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Published on : Wednesday, January 6, 2016
The global aviation industry is expected to post good growth in 2015 which can be attributed to several factors such as stronger global economic prospects, high load factors, and lower fuel prices. North America, which is largely dominated by the US, a market where legacy carriers significantly dominate, is expected to contribute more than half of the cumulative profit.
The top-three leading full service carriers in the US have accused the state-owned Middle East full service carriers that the subsidies (US$42 billion over the last decade) received by them from their governments are enabling them to charge lower prices to customers. The move is aimed to prevent competition from the Gulf carriers on transatlantic routes. The three US carriers called for talks between the US and their governments (UAE and Qatar) to end the alleged subsidies or to prevent more flights from these Middle Eastern carriers from arriving in the US. However, the Middle East carriers denied the allegations and in turn made a statement that leading US-based full service carriers received benefits (US$70 billion since 2000) in the form of bankruptcy protection and pension guarantees
Globally FSCs have been facing a threat from low-cost carriers (LCCs) over the past few years but the affect has been most felt in Asia-Pacific. Due to this, FSCs capacity in Southeast Asia increased only by 43% during 2004-2014 and this expansion in capacity is largely contributed by Gulf carriers as many flag carriers in the region are restructuring their operations to face LCCs. Major airlines including Singapore Airlines, Philippine Airlines, Garuda Indonesia, Thai Airways, and Malaysia Airlines have cut down their expansion plans on long-haul routes and are focusing on Asia-Pacific
As the Middle East carriers strengthened their presence by offering one-stop services from Europe to various markets including Southeast Asia, Australia and India, the European FSCs such as Air France have diverted their capacity to more attractive markets, particularly the North Atlantic region