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CIR

Gulf Crisis: Six months on

The GCC is facing an unprecedented crisis amid a Saudi-led blockade of Qatar. In June four countries imposed an air, sea and land blockade on Qatar, and now, 6 months on the crisis seems no closer to being resolved.

“It is difficult for us to understand the full extent of the damage inflicted on Doha Hamad by the current situation in the Middle East, as the airport has appeared keen to keep key details under wraps,” Garry Stasiulevicuis, Founder and President of CiR, comments on the fact that the airport authority haven’t released an official monthly PAX number since June, when the crisis initially began. “We know that total international PAX in June declined -14.6%, a significant monthly drop-off considering the crisis began a few days into the month.”

Indeed, further to June’s airport data, Qatar's Ministry of Development Planning and Statistics reported visitor arrivals from Gulf Cooperation Countries declined -18.4% in July, while visitation from other Arab countries decreased -8.9% year on year, so it is certainly having a profound effect.  

“We are sure that most parties involved expected the crisis to blow over reasonably quickly. Several airlines from the participating countries continued to include Qatar in their flight schedules up until mid-August in preparation to resume business as usual, however we are now in December and it is yet to be resolved.”

Analysis from Business Lounge, the market data arm of CiR, shows that already in the first few months since the ban there has been a significant change in the passenger mix at the airport. While the total number of passengers has fallen, some of the void has been filled by nationalities from across the other regions. Between July and September 2016, 60% of PAX departing Doha were from the Middle East and Africa (based on residency), versus only 46% in 2017. Versus the same period in 2016 Europeans have gained 8%, APAC nationalities 6% and Americans 1% of the airport share.

“Looking forward into 2018, this trend is likely to continue,” says Stasiulevicuis. While total departing capacity appears to be down around -13% each month [December 2017 to May 2018], flights into Europe and APAC are up +25% and +19% percent respectively, while capacity to the Americas is also +6% ahead.” 

With 20 airports across the Middle East and Africa now off limits (6 of which – Dubai, Bahrain, Abu Dhabi, Jeddah, Beirut and Dammam – traditionally feature in the airport’s top 15 destinations), Qatar Airways, which now accounts for around 90% percent of flights at the airport, is looking to offset these losses by targeting other key markets.

If the current crisis continues, India, USA and UK look set to be the top 3 destination countries out of Doha, with the UAE and Saudi Arabia closed off along with Egypt, Bahrain and Eritrea. The declines in seats to these countries have been offset to some degree by strong growths to the majority of the other top destinations: India (+22%), Thailand (+12%), Kuwait (+35%), Oman (+25%), Australia (+37%), Germany (+22%), Indonesia (+16%), Sri Lanka (+24%), Italy (+14%), Iraq (+27%), and Turkey (+23%) all seeing robust double-digit growth. However, despite this, total seats departing the airport are still down -13% over the 6-month period.

In August the Qatar Tourism Authority announced that citizens of 80 countries, including India, the UK, the US, and Australia as well as South Africa, Canada and New Zealand, will be able to enter Qatar visa-free, making the state the most open country in the region. “Now more than ever Qatar will be hoping to reap the rewards of this scheme in order to alleviate the damage caused by the sharp declines from the Gulf and Africa,” notes Stasiulevicuis.

Earlier this week members of the GCC were gathered in Kuwait by the Kuwaiti Emir in an attempt to mediate the dispute, but to little avail. Reports from the summit, which ended a day earlier than planned, suggest that despite positive efforts by several of the GCC countries, the current crisis looks likely to remain unresolved for some time, with some news outlets even suggesting that the UAE and Saudi Arabia have taken steps to form a new economic and military partnership separate from the Council.  

The below graph, which charts departing seats by region for the next 6 months versus the same period in 2016-17, with the bubble size indicating market share, illustrates the shift in focus forced upon the airport, with flights to Europe and APAC in huge growth, while traffic within the Middle East has shrunk drastically.

“With the current crisis looking less and less likely to be resolved any time soon, it is important for brands and operators to understand the effect that this will have on their audience in the airport. Already we have seen a drastic change in the passenger mix at Doha Hamad, and it is imperative to keep up to date with how the situation progresses in order to re-evaluate retail offerings if necessary.”

For further information, please contact Simon Best, Business Lounge Director: Simon@counterintelligenceretail.com