Profit and loss of airlines worldwide 2010-2022

Although the global air travel industry was booming, the coronavirus (COVID-19) pandemic hit it hard. The loss in global commercial aviation profit is expected to reach another 51.8 billion U.S. dollars in 2021, after a loss of 137.7 billion U.S. dollars in 2020. On the other hand, prior to the COVID-19 shock, it was estimated that the commercial airline operations during 2020 would generate over 29 billion U.S. dollars. In regional dimensions, the Middle Eastern and African carriers reported combined losses even before the COVID-19 shock.

Middle Eastern airlines before and in the aftermath of COVID-19

The Middle Eastern airline companies have an ambitious plan to shift the center of global air transport towards their local region. The region’s largest carriers – Emirates, Etihad, and Qatar – exert high effort to position their respective countries as central hubs for intercontinental travel. Yet, the dynamics of global commercial airlines create a fiercely competitive environment difficult to resist. Up until around 2016, the region was consistently the fastest growing but the emergence of the coronavirus pandemic further worsened the profitability scenario in the Middle East. In 2020, the Middle Eastern airline groups incurred a net loss of just under seven billion U.S. dollars.

Reasons for low profits in the Middle East

Analysts provide several reasons for the low profits of Middle Eastern airlines. One reason is a decline in demand relative to capacity. For example, Qatar Airways increased their available seat kilometers in 2019, while the number of passengers they carried slightly increased. Regional geopolitical tensions is one reason often given for this decline, both through direct effects (such as the Qatar blockade which commenced in 2017) and the indirect effect of leading passengers to not want to travel through the region. Other analysts argue that the large Middle Eastern airlines are simply less concerned with profits than their western counterparts, as they are owned by oil-funded governments who are more focused on gaining market share than profitability. Regardless of reasons, airlines in the Middle East are significantly less profitable than the industry average.