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Middle East Aviation Market
Frost & Sullivan, Aug 2009, Pages: 69
Frost & Sullivan's Financial Benchmarking and Analysis (FBA) service presents various trends and outlook for the global aerospace and defense industry. It is a comprehensive study encompassing various segments with in the market. This study presents a holistic view of the Aviation sector in The Middle East Region.
Research Overview
This Frost & Sullivan research service titled Middle East Aviation Market provides an analysis of key market drivers, industry challenges, and trends that are impacting the market. In this research, Frost & Sullivan's expert analysts thoroughly examine the following sub-segments: commercial aviation, aviation infrastructure, business aviation, MRO, aircraft leasing and support services.
This analysis is available through our Financial Benchmarking in the Aerospace and Defense Industry subscription. With continuous access to intelligence and resources from all seven perspectives of the Complex Business Universe, the Growth Partnership Services program ensures that you and your Growth Team™ are able to maintain a 360 Degree Perspective of the market. This comprehensive, objective information allows your company to mitigate risk, identify new opportunities, and drive effective strategies for growth. For more information on this custom subscription service, please click here.
Market Overview
Middle East Aviation Market Remains Upbeat Despite Recession
The Middle East aviation market is one of the fastest growing markets in the world, enabling the region to diversify beyond the oil and gas sector. The ripple effects of the high growth in the sector have been felt in the financial services, tourism, and real estate domains. Compared with other regions, the aviation sector in the Middle East has performed better during the recession, and its influence has been growing by leaps and bounds in the global aviation market. Foremost among the drivers for the market is the favorable macroeconomic environment in the region. 'There is a high positive correlation between air travel and the level of economic activity in the region since GDP would relate to consumer spending and hence positively impact the demand for air services,' notes the analyst of this research service. 'Thus, a GDP growth in the Middle East will ensure that the region’s aerospace sector would outpace the rest of the world.'
Apart from this, the strategic geographical positioning of the Middle East has proved to be highly advantageous. It lies in the center of the world, equidistant from Asia Pacific and North America, attracting a large portion of transit traffic in the years to come. The region’s massive oil reserves enable it to serve as a refueling base for most airlines across the world. Considering the rapid pace of development of airport and cargo infrastructure in the Middle East, the region is poised for a larger role in the global transportation and logistics industry. Aviation infrastructure in the Middle East region has not been in sync with the fast-paced growth of airlines in the past, leading to crowding of the airspace in the region. Efficient capacity management is critical for moving market prospects forward.
Providing a Leg-up for LCCs can Help Accelerate Market Momentum
A prominent trend impacting market dynamics during recent times is the growth of low cost carriers (LCC). Growth in this segment will result in deeper penetration of commercial aviation into underserved areas. This will necessitate the establishment of low-cost landing strips and smaller airports. The sector on the whole has grown in a disorganized manner, with inequitable growth in the region. Development has taken place in small catchment areas and most of them overlap, leaving large regional pockets uncovered by the sector. The setting up of low cost infrastructure in such areas must be prioritized. It is vital for the aviation sector to percolate into the entire region to achieve sustainable growth.
In the Middle East, the Government’s stake in aviation projects tends to be high. Though some aviation markets such as Dubai have introduced reforms for the sector, the region’s tight regulations and restricted traffic rights have reined in market progression. In the future, private investment is expected to gather steam in the aviation space in the Middle East. 'Regional regulations do not promote adequate financial and operational transparency, which is a hindrance for attracting private investment,' says the analyst. 'If the respective authorities do not address the issues relating to deregulation and privatization, the aviation sector could be a facing a key restraint.'
To succeed, the Middle East’s aviation sector needs a clear vision and a commitment to confront the risks associated with ill-conceived and uncoordinated deregulation initiatives at the various country levels. The Middle East is among the few regions promising growth in the highly turbulent aerospace domain, and proper strategizing will see the market emerge stronger after the recession.
Market Sectors
Expert Frost & Sullivan analysts thoroughly examine the following market sectors in this research:
- Commercial aviation
- Aviation infrastructure
- Business aviation
- MRO
- Aircraft leasing
- Support services
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