Études de l’Ifri EMIRATES AIRLINE, ETIHAD AIRWAYS AND QATAR AIRWAYS Global Airline Companies Promoting the International Position and Reputation of Dubai, Abu Dhabi and Qatar Julien LEBEL July 2019 Turkey and Middle East Program The Institut français des relations internationales (Ifri) is a research center and a forum for debate on major international political and economic issues. Headed by Thierry de Montbrial since its founding in 1979, Ifri is a non-governmental, non-profit organization. As an independent think tank, Ifri sets its own research agenda, publishing its findings regularly for a global audience. Taking an interdisciplinary approach, Ifri brings together political and economic decision-makers, researchers and internationally renowned experts to animate its debate and research activities. The opinions expressed in this text are the responsibility of the author alone. ISBN: 979-10-373-0046-1 © All rights reserved, Ifri, 2019 How to cite this publication: Julien Lebel, « Emirates Airline, Etihad Airways and Qatar Airways: Global Airline Companies Promoting the International Position and Reputation of Dubai, Abu Dhabi and Qatar », Études de l’Ifri, Ifri, July 2019. Ifri 27 rue de la Procession 75740 Paris Cedex 15 – FRANCE Tél. : +33 (0)1 40 61 60 00 – Fax : +33 (0)1 40 61 60 60 Email : [email protected] Website: Ifri.org Author Julien Lebel holds a Ph.D. in geography from the French Institute of Geopolitics (Institut français de géopolitique - IFG) at the Université Paris 8. His research centers on civil aviation and especially on how political actors use air routes to gain influence and promote their interests at various geographic levels. He is more generally interested in transport networks, regional development issues and international relations. Summary Airports in the Gulf emirates are major transit hubs in global airline networks today. Apart from their “advantageous” geographical location, their development results primarily from the ambitions of political actors seeking to maintain their power. This has led especially to the creation of the “Gulf companies”, namely Emirates Airline (Dubai), Etihad Airways (Abu Dhabi) and Qatar Airways (Doha). However, the three emirates are not following identical strategies. Within the unstable context of the Middle East, it is important to look at the development dynamics of these companies which symbolize the global reach of small but powerful political entities on the international stage. Table of Contents INTRODUCTION .................................................................................... 9 FROM THE TRUCIAL STATES UNDER BRITISH PROTECTORATE TO THE EMERGENCE OF POWERFUL INDEPENDENT ENTITIES ........ 11 The rise of air transport issues in the Gulf amidst local rivalries ....... 11 The creation of the Gulf emirates: a process marked by the evolution of British interests ......................................................................... 11 The early development of air transport provided financial rents and legitimacy to the power of the reigning families ......................... 13 Development strategies to ensure the continued power of ruling families .................................................................................................... 16 From the discovery of hydrocarbons to the management of powerful sovereign wealth funds .................................................................. 16 Successful integration into the networks of contemporary globalization21 THE SPECIFIC OBJECTIVES AND DEVELOPMENT DYNAMICS OF EACH TERRITORY .......................................................................... 29 Dubai: a global hub strategy supported by careful branding .............. 29 A boom bucking global trends ........................................................ 29 The construction of a global hub based especially on the growth of traffic flows ............................................................................... 32 Abu Dhabi: the imperative of maintaining cohesion in the Federation of the United Arab Emirates, in an assumed framework of leadership .... 34 Persistent rivalry with Dubai ........................................................... 34 The challenges of maintaining cohesion in the Federation ................. 36 Qatar: freeing itself from an unstable regional environment through all-out diplomacy ..................................................................... 39 Strong political will allied with large revenues from the gas industry . 39 Building multiple partnerships accompanied by a growing international influence ....................................................................................... 41 THE GROWTH OF GULF AIRLINES AND ASSOCIATED HUBS: AN IMPORTANT FACTOR IN THE TRANSFORMATIONS OF GLOBAL AIR CONNECTIVITY ............................................................................ 45 Emirates Airline, Etihad Airways and Qatar Airways Julien Lebel A much-debated disruption of airline networks ................................ 45 Strategic challenges in air transport competition and connectivity ..... 45 The Gulf airlines as tools of soft power ............................................ 47 The sustainability of the Gulf hubs in question .................................... 49 Conflicts and tensions that are not without consequences for air traffic throughout the Middle East ............................................................ 49 Future developments of the Gulf airlines faced with competition and the lack of sustainable models ................................................. 53 CONCLUSION ...................................................................................... 61 8 Introduction The interest shown by some leaders of the Gulf emirates for civil air transport emerged well before the appearance of massive financial rents which have today allowed Emirates Airline, Etihad Airways and Qatar Airways to sustain their development strategies. The importance for the British to maintain maritime and air routes through to the Indian subcontinent up to its independence gave the Persian Gulf a certain strategic importance. Today, the emirates of Dubai, Abu Dhabi, and Qatar are pursuing ambitious strategies in the airline industry, within the context of the rivalry between Saudi Arabia and Iran. But they are also pursuing economic diversification and asserting themselves on the international diplomatic scene. The growth of the Gulf companies is not without consequences for other carriers, both in the Middle East and in other continents. It is also leading to a real transformation of global airline connectivity. The various airline companies which connect the Gulf emirates to other countries reflect the contacts and the interdependency which have developed between different actors across the globe. This is taking place against a background of rising tourism flows (mostly in transit), of strengthening diplomatic and security cooperation, as well as of deepening investments by the sovereign wealth funds of the Gulf in third-party states. A rising number of international actors are therefore concerned by the developments set out here. This study aims to understand the origins and motivations of an unprecedented development in the history of commercial aviation which has given the emirates of Dubai, Abu Dhabi and Qatar a place on the international scene, via the expansion of their world-renowned airlines. It is appropriate to examine the consequences of their strategies and the sustainability of the business of the Gulf companies, especially in view of the regional upheaval that is looming over the coming years. From the Trucial States under British Protectorate to the Emergence of Powerful Independent Entities The rise of air transport issues in the Gulf amidst local rivalries The creation of the Gulf emirates: a process marked by the evolution of British interests By gradually becoming involved in the region that was a strategic transit area to the Indian subcontinent, the United Kingdom played an important role in the more or less rapid assertion of the various Gulf emirates. British influence was particularly marked via the signing of non-aggression agreements at the start of the 19th century, which were put to eminent members of the tribes on the northern shores of the Arabian Peninsula. British interests in pacifying the region were mainly due to the wish to safeguard maritime routes to India. The Bani Yas tribe, based in the region of Abu Dhabi, benefited from British influence in particular, weakening the tribe’s rivals at the time, the Qawasim in the Ras Musandam Peninsula. The latter were relatively powerful in regional maritime trade, and the British sought to limit their rise.1 Abu Dhabi was then able to emerge as the most influential political and military power center on the southern coast of the Persian Gulf, during the 19th century. The sovereignty of Dubai oscillated for a long time between the Bani Yas and the Qawasim, before Dubai left the control of Abu Dhabi to become an autonomous entity. The first non-aggression treaties were put by the United Kingdom to certain leaders on the coast in 1820, when Dubai was not yet independent. However, the British did not hesitate to get new treaties signed in 1835 in order to raise Dubai to the same rank as its neighbors. This strategy of favoring divisions in the region allowed Britain 1. F. Heard-Bey, Les Émirats arabes unis, Paris, Karthala, 1999. Emirates Airline, Etihad Airways and Qatar Airways Julien Lebel to prevent