’s ongoing losses will continue to fuel speculation over a merger with Emirates.
  • The impact of the Iran crisis may lead to further dissonance between Abu Dhabi and Dubai over aviation policy.
  • Growing competition with Turkish Airlines is adding to already complicated relations between the two countries.
  • The tourism bump expected from Dubai’s hosting of the World Expo in 2020 will provide at least some temporary relief.
  • The positive long-term outlook for passenger traffic from Asia will also be reassuring.
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