Emirates Airline, Etihad Airways and Qatar Airways

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
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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.
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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.

to prevent an important bloc emerging, capable of challenging its maritime

routes.2
Further to the west, Qatar and Bahrain emerged with the settlement of
the Bani Utbah tribe, which included the Khalifa family that is presently
reigning in Bahrain. This tribe originated in Kuwait and decided to settle
on the western Qatari coast at the end of the 18th century. Very quickly, it
took hold of the Bahraini Archipelago and decided subsequently to transfer
its pearl industry which was judged to be more promising in Bahrain.
Kuwait and Bahrain witnessed the rise of a true merchant community with
a certain economic and political influence, whereas Qatar was left behind
in the process. The results are still visible today as Emir Tamim bin Hamad
Al Thani, who is presently the ruler of the emirate, holds all powers and
faces no real challenges from the national population.
The growing influence of the Al Thani family occurred through
alliances with other tribes in the peninsula. This did not fail to provoke
tensions with the Khalifa. Based in Bahrain, they considered that Qatar was
part of their zone of influence. British intervention also proved here to be
decisive in the recognition of Qatar as a distinct political entity from
Bahrain, when the British imposed an agreement on the two neighboring
enemies in 1868. Once again its overall purpose was to pacify the region.3
The rise of the dynasty currently reigning over the Gulf emirates was
therefore grounded in various treaties they signed with the British during
the 19th and 20th centuries. Such agreements have indeed given them a
certain legitimacy to govern over the newly created political entities. This
dynamic helps especially to understand the reality of the blurred line which
exists between government institutions and the families in power: the rise
of both are historically linked.
The survival and autonomy of these small political entities during the
first half of the 20th century resulted primarily from the continued British
presence in the region. In fact, Iran was asserting its own sovereignty at the
time, while Saudi Arabia emerged progressively with the conquests of Ibn
Saud on the Arabian Peninsula. Besides these external forces, internal
threats also weighed on the stability and development of the Gulf emirates.
They are made up of limited and dispersed populations, while fluctuating
allegiances of some tribes with the reigning families weakened certain
leaders. The brutal decline of the pearl economy, which at the time was the
main source of income for many families, followed from the Great
2. C. Davidson, Dubai – The Vulnerability of Success, London, Hurst & Company, 2008.
3. M. Gray, Qatar – Politics and the Challenges of Development, London, Lynne Rienner
Publishers, 2013.
12
Depression of 1929 in the Western countries (leading to falls in demand),

and the arrival of Japanese cultured pearls (causing falling prices). This
affected the local economy substantially.4
To guard themselves against criticism from the local populations, the
British were careful to consolidate the legitimacy of the reigning families,
by setting up a system of concessions providing income to the Emirs. This
provided them with real power, while distinguishing them from the rest of
the population.
The early development of air transport

provided financial rents and legitimacy
to the power of the reigning families
It was notably through the development of air transport that the Gulf
emirates emerged during the 20th century. At the end of the 1920s, the
system of rents set up by the British included the payment of taxes in
exchange for landing rights for aircraft belonging to Imperial Airways, the
predecessor of the British Overseas Airways Corporation (BOAC). To link
Basra with Mumbai, as well as Cairo and Karachi, British planes had to
stop over in the Gulf, where they took on fuel. Whilst some local leaders
were reticent and little inclined to provide landing rights to Imperial
Airways, other Emirs were open to British offers: Sharjah and then Dubai
quickly showed interest, whereas Abu Dhabi and Ras Al Khaimah initially
refused. That explains why the British set up good airport infrastructures
on the lands of Sharjah in 1939, allowing Imperial Airways to operate
flights in the best conditions and thereby making the emirate the only
regional entity to have such infrastructure for several decades.5
For its part, Dubai only received taxes from the landing of seaplanes in
the city's creek. This provided the emirate with a comfortable income, but
did not allow it to rival the dynamism of Sharjah. Said Al Maktoum, the
head of Dubai, did not fail to buy free seats on planes servicing the emirate
with his own funds, in order to support demand artificially and hence
ensure the sustainability of agreements concluded with the United
Kingdom and the numerous advantages which resulted.6 It is therefore
possible to point to the personal involvement of the Emir of Dubai in air
transport, which was already seen at the time as essential to the security
and to the economy of the emirate. This was of course long before the
creation of Emirates Airline in 1985.
4. F. Heard-Bey, Les Émirats arabes unis, op. cit.

5. C. Davidson, Dubai – The Vulnerability of Success, London, op. cit.
6. Ibid.
13
While Sharjah was reaping substantial benefits from its strategic

position in the network of British air routes, Dubai could count on the
presence of an active community of merchant traders based on its territory.
Right from the start of the 20th century, the emirate established proactive
policies to facilitate the settlement of new nationals, notably by providing
land to migrants from Persia, as well as by removing customs barriers.7
Positioned centrally on the Truce coast, between Qatar and Ras Al
Khaimah, Dubai was therefore able to establish itself as a real
redistribution center for the whole of the coast, while at the same time
competing with its Persian neighbor (the port of Lingah) for the transit of
goods to India.8
In the 1940s, Dubai largely overtook neighboring Sharjah as the
emirate became the location of nearly all economic activity on the coast
and experienced strong demographic growth, to such an extent that the
British relocated their regional administration offices from Sharjah to
Dubai. The Al Maktoum family also started dredging the city's bay from
1958 onwards, to enhance the attractiveness of the local seaport and
accommodate larger vessels.9
For Rashid Al Maktoum it very quickly became necessary to set up an
airport in the emirate to support its international role, which Sharjah
opposed, fearing that it would be overtaken by its ambitious neighbor. As
the British did not judge an infrastructure to be necessary, the Emir
financed all the work which was completed during the 1960s. Very quickly,
Gulf Aviation (the predecessor of Gulf Air which is today based in Bahrain)
and Kuwait Airways opened up routes to Dubai, whereas BOAC refused to
fly to the emirate because it was judged uneconomic. The British company
did finally open up routes, as Emir Rashid carried forward the strategy of
his father of buying up advanced seats in BOAC flights and so personally
ensuring the company would sell at least 60% of its seats on roundtrips,
this being considered as the threshold required to maintain the operation
of flights.10
In a context of budget restrictions in the UK and the rising
denunciation of imperialist strategies by Western countries in western
public opinion, the British announced their intention to end their presence
in territories situated “East of Suez” in 1967. This decision obviously
concerned the Gulf emirates. The news was greeted with apprehension by
the ruling families, whose power depended mainly on the benevolence of
7. Ibid.
9. Ibid.
10. C. Davidson, Dubai – The Vulnerability of Success, op. cit.
14
the UK, to such an extent that Emir Rashid (Dubai) and Emir Zayed (Abu
Dhabi) tried to negotiate for an extension of a British presence, offering to
finance it entirely. London however stuck to its decision while the emirates
began the laborious negotiations about creating a federation, bringing
together the different entities of the Gulf which had been under British
protectorate. This grouping finally emerged without the participation of
Bahrain and Qatar.
The independence of the Gulf emirates in 1971 marked a strengthening
of individual strategies, which can be seen especially in the airline sector.
Following British withdrawal, the control of Gulf Air was exercised jointly
by the emirates of Bahrain, Qatar, Abu Dhabi and the Sultanate of Oman.11
However, the airline was particularly well-established in Manama. There,
the monarchy was conscious of its limited reserves in hydrocarbons and
very early on emphasized an ambitious policy of diversification to set up
the archipelago as a world financial center.
Kuwait also launched its own national airline – Kuwait Airways – in
1954, when the country began accumulating income from exploiting its oil
and gas resources. However, the reigning families in Kuwait and Bahrain
seem to have been held back in their projects to gain international
influence, which could not be undertaken unilaterally in the face of an
active civil society, mobilized in more democratic institutions than those of
Qatar and the United Arab Emirates. The Iraqi invasion of Kuwait at the
beginning of the 1990s, the constant shadow of Iran in Bahrain and its Shia
majority facing a reigning Sunni family led the local leaders to concentrate
their actions in other areas. Air transport was left aside, leaving the way
open to competition based in neighboring emirates.
Unable to be satisfied with the shared links of Gulf Air between the
various emirates, Dubai, Qatar and Abu Dhabi then each launched their
own airlines in turn, over which they were to have total control. Revenues
from oil and gas (especially in Qatar and Abu Dhabi) and the emergence of
a commercial hub in Dubai, have provided the three emirates with
significant resources to use in pursuing ambitious development projects.12
Emirates Airline (1985), Qatar Airways (1993) and Etihad Airways
(2003) now stand out as real strategic tools for policies implemented by
their home-based territories. This is particularly true economically, as the
11. P. Hooper, S. Walker, C. Moore, Z. Al Zubaidi, “The Development of the Gulf Region’s Air
Transport Networks – The First Century”, Journal of Air Transport Management, Elsevier, 2001,
pp. 325-332.
12. K. Ulrichsen, “Gulf Airlines and the Changing Map of Global Aviation”, Center for the Middle
East, Rice University’s Baker Institute for Public Policy, 2015, available at:
https://scholarship.rice.edu.
15
development of the aviation sector supports the diversification of the

emirates’ activities (the promotion of tourism or financial sectors), while
the existence of a global air network spreading from each entity reinforces
their international visibility. At the same time, the new air links illustrate
the interdependent relations that are developing with many other states
worldwide.
Development strategies to ensure

the continued power of ruling families
From the discovery of hydrocarbons to the

management of powerful sovereign wealth
funds
The independence of the Gulf emirates in 1971 was accompanied by a boom
in oil industries and later in gas. The latter particularly favored the
development of Abu Dhabi and Qatar, while Dubai has been able to rely on
its commercial dynamism, as its hydrocarbon reserves are limited. As a
result, revenues from oil concessions, hydrocarbon exports and trade-
related activities have led to the creation of large sovereign wealth funds in
the region, which are today among the most powerful in the world.
The activities of companies based in Dubai, Abu Dhabi and Doha –
starting with the local airlines – depend on these financial institutions with
which they have more or less direct links: the Investment Corporation of
Dubai (ICD) has owned Emirates Airline since 2008;13 while the Qatar
Investment Authority (QIA) participates directly in the activities of Qatar
Airways. This follows the acquisition by the State of part of the company in
1999, then all of it in 2013 (the firm’s various shareholders have always
been close to power, leaving no doubt about the involvement of Qatari
leaders since the airline’s creation in 1993). Finally, Etihad Airways is
chaired by Hamed Al Nahyan, who is also one of the leaders of the Abu
Dhabi Investment Authority (ADIA).
The exploitation and exportation of oil and gas still account for a large
share of GDP in many Gulf kingdoms. Sovereign wealth funds have indeed
allowed the financing of infrastructure in order to develop activities outside
the oil and gas industries. However, it should be noted that the various
diversification projects carried out depend directly on hydrocarbon
13. “Dubai Moves Ownership of Emirates, Dnata to ICD”, Reuters, December 30, 2008, available
at: https://www.reuters.com.
16
revenues. It therefore remains difficult to envisage the development of new

sectors without real links to energy rents.
Figure 1 sets out a schematic diagram of the system which helps
maintain the stability of the Gulf emirates, particularly Dubai, Abu Dhabi
and Qatar. The strategies implemented by the ruling families are linked,
and are based especially on the large financial reserves available to the
three emirates. These allow them to pursue economic diversification
policies to prepare for life after oil, while the national populations benefit
daily from generous subsidies, thus eliminating all forms of potential social
protest.
The ruling families rely on the image of the economic success of their
territories, which gives them a certain form of legitimacy. At the same time,
their direct involvement in the development of different sectors of activity,
such as air transport, is not subject to any local criticism. Finally, the
leaders of the Gulf emirates are developing a certain form of activism on
the international stage, increasing their global visibility.
The extensive networks deployed by Emirates Airline, Qatar Airways
and Etihad Airways take part in this dynamic process fully. The multiple
existing air routes are a material expression of the bilateral cooperation
and investment which have developed between their home territories and
third-party states. By transiting a large number of international travelers
through their hubs, the Gulf companies are also reinforcing the strategic
nature of these major nodes in international air networks, whose potential
instability would affect many actors outside the region. Partners of the
emirates are in turn more and more inclined to ensure the stability of these
countries, where they have growing interests (commercial contracts,
economic and diplomatic cooperation, etc.).
It is in this specific context that some third powers – primarily the
United States, the United Kingdom and France – have chosen to establish
their military presence in the Gulf emirates. Their involvement allows local
authorities to guarantee their safety, protecting the development of local
activities (extraction of hydrocarbons, growth of the air sector, growth of
tourism, etc.) which are all part of a stable environment.
17
Figure 1. The Stability of the Gulf Monarchies: a Fragile Model with Many Interconnected
Parameters
Through powerful, locally-based companies, the airline sector thus

plays a major role in this global strategy implemented by the emirates of
Dubai, Abu Dhabi and Qatar. While reinforcing certain aspects of the
development model pursued by the local authorities, the Gulf companies
benefit at the same time from the stability of the emirates in order to
extend their activities and reinforce their positioning. This in turn ensures
the hold on power of the ruling families on which the companies are totally
dependent. The chairman of the Emirates Airline Board, Ahmed bin Said
Al Maktoum, is indeed the uncle of the Emir of Dubai, Mohammed bin
Rashid Al Maktoum. Etihad Airways is chaired by Hamad Al Nahyan, half-
brother of the President of the United Arab Emirates and Emir of Abu
Dhabi, Khalifa Al Nahyan. Finally, the iconic managing director of Qatar
Airways, Akbar Al Baker, was appointed in 1996 by Emir Hamad Al Thani
soon after he acceded to power.14
Figure 2 highlights the strategic value of the Gulf monarchies’
territories: on top of important hydrocarbon reserves, the extraction of
which has led to the emergence of major maritime export routes, especially
via the Strait of Hormuz, the opening of many foreign military bases on the
territory of the emirates has become an important factor. External powers
are paying particular attention to the region, as shown by the presence of
the 5th US Fleet in Bahrain, and the activities of Al Udeid's international
base in Qatar which notably includes a US Central Command (CENTCOM)
outpost to oversee ongoing military operations in the Middle East. In
passing, the inauguration of a Turkish military base in Qatar in 2017 is to
be noted, against a background of strengthening diplomatic and economic
cooperation between Turkey and this gas-producing emirate.15 China's
presence in the port of Gwadar in Pakistan also allows the Chinese
authorities to have a regional base without directly establishing themselves
in a sphere of influence which is highly strategic to Western powers.
14. K. Ulrichsen, “Gulf Airlines and the Changing Map of Global Aviation”, op. cit. It should be
noted that Akbar Al Baker is not a member of the Qatari ruling family, even if he clearly has close
links to the emirate’s rulers.
15. “Turkey Sends New Group of Soldiers to Military Base in Qatar”, Daily Sabah, December 27,
2017, available at: www.dailysabah.com.
19
Figure 2. The Gulf Monarchies, Strategic Territories Integrated into Today’s Global
Networks
Successful integration into the networks

of contemporary globalization
The expansion of the Gulf companies' network on a global scale illustrates
the outsized growth of the emirates of Dubai, Abu Dhabi and Qatar
internationally, in view of their limited geographical area and small
populations. It reflects the ambitions of their ruling families and the
relationships developed with other parts of the world.
Far from pursuing identical strategies, which may nevertheless seem
similar in their drive to rely on transit traffic, Emirates Airline, Etihad
Airways and Qatar Airways have adopted specific approaches in extending
their network (Figures 3, 4 and 5). These strategies also differ in their
cooperation with third-party carriers, as shown in Figure 6. Such dynamics
are indicative of the trajectories chosen by the three emirates to stand out
internationally.
Emirates Airline maintains a relatively limited number of
cooperative ventures which can be explained by the strong
development of the company itself and the ensuing broad presence
across the world. The Dubai company has, however, concluded some
“strategic partnerships” with the Australian carrier Qantas in 2012, and
then with Malaysia Airlines in December 2015. This strategy has
allowed the company to consolidate in one of its main markets, which is
Australasia, and to participate fully in strengthening its position along
the Europe – Asia-Pacific axis. In fact, by cooperating with Emirates,
Qantas and Malaysia Airlines have undertaken a major overhaul of
their networks and rely more on the Dubai hub, especially to reach
Europe.16
16. It should nevertheless be noted that Qantas launched a direct flight between Perth and London
in March 2018. It allows travel to Europe from Australia without transiting in As ia or the Middle
East. For its part, Malaysia Airlines currently operates only one direct link to Europe (London)
from Kuala Lumpur.
21
Figure 3. A Map of the Network Operated by Emirates Airline from Dubai (DXB), Summer
2017
Figure 4. A Map of the Network Operated by Etihad Airways from Abu Dhabi (AUH),
Summer 2017
Figure 5. A Map of the Network Operated by Qatar Airways from Doha (DOH), Summer
2017
Figure 6. The Dynamics of Cooperation by the Gulf Companies at a Global Level: Highly
Strategic and Differentiated Links Depending on Carriers
The Abu Dhabi airline, Etihad Airways, distinguished itself from its
two competitors in the Gulf by pursuing a strategy of acquiring stakes
in the capital of other carriers, a few years after its creation in 2003.
This was done to influence the latter’s strategies while ensuring the
rapid development of Etihad Airways on a global scale. However, the
decline in the emirate's revenues, following falling oil prices from 2014
and increased tensions between Saudi Arabia and Iran, have led Abu
Dhabi to review its strategy and its expenditure in different sectors.
Air transport has been particularly affected by these developments, as
in the course of 2017, Etihad successively abandoned its Swiss partner
(Etihad Regional, formerly Darwin Airline) and then Air Berlin, while it
also refused to continue its investments within Alitalia. These three
companies were recording significant financial losses, requiring
constant support from Abu Dhabi. Yet, despite the reconsideration of
certain close partnerships, Etihad Airways continues to maintain
numerous code sharing agreements with different carriers, particularly
in Europe, which ensures large transit traffic via its hub in Abu Dhabi.
It may also be noted that the company still retains its equity
investments in Air Serbia, Air Seychelles, Jet Airways and Virgin
Australia, although these may well evolve.
The strategy pursued by Qatar Airways, for its part, has long been
characterized by growth that does not rely on commercial alliances with
other carriers. However, in recent years, the Qatari company has been
promoting a more frank and aggressive strategy of cooperation with
third-party carriers. This resulted in the entry of Qatar Airways in 2013
into the Oneworld alliance, created in 1999 by British Airways,
American Airlines, Cathay Pacific and Qantas. Soon afterwards, the
company invested in IAG (the parent company of British Airways,
Iberia, Vueling and Aer Lingus) acquiring 10% of IAG’s capital in
January 2015, before expanding its holdings to 20% in August 2016.
Qatar Airways is thus strengthening its influence within Oneworld,
particularly through its investments in various third-party companies
that, for the most part, are joining this alliance: LATAM (10%) in
December 2016, Meridiana (49%, renamed Air Italy) in September
2017, Cathay Pacific (10%) in November 2017, and more recently China
Southern (5%) in January 2019. The attempt of Qatar Airways to invest
in American Airlines may also be recalled, though this initiative failed
to materialize due to strong opposition from the directors of the
American carrier.
26
All in all, Emirates Airline, Etihad Airways and Qatar Airways have
distinguished themselves for more than a decade by unprecedented
development. The extent of the air networks in operation alone symbolizes
the successful integration of the three emirates in contemporary
globalization, while providing the material substance of the multiple
interdependencies that exist today between the Gulf monarchies and other
regions of the world.
27
The Specific Objectives
and Development Dynamics
of Each Territory
Dubai: a global hub strategy supported

by careful branding
A boom bucking global trends

The emirate of Dubai has asserted itself in following the ambitions of
successive leaders who supported the commercial activities located on its
territory since the beginning of the 20th century. Various populations have
been welcomed and have taken advantage of the easing of the emirate's
customs barriers, while Iran was implementing opposite measures at the
same time. In fact, Dubai quickly sought to legitimize its independence
when the British decided to create it as an autonomous entity in 1835. This
led the emirate to implement measures allowing it to differentiate itself
from neighboring entities.17
Immediately following British withdrawal, the attractiveness of Dubai
increased, so that in the 1980s its airport was used by more than 40
airlines operating at least one weekly flight to and from the emirate. Gulf
Air, the main operator out of Dubai airport at the time, was in fact worried
about such opening up. The company set out to convince Mohammed bin
Rashid al-Maktoum, the son of the Emir and officially in charge of
aeronautics, to undertake a review of the emirate's strategy on civil
aviation, threatening to reduce flights drastically. The issue turned out to
be highly sensitive as some observers went so far as to suspect Abu Dhabi,
a shareholder of Gulf Air, of playing a part in such intimidation.18 It must
be said that at the same time, the strengthening of federal institutions after
independence in 1971 was struggling to materialize. Dubai constantly
asserted its autonomy, while refusing to make the slightest concession to
Abu Dhabi to strengthen its political hold on the young Federation of the
United Arab Emirates.

18. Ibid.
In 1984, Gulf Air finally decided to halve its flight schedule to Dubai,
forcing Mohammed Al Maktoum to act. Rather than respond favorably to
Gulf Air's demands, he called on Maurice Flanagan, a British citizen
working for British Airways in Dubai, to create a carrier based in the
emirate. He granted Flanagan $10 million, while naming his uncle, Ahmed
bin Said Al Maktoum, as head of the new company – Emirates Airline.
Having recognized the strong growth of competition at Dubai Airport, the
new team nevertheless tried to convince Rashid Al Maktoum to reconsider
the open skies policy of the emirate, in order to protect the development of
Emirates Airline. The Emir refused this again, considering that it went
against the strategy adopted by Dubai.19
The spectacular rise of Emirates Airline is today a source of pride for
the emirate, which systematically presents the company’s development
model as a reflection of Dubai's global ambitions. The Emirates brand is
visible well beyond the scope of its core activity – air transport – and is
used primarily to promote the image of Dubai abroad as part of a wider
branding strategy. It is indeed interesting to note that the brand has come
to “deterritorialize” Dubai and present the emirate as a separate entity
from the Middle East: a “city state” that is, for many travelers, only a few
hours away by plane.
In this sense, Dubai almost seems to have succeeded in distinguishing
itself from the regional environment in which the emirate is geographically
located, namely being “stuck” between its two powerful neighbors, Saudi
Arabia and Iran. Moreover, Emirates Airline has retained national symbols
with which the local population can identify: the livery of its planes carries
the flag of the Federation. Also, the name “Emirates” itself refers to the
different entities that make up the Federation, although it may be noted
that the Arabic calligraphy is more discreet than the English name
“Emirates” on its aircraft fuselages.
Based on the so-called sixth freedom traffic – the transit of
international passengers via its hub in Dubai – the activities of Emirates
Airline fully coincide with the authorities' desire to promote the emirate as
a trading platform connecting the different global flows. Air transport
currently accounts for nearly 30% of Dubai’s GDP and the authorities are
aiming to increase this share through the expansion of Emirates'
activities.20 Such fast growth is unheard of in the global airline industry;
and even though the company claims today that it has never received any
subsidies – it has published its accounts in a “transparent” way since the
19. Ibid.
20. I. John, “Dubai Aviation Sector Set to Boost GDP Share to 35%”, Khaleej Times, 26 avril 2016,
available at: www.khaleejtimes.com.
30
early 2000s – the role played by the ruling Al Maktoum family has been
instrumental in the success of the carrier's activities.21
When Emirates began operations in 1985, it did not immediately
attract attention. Initially, its network was mainly turned towards the
Indian sub-continent, with some regional services in the Middle East.22
The company expanded discreetly, focusing its activities on point-to-point
traffic, mainly carrying local merchants and expatriate workers on missions
to the Gulf, who were benefiting from the booming oil industry and the
construction sector.
It was only at the turn of the 2000s that the growth of the carrier's
network accelerated appreciably, as Emirates almost doubled its number of
stopovers in Europe, opened its first route to the United States (New York),
deployed its services in different regions in Africa, and sought to conquer
Oceania (opening 5 stopovers in the region in 2002-2004). At the same
time, it strengthened its presence regionally. This development dynamics
has not stopped since, and Emirates Airline seems to take advantage of the
global economic upheavals that have affected its European and American
competitors, especially after the September 11 attacks and the economic
and financial crisis of 2008-2009. The slowdowns in demand caused by
these events indeed forced many companies to review their network and
reduce capacity, while Emirates Airline continued its global expansion
against industry trends: its leaders claim that the supply proposed by the
carrier of Dubai stimulates demand.
It is, in fact, clear that Emirates has been pursuing an expensive
strategy of creating overcapacity on air routes which already have a
substantial supply. Emirates has established itself as a carrier offering
quality services to passengers wishing to travel between Europe and Asia,
via its hub in Dubai. In this way, the company has upset the entire existing
route network and poses important challenges to competing carriers based
on both continents, and even beyond. This strategy translates the need for
Dubai to remain at the top of the various world rankings to support its local
economic dynamism and remain credible in promoting its image
internationally.
21. See in particular the diagram published by the Partnership for Open & Fair Skies, available at:
www.openandfairskies.com/dubai-inc.
22. In 1985, Emirates launched its services towards Karachi, New Delhi and Mumbai, and then in
1986 towards Dhaka, Colombo, Amman and Cairo. Its first two European destinations were
London and Frankfurt in 1987. However, the flights remained infrequent for several years and
were operated with limited-size planes (A310).
31
The construction of a global hub based

especially on the growth of traffic flows
The rise of such a powerful hub has however not been without risks for the
emirate. Following the resulting international openness, it has already
attracted criticisms from regional extremist movements that associate the
transformation of Dubai with a loss of identity, as well as the falling
influence and role of local traditions in the daily life of Emiratis. Such
criticisms accuse the ruling family of accommodating Western imperialism
which threatens the region. At the same time, Dubai is also a gray zone that
can be very useful for those same groups who want to have access to
globalization networks.
This is reflected in particular by the existence of various types of illicit
trafficking that contribute to strengthening the hub politically and
economically. It can be argued that the local authorities even have a certain
interest in the continuation of such trafficking, especially since it provides
income for the emirate and ensures that extremist movements do not
implement their various threats in a territory in which they themselves
have special interests.
The former US Treasury Secretary Paul O'Neil, for example, did not
hesitate to accuse Dubai of being a conduit of Taliban gold, after the radical
group had taken control of Afghanistan in the 1990s.23 Indeed, the United
Arab Emirates granted flight permits to Kabul to small companies based in
Dubai and Sharjah, even though they were openly suspected of
transporting Taliban gold to the emirates for re-export to Pakistan or to
Sudan.
Furthermore, as the Gulf emirates are a major destination for South
Asian expatriate workers who send home a large part of their wages,
remittances in the form of Hawala may be incorporated into gold
trafficking networks.24 This process requires no written record and is
especially popular with workers from rural areas where banking services
are poorly developed. At the same time, sending foreign currency as gold,
which is resold in the country of destination, also offers more attractive
transaction rates than bank branches specializing in financial transfers.
This reinforces Dubai's position as an international hub in gold smuggling
networks.

24. On this, see P. Jost and H. Singh Sandhu, The Hawala Alternative Remittance System and its
Role in Money Laundering, Lyon, Interpol General Secretariat, 2000.
32
Various actors in Dubai, be they businesses or government

institutions, have probably supported the development of these smuggling
networks. At a time when Dubai was less prominent on the international
scene, while the emirate was also carrying large infrastructure projects and
building up its sovereign funds, the rise of such trade provided real
opportunities for local authorities. It can also be pointed out that, at the
same time, neighboring emirates were beginning to benefit from revenues
derived from exploiting hydrocarbons. This made them important
competitors. Their development was a potential brake on the ambitions of
the Dubai authorities, threatening to jeopardize the emergence of the
emirate on the international scene. In the tradition of Dubai’s specific,
early 20th century laissez-faire,25 the local authorities have not failed to
consider the flowering of parallel activities as a dynamic force contributing
to the development of the economy of the emirate. The latter owes part of
its development to smuggling, which is perfectly in line with the local
authorities' desire to make Dubai a major international hub.
As Paul O'Neil suggested, air transport has certainly had a clear role in
this system, and it seems legitimate to question what the exact benefits
were, particularly before the turn of the 2000s and the growing visibility of
Dubai internationally. It is also interesting to note that Freddie Bosworth,
a British pilot notoriously involved in Dubai’s gold trade during the 1950s,
later served as a director of Gulf Aviation. He was moreover appointed by
Emir Rashid as an intermediary in negotiations with the United Kingdom
on the construction of Dubai International Airport.26
The autonomy and activism of Dubai, however, appear fragile, while
Dubai’s dependence on Abu Dhabi and its large hydrocarbon reserves is
fully accepted (Dubai refused to head the Federation in 1971, which had
been the initial wish of British).27 The economic and financial crisis of
2008-2009 was a reminder of this, as Abu Dhabi had to pay $10 billion to
clear Dubai’s debts and avoid the reputation of the entire Federation being
tarnished.

26. Ibid.
33
Abu Dhabi: the imperative of maintaining

cohesion in the Federation of the United
Arab Emirates, in an assumed framework
of leadership
Persistent rivalry with Dubai

Following the creation of the United Arab Emirates, the strengthening
of the federal state desired by Abu Dhabi progressed with difficulty. It was
not until the Dubai agreement in 1996 that the Constitution drafted in 1971
was declared permanent. The various emirates, and especially Dubai, were
for long attached to their prerogatives, favoring individual initiatives. This
has notably resulted in the proliferation of similar infrastructures in the
various emirates. Each territory has indeed sought to develop its own
public works, at the cost of planning at the federal level. As a result, there
are significant problems of overcapacity.
The problem is particularly strong for airport infrastructures. Many of
them faced significant difficulties during the 1990s, while the wealthy
emirates of Abu Dhabi and Dubai invested massively in their own facilities
to make them more attractive and achieve a dominant position against the
small emirates of the Federation. It was indeed during this period that the
airport of Sharjah lost much of its commercial traffic. Nevertheless, today it
hosts many cargo flights and is home to the low-cost activities of Air
Arabia.28 The small emirate is now developing its business in this segment,
by offering more affordable housing to maintain a certain autonomy in the
face of the strong dynamism of its direct neighbor, Dubai.
Dubai and Abu Dhabi especially have been rivals, as is reflected in the
divergence of the strategies pursued by the two emirates. Abu Dhabi has
followed a more discreet strategy than its neighbor, focusing more on
certain segments, such as high-end tourism or the cultural sector, rather
than pushing a policy of all-out openness. This allows Abu Dhabi to appear
as more “authentic”, and more respectful of local traditions than Dubai, in
the eyes of regional actors.29 In fact, the oil emirate seeks to limit the
transformations taking place on its territory, although these are still
important, if one looks at the development of the city of Abu Dhabi for
example.
28. The company was founded in 2003 on the decision of the emir of Sharjah and now operates
subsidiaries based in Morocco and Egypt, in parallel with its activities at the Emirati airport.
29. The development of a local Guggenheim Museum in the emirate is exemplary of this: the
architecture of the building is supposed to recall the “wind towers” that existed in traditional Gulf
dwellings.
34
Oil production should continue for several decades in Abu Dhabi.

Nonetheless, the emirate has sought to diversify its economy since 2003,
partly through the creation of Etihad Airways. There has been an evident
desire by Abu Dhabi not to be outdistanced by Dubai in a sector where the
latter plays a major role globally, and the new carrier has self-proclaimed
itself as the “official company of the United Arab Emirates”, at a moment
when Emirates Airline had a large international network and had been
operating for close to 20 years. It was also only a few years after Emirates
Airline had adopted a much more aggressive expansion strategy at the turn
of the 2000s, as explained above.
In the space of ten years, Etihad Airways has climbed into the world
rankings while building a network covering all continents in 2015.30 The
company thus stands out for its unprecedented development in the airline
industry, within such a short period of time. However, the number of
travelers actually from or arriving in Abu Dhabi remains very limited –
much more so than in Dubai. This pace of Etihad’s development is
therefore primarily due to the ambition and massive support provided by
Abu Dhabi's management in a highly competitive global environment.
The sharp drop in international oil prices recorded between 2014 and
2016 posed significant challenges to the emirate of Abu Dhabi, which saw
its revenues decline, just as Emirates Airline and Qatar Airways continued
to expand. The Abu Dhabi-based carrier had made ambitious equity
investments in foreign companies, but disappointing results by these firms
subsequently led Etihad to undertake a fundamental overhaul of its
development model. The company found itself forced to limit spending and
rethink its strategy.
Some observers indeed wondered about the possibilities of a merger
between Etihad and its neighbor Emirates, but the authorities of both
countries denied discussing such a project. In fact, Dubai is now a major
player in the Federation, especially thanks to its strong hub reinforced by
the services of Emirates, which allows Dubai to influence federal decisions.
For its part, Abu Dhabi intends to retain a local carrier that provides direct
links to destinations considered as strategic. There has been a
rapprochement between Abu Dhabi, the Saudi authorities and their allies,
both as part of the military intervention in Yemen since 2015 and of the
implementation of an embargo against Qatar in June 2017. This was
accompanied by a strengthening of the services by Etihad to Riyadh and
Cairo. Meanwhile, in December 2017 the company announced the
30. It should be noted that the company suspended links to Sao Paulo in March 2017 , and does
not fly to South America anymore.
35
suspension of its flights to Tehran, thus supporting the end of direct flights
between Abu Dhabi and Iran. 31
The emirate of Abu Dhabi is therefore engaging in regional alliances
that it considers to be in line with its interests, while strengthening its
leadership of the United Arab Emirates and ensuring the maintenance of
cohesion in the Federation, whose development it controls through its
substantial financial resources.
The challenges of maintaining cohesion

in the Federation
The seven entities that make up the United Arab Emirates, shown in
Figure 7, are distinguished by significant disparities. Yet, Abu Dhabi, and
to a lesser extent Dubai, have total control of the country's institutions. The
two emirates in fact have a right of veto in the Federal Supreme Council, a
body that brings together the seven leaders of the Federation, all of whom,
in principle, have an equal vote.32 It is the highest federal institution,
holding executive power and the right to look at locally adopted legislation.
The presidency goes naturally to Abu Dhabi, and the vice-presidency to
Dubai which is the second contributor to the federal budget.
Large revenues from oil and gas enable Abu Dhabi to maintain its
power over the Federation by providing funding for the development of
small emirates with limited resources and which have hardly any economic
weight at the federal level. This strategy allows Abu Dhabi to control the
development projects of potential competitors that have real assets, for
example Ras Al Khaimah, which has high potential for tourism and could
easily surpass its neighbors. For a decade, this small emirate supported the
air services of a locally-based company which has now disappeared. It
nevertheless intends to benefit from its tourism sector which has grown in
recent years.33 The Ras Al Khaimah Tourism Development Authority
(RAKTDA) has opened new offices in different countries from which the
emirate intends to attract more visitors.34
31. However, there are still many air links from Dubai and Sharjah, where there is a large
community of Iranian origin.
32. Not to be confused with the Federal National Council, which sits in Abu Dhabi and is
responsible for representing the Emirati people, and in which the different emirates do not have
an identical number of representatives.
33. S. Shakeel, “Flying High: RAK Int'l CEO Mohammed Qazi”, Arabian Business, February 10,
2017, available at: www.arabianbusiness.com.
34. “Ras Al Khaimah Plans New Attractions to Build on 2016 Tourism Growth”, Arabian Business,
February 17, 2017, available at: www.arabianbusiness.com.
36
Figure 7. The United Arab Emirates: a Federation with Limited Territorial Cohesion
It is also possible to highlight the ambitions of Sharjah, which drew

up the largest budget of its history in 2017.35 This contrasts with the
measures taken by Dubai and Abu Dhabi that tended to reorganize their
spending and develop new taxes. The small emirate, a direct neighbor of
Dubai, is also planning to develop its tourism sector and hopes to attract 10
million visitors in 2020, an ambitious goal as Dubai is planning to receive
only twice the number by the same date. Sharjah also wishes to develop its
free zones and is supporting the establishment of small and medium-sized
enterprises on its territory, to distinguish itself from its powerful
neighbors. The local authorities have not hesitated in organizing events
like the Sharjah Day or Invest in Sharjah in countries like China, South
Korea, the United Kingdom, or Germany to enhance its visibility.36
Meanwhile, the emirate of Fujairah enjoys an advantageous location
on a coastal strip directly overlooking the Arabian Sea, and so avoiding the
Strait of Hormuz. The city could thus be a safer and more attractive hub for
trade in the region. Such a strategy would, however, considerably weaken
the position of Dubai, and to a lesser extent Abu Dhabi, which both have to
remain key territories in order to maintain their status and role at the helm
of the Federation.
In their relations with the small emirates, Abu Dhabi and Dubai thus
seem to share convergent interests and are trying to slow down the
development of potentially competing territories. However, this is not
without risks, as growing inequalities constitute a source of internal
instability, which most local leaders seem to be denying, while preferring to
take advantage of their clientelist relations with Abu Dhabi and Dubai.
Beyond an unstable regional environment, the internal dynamics of the
Federation therefore threaten directly its cohesion and the maintenance of
the leaders in power.
35. “Sharjah Sets Largest Ever Budget of Nearly $6bn for 2017”, Arabian Business, January 3,
2017, available at: www.arabianbusiness.com.
36. C. Trenwith, “Sizing Up Sharjah: Marwan Bin Jassim Al Sarkal”, Arabian Business, December
17, 2016, available at: www.arabianbusiness.com.
38
Qatar: freeing itself from an unstable

regional environment through all-out
diplomacy
Strong political will allied with large revenues

from the gas industry
Qatar stands out for its rapid and relatively recent rise on the international
scene. Its current vitality is indeed based on the changes that occurred with
the coup in 1995 that brought Emir Hamad bin Khalifa Al Thani to power.
Believing that his father had not gone far enough in the reforms
undertaken to transform the emirate, the new leader decided to set up an
ambitious policy of “economic liberalization”, under state control, namely a
restricted circle composed of the Emir and his relatives.37
Regional unrest since the late 1970s, notably the Iranian revolution of
1979, the war between Iran and Iraq from 1980 to 1988, and above all the
invasion of Kuwait by Iraq in 1990 have all sparked concerns about the
potential vulnerability of the emirate to the major regional powers that are
still Iran and Saudi Arabia. In 1971, Qatar chose to proclaim its
independence unilaterally, dissociating itself from the negotiations for the
creation of a great federation bringing together the Trucial States formerly
under British protectorate. The country considered that it was more
advantageous to benefit from a total autonomy and to overcome the
influence of other regional actors. The debates on the choice of the capital
of the federation, favoring Abu Dhabi and Dubai, ended up legitimizing
Qatar's ambitions for autonomy, as it did not want to remain on the
sidelines of a heterogeneous political entity and thus potentially vulnerable
to external influences.
Doha has accumulated significant revenues thanks to oil. This has
been followed by the development of gas exports as liquefied natural gas
(LNG), which today are the mainstay of its economy. These revenues were
initially used to finance the country’s infrastructure, under the control of a
small circle of decision-makers, led by the Emir. They managed these funds
in an opaque manner, maintaining a blurred border between the public
and private spheres. The creation of Qatar Investment Authority (QIA), a
sovereign fund now active in many foreign countries, dates back only to
2005, when hydrocarbon revenues peaked and the global economy had
slowed down following the 9/11 attacks. It has created opportunities for
foreign investments.
37. M. Gray, Qatar – Politics and the Challenges of Development, op. cit.
39
Moreover, it is interesting to note that the leadership of the QIA was

entrusted to Hamad bin Jassim Al Thani, the influential Prime Minister
and a close associate of the Emir. He was also in charge of foreign affairs
(he was present in the government until Emir Hamad handed over power
to his son in 2013), illustrating the existing political links with the
strategies and objectives of the Qatari sovereign fund. Beyond the many
investments made abroad and highlighting Qatar's international
ambitions, the QIA is also a powerful tool within the emirate itself,
providing funding for state-owned companies.
It is precisely in this context that Qatar Airways is deploying its
activities today. Founded in 1993 when Emir Khalifa Al Thani wanted to
improve Qatar's international connectivity, the company only had regional
ambitions at that time, to complete Gulf Air services which were
considered too limited for Doha’s needs. It was only after the 1995 coup
that Qatar Airways aspired to real international development. Emir Hamad
decided to revive the company in 1997 by appointing a new management
team, led by Akbar Al Baker. In 1999, the State bought back the company's
shares (which were already largely owned by relatives of the rulers) before
placing it in the QIA portfolio a few years later. At the same time, the
Qatari authorities withdrew their capital from the Gulf Air company.38
In the early 2000s, this strategy allowed Qatar to focus fully on the
development of a national airline, whose profitability did not seem to be a
preoccupation (Emirates Airline was growing strongly at the time). Indeed,
the apparent indifference of Qatar Airways’ management to this issue
would tend to suggest that the emirate’s government had guaranteed its
support to the carrier in all circumstances. The financial audits revealed by
the three major American airlines, anxious to denounce the “unfair
competition” of the Gulf carriers, support this hypothesis.39 The articles of
the company in force stipulate that the board of directors of the Qatari
company is required to meet in case of negative financial results, in order
to agree on the continuation or not of the activities of Qatar Airways. But
the meetings are concluded every year by direct intervention of the State,
which injects extra capital and so precludes any cessation of activities by
the carrier.
Qatar Airways is therefore not a real tool for obtaining economic rents,
even though it participates in generating income by supporting the
development of tourism to the emirate for example. This is a sector that
remains marginal, but the company’s development strategy also provides
38. Ibid.
39. See www.openandfairskies.com.
40
the state with political benefits. Indeed, the development of the company's
network allows the emirate to enhance its position internationally, to
consolidate various cooperation links with states outside the region, while
reinforcing its attractiveness, particularly through the hosting of
international events such as the organization of the football World Cup in
2022.
Building multiple partnerships accompanied

by a growing international influence
The international activism of the Qatari authorities concerns different
areas, starting with the aviation sector. The negotiations on the granting of
air traffic rights to Qatar Airways to develop its links are closely followed by
the emirate's leaders. At the same time, the signing of important
commercial contracts and the implementation of cooperation with certain
states is strengthening Qatar's influence worldwide. Since the signing of
the first air traffic agreement between the two countries in 1975, the
evolution of traffic rights between France and Qatar has illustrated how
Qatari power has intervened in aviation issues, in order to transform the
sector into a political tool. While flight frequencies remained capped at two
per week from 1975 to the early 2000s, new rights have subsequently been
regularly demanded by the Qatari authorities. Thus, in less than a decade,
Qatar Airways has ended up having a total of 21 frequencies (3 daily flights)
to operate services between Doha and Paris.
It may also be recalled that the first bilateral meetings held in 1999
and 2000 did not result in any agreement. This led the Qatari authorities to
use their influence to obtain new rights, especially by facilitating the
signing of business contracts with French companies. The pressure exerted
through certain European players such as Airbus has allowed Qatar to have
support for its requests to the French authorities. Such practices are
contrary to the rules defined by the World Trade Organization (WTO) .
However, they indicate the strategic interest of the Qatari authorities in
developing the air sector.
The growth of services offered by Qatar Airways has been
accompanied by numerous investments made by the emirate in different
countries across the world thanks to the powerful QIA sovereign fund. But
it has also followed an active Qatari diplomacy on the international scene,
notably via its mediation in conflict zones. In addition, the emirate
promotes economic partnerships through joint ventures with foreign
companies wishing to develop their business in Qatari territory. This is
reflected in particular by the constant modernization of local amenities, be
41
they communication infrastructures or vast real estate projects. Although

the stated objective is similar to a desire to diversify its economy – which is
indeed a reality – the emirate has substantial hydrocarbon reserves. At
current operating rates, these would guarantee revenues for the next 50
years for oil, and no less than 200 years for gas.40
The low or even lack of economic profitability of certain Qatari
companies would also tend to prove that economic diversification is not
really a priority for the regime in place, whereas such diversification should
be reflected in the multiplication of income sources, reducing Qatar's
dependence on its energy rent. The creation of Al Jazeera in 1996 (the
activities of the Qatar Airways company were themselves about to be
relaunched at the same time) seems to be part of a similar pattern, since
the TV channel does not make a profit and operates only with the financial
support of the emirate's leaders. Qatar thus has another soft power tool
which proved very useful during the Arab uprisings in 2011.41
Qatar's activism on the international scene is, however, followed
closely by some of its neighbors, who are worried about the emergence of a
powerful rival. Furthermore, the foreign policy of the emirate, including its
support for Islamist movements such as the Muslim Brotherhood in Egypt
(at the time of the Arab Spring) has raised the mistrust of other leaders in
the region who have divergent interests. By imposing an embargo against
Qatar in June 2017, Saudi Arabia and its allies recalled the sensitivity of the
positions adopted by this small emirate.
Faced with today's challenges, the Qatari authorities are pursuing
their ambitions: Qatar Airways is continuing to expand its network; and
the emirate is developing its cooperation with foreign countries in parallel,
as illustrated by the official visit of Emmanuel Macron to Doha in
December 2017, which was marked by the signing of numerous commercial
contracts; 42 or even the opening of a Turkish military base on Qatari
territory in August 2017. The decision by the authorities in summer 2017 to
implement free entry visas for nationals from 80 countries and to boost
transit flows through the emirate should also be stressed. Again, this
highlights the international opening of Qatar. It is interesting to note that
with a 180-day valid visa, European nationals benefit from the best
provisions among the countries concerned by this measure.43
40. M. Gray, Qatar – Politics and the Challenges of Development, op. cit.
41. Ibid.
42. V. Graff, “Visite d'Emmanuel Macron au Qatar : Doha achète 12 Rafale et 50 Airbus”,
France24.com, December 7, 2017, available at: www.france24.com.
43. “Qatar Waives Entry Visa Requirements for Citizens of 80 Countries”, Arabian Aerospace,
August 10, 2017, available at: www.arabianaerospace.aero.
42
However, the opening-up strategy of the emirate and the

strengthening of its links with multiple external actors generally require
the mobilization of large financial resources. This increases the dependence
of the ruling family and various associated companies, such as Qatar
Airways, on the energy rents of the emirate. This situation illustrates a
certain vulnerability of the regime whose development model will not be
able to continue in an unlimited way. Unavoidable and potentially delicate
transformations will inevitably have to be undertaken in the future.
43
The Growth of Gulf Airlines
and Associated Hubs:
an Important Factor in the
Transformations of Global Air
Connectivity
A much-debated disruption of airline

networks
Strategic challenges in air transport

competition and connectivity
The hubs of the Gulf are today major nodes in the global air networks. By
developing large-scale networks, Emirates Airline, Qatar Airways and
Etihad Airways have transformed air connectivity on various routes. This is
particularly the case between Europe and East/South Asia, as the Gulf hubs
have captured a growing share of traffic between the two regions,
weakening the direct links operated by European or Asian companies.44
Consequences can also be found in certain continents, such as Europe. By
multiplying their services/flights and opening routes to different European
airports, the Gulf companies are transporting an increasing number of
passengers who had previously passed through European hubs to take
long-haul direct routes to the Far East, for example. The evolution of routes
also threatens intra-European connections. Some routes are strategic in
ensuring close contacts between EU Member States, and cannot be
exploited by European carriers without the presence of passengers in
transit.
44. In its impact study presenting the need for a revision of the regulations on “fair competition”
across the aviation sector, the European Commission emphasised in 2017 that “the EU is losing
large market shares as a global hub for intercontinental air connections ”. See European
Commission, Proposal for a regulation of the European Parliament and the Council on
safeguarding competition in air transport, repealing Regulation (EC) n°868/2004, Commission
staff working document – Impact assessment, 2017, available at: https://ec.europa.eu.
Beyond Europe, the Gulf companies are now strongly established on

routes connecting different regions: between Africa and East Asia, but also
between North America and South Asia, and more recently between South
America and East Asia for example. The route diagrams illustrate the
desire of the Gulf hubs to become global platforms. This ambition is
underpinned by the argument that they have an “advantageous”
geographical location, and is put forward by Emirati and Qatari leaders,
who explain the success of the model implemented by the companies based
in Dubai, Abu Dhabi and Doha in this way. However, this argument alone
cannot justify the success of the Gulf companies’ development, as
European hubs also benefit from a strategic location on routes with
significant passenger flows.
Various European carriers, such as Air France-KLM and Lufthansa,
have found that the growth of Middle Eastern hubs and the expansion of
the companies based there are taking place at the expense of European
airports. For its part, the European Commission unveiled a “strategy for
Europe” in December 2015, aimed at preserving the future of European air
transport, as well as connectivity to and from the continent. This was in
particular accompanied by the decision in June 2016 of the EU Council to
grant the Commission a mandate to negotiate global aviation agreements
(i.e. applying to all Member States) with the ASEAN countries, Turkey, and
especially Qatar, as well as with the United Arab Emirates.45 In this
context, an agreement was initialed in March 2019 between the European
Commission and Qatar, a text which includes interesting provisions on
“fair competition”.46 However, its coordinated application by the Member
States still needs to be carried out. It should be noted that the United Arab
Emirates does not intend to follow a similar path: no negotiations have
taken place between the Federation and European representatives.
The growth of the Gulf companies means they are now among the
major players in the aviation sector. Yet, while this growth has created
dependency relationships with many third-party companies, it raises
questions about the future of the airline networks and even possibilities of
quasi-monopolies emerging on certain axes: other carriers may simply
become too weak to compete;47 or have to become “partners” of more
45. J. Lebel, “Développer une stratégie commune en matière d’aviation civile : une nécessité pour
s’assurer du maintien des intérêts de l’Europe sur la scène international e”, Questions d’Europe,
Fondation Robert Schuman, September 3, 2018, available at: www.robert-schuman.eu.
46. See the European Commission's press release on March 4, 2019 entitled “EU and Qatar Reach
Aviation Agreement”: http://europa.eu.
47. This scenario has been taken into consideration by certain air transport analysts. For example,
France’s Commissariat général à la stratégie et la prospective published a memorandum in July
2013 entitled “Les compagnies aériennes européennes sont-elles mortelles ?”. The growth of the
Gulf airlines was mentioned in particular in this publication. See: www.strategie.gouv.fr.
46
powerful companies. Such a reduction in competition could result in higher

passenger fares, and a de facto control of global connectivity by a reduced
number of players. At the same time, many states could see their influence
diminish in the aviation sector, as carriers based in these countries become
dependent on external actors.
Some companies already find themselves in such a delicate situation,
resulting from “cooperation” involving a major change in their strategy,
such as Air Seychelles or Alitalia which entered into agreements with
Etihad Airways, before the latter revised its initial ambitions. Apart from
airlines, the fate of other types of actors is now linked to the future of
powerful carriers. Emirates Airline, which operates over one hundred
Airbus A380s, is now for example a key customer of the European aircraft
manufacturer. The decision by the Dubai carrier in early 2019 to cut its
A380 orders forced Airbus to announce the suspension of the production
in 2021 of one of its most emblematic aircraft, already shunned by other
airlines.48
The Gulf airlines as tools of soft power

The emirates of Dubai, Abu Dhabi and Qatar are fully aware of the
strengths and challenges of controlling global air connectivity, notably
through their support for the development of powerful airlines. These
political actors thus use air transport to defend their specific interests,
while seeking to gain a better foothold on the international scene. Their
concrete involvement in the management of companies based on their
territory proves that the growth of Gulf companies is not simply driven by
carriers taking advantage of the globalization of trade and seeking to
expand their activities. The engagement of public authorities reflects the
large-scale implementation of strategies to derive maximum political
benefit from air connections. This illustrates the extension of diplomatic
networks, or even the support for commerce and trade that strengthen the
air hubs and national economies.
Civil air transport and its associated connectivity is therefore a strong
tool for strengthening the power of the political authorities that have
appropriated them. It is a suitable way for some political leaders to extend
their influence while allowing them to generate soft power.49 This concept
was developed by the American academic Joseph Nye in the 1990s, and it
48. F. Gliszczynski, “Airbus arrête les frais avec l'A380 : les raisons d'un tragique destin”, La
Tribune, February 14, 2019, available at: www.latribune.fr.
49. See J. Nye, Soft Power: The Means to Success in World Politics, New York, Public Affairs,
2004.
47
characterizes the ability of an actor – be it a state, a non-governmental

organization, or a company – to gain support and see its positions
defended by third parties on the international scene. The particularity of
soft power lies in the fact that such dynamics occur without the use of
coercive means or payments.
In return, different actors, like some European states, airports, but
also local authorities favorable to the development of extra-community
carriers, expect an increase in the number of passengers welcomed, or even
the development of tourism. These players perceive the new air services as
a real asset to ensure their integration into international networks, while
fearing the consequences of a potential withdrawal of these same
operators. They are therefore particularly inclined to relay the positioning
of the Gulf airlines because they perceive them to be in line with their
immediate interests. The prestige of being connected to a world-renowned
hub hosting a company, admired for the speed of its development and the
extent of its network, strengthens the reputation of these airlines.
Yet beyond the tools they offer in terms of air connections to stimulate
and disseminate the soft power of their home emirates, it may also be
stressed that the Gulf companies themselves seem to exercise some soft
power. The work of Alexander Vuving on the “currencies of soft power”
describes many features that can be applied to the strategy of these
carriers.50 Admiration for what is portrayed as the success of their
development model appears as a factor that can reinforce their influence.
The companies also present themselves as zealots of a form of economic
liberalism favoring competition for the benefit of consumers. More
generally, their declared desire to allow travelers to reach any point in the
world favors their appeal to the greatest number of customers. These
positioning elements make them particularly popular in a context where
the market economy is put forward as the most desirable model globally.
This specific soft power of the Gulf companies, coupled with the soft
power exercised more broadly by their host emirates, is the source of their
specificity. It makes them clearly stand out from their competitors. Joseph
Nye stresses that the ambitions of some private actors can lead to a
50. A. Vuving , "How Soft Power Works," Asia Pacific Center for Security Studi es , 2009, available
at: http://apcss.org. In this publication, the author seeks to complete the work done by J. Nye,
putting forward an approach to the concept of soft power which is less US-centric. A. Vuving thus
defines three pillars that he calls “soft power currencies”: “benignity”, “brilliance” and “beauty”.
These three points correspond respectively to the ability of an actor to listen to and pay attention
to his/her counterparts, to inspire admiration through his/her successes in various fields, and
finally to be a source of inspiration for others, which lends the actor a certain legitimacy,
credibility and moral authority. It should be noted that these “currencies” are particularly
relevant in the diplomatic, economic and cultural fields.
48
weakening of the soft power of the State in which they are based.51 Yet, the
cases of Qatar, Dubai and Abu Dhabi illustrate a process of generating soft
power in which the airlines and their base emirates are completely in
phase. This is illustrated by the many links between these companies and
the political actors who align the interests of the companies in question
with their own ambitions.
By increasing their soft power towards many states around the world,
the Gulf emirates also intend to involve different extra-regional
governments in the stability of their territories and the sustainability of
their development model. Benefiting from the greatest possible number of
external allies appears therefore as a necessity for the success of the
strategies pursued by the emirates of the Gulf, and in this sense soft power
constitutes an adequate and effective tool.
The sustainability of the Gulf hubs

in question
Conflicts and tensions that are not without

consequences for air traffic throughout the
Middle East
The existence of conflict zones and the spreading of tensions are leading to
a real concentration of air flows in narrow flight corridors in the Middle
East. The territories of some states – Turkey, Iran, Saudi Arabia and Egypt
– are thus of particular strategic importance to the transit of international
commercial flights in the region.52 The stability of these same states,
however, should be examined in view of the various internal and regional
issues that could affect the powers in place and thus potentially prevent the
transit of commercial flights, as today in Syria or Yemen. Figure 8 shows
the corridors used in 2017 by commercial flights over the Middle East, and
indicates the different zones of tension and/or conflict.
The instability of the Middle East, due to rivalries, disputes and
violent conflicts, has already led to disruptions in the operation of
commercial flights, both on the ground and in the air. The attack over Sinai
against an aircraft of the Russian company Metrojet in October 2015 is one
51. J. Nye, Soft Power: The Means to Success in World Politics, op. cit.
52. The case of Israel should be noted especially, as it maintains important restrictions on transit
through its airspace. Agreements allow in particular most western airlines to fly over Israel to
reach Amman, the capital of Jordan, and one of the few countries in the reg ion with which Israel
has contacts. It should be emphasised that the large majority of companies based in the Arab
world – with the exception of Royal Jordanian Airlines – are not authorized to fly over or to fly to
Israel, as their home countries do not recognize Israel.
49
of the main events that have directly affected the aviation sector in the
region in recent years.53 Responsibility for the explosion of the plane was
claimed a few days later by the Islamic State group. The latter has cells in
the Sinai desert, where clashes regularly take place between the Egyptian
army and movements disputing the central power, while Russia was
already engaged militarily in Syria, in support of Bashar El Assad.54 The
radical Sunni group expanded strongly in Syrian and Iraqi territories in
2015, until being only a few kilometers from major cities like Erbil and
Baghdad. Rocket attacks were targeted at civil aircraft serving the airports
of these two cities, leading to interruptions in traffic and forcing some
companies to suspend their commercial services for shorter or longer
periods of time.55
53. A charter flight linking Sharm El Sheikh with Saint-Petersburg.

54. H. Siddique, A. Luhn, “Russian Plane 'Broke Up in Air' Before Sinai Crash”, The Guardian,
November 1, 2015, available at: www.theguardian.com.
55. K. Fahim, “Airlines Suspend Flights to Iraq’s Baghdad Airport After Jet Is Hit by Gunfire ”, The
New York Times, January 27, 2015, available at: www.nytimes.com; “Iraq Closes Northern
Airspace Over Missiles Launched at Syria”, Reuters, N0vember 23, 2015, available at:
www.reuters.com.
50
Figure 8. The Middle-East as a Transit Zone Threatened by Different Conflicts
and Tensions
More generally, the expansion of the Islamic State group and the
continuation of military clashes on the Syrian and Iraqi territories have led
the vast majority of airlines to avoid the airspace of these two countries.56
Instead, carriers have favored transit through Iran and Turkey, or through
Saudi Arabia and Egypt. However, these routes also need special attention:
in October 2016, the European Aviation Safety Agency (EASA) published a
safety alert inviting airlines using the air corridor crossing Iran to be
vigilant – particularly in the north-west of the country – as Russia was
firing cruise missiles from the Caspian Sea in support of its intervention in
Syria.57
The destruction of a Malaysia Airlines plane in July 2014 over the
eastern part of Ukraine was a reminder of the vulnerability of commercial
flights over-flying conflict regions. At the same time, the increasing
military involvement of different states in the Iraqi-Syrian theater has
pushed some companies, such as the Malaysian carrier or Cathay Pacific, to
re-route quickly their commercial flights to and from Europe.58
Nevertheless, the decline of the Islamic State group in 2017 was
accompanied by a statement from Iraqi officials announcing that they had
regained control of almost the entire country.59 Some airlines – especially
those based in the Gulf – therefore decided to route some of their aircraft
through the Iraq skies again in November 2017, a route that is often shorter
than flying over Iran, to reach Europe for example.60
The ongoing conflict in Yemen is also affecting commercial air traffic
in the region, with the closure of the airspace above Yemeni territory. As
the authorities of the country were not able to control flights transiting
through the Yemeni airspace in 2015, a significant transfer of traffic to
neighboring regions was recorded, particularly in the Mumbai Flight
Information Region.61 More recently, Houthi rebels have not hesitated to
target Saudi Arabia to punish its military engagement in Yemen. By
intercepting missiles directed at Saudi territory – one of them was even
directly targeting Riyadh International Airport in November 2017 – the
56. For Iraq, the regions of the country avoided by a large majority of airlines have evolved
according to the location of clashes and the presence of radical armed groups.
57. See Safety Information Bulletin published on October 9, 2015 by the EASA and entitled
“Caspian Sea, Iran and Iraq Airspace – Launch of Missiles from Caspian Sea to Syria”, available
at: www.easa.europa.eu.
58. “Flights over Iran: How Airlines Are Responding to Warning”, The Straits Times, October 16,
2015, available at : https://graphics.straitstimes.com.
59. “Irak : l’armée a repris Hawija, l’un des deux derniers bastions irakiens de l’Etat islamique”,
Le Monde, October 5, 2017, available at: www.lemonde.fr.
60. “Emirates and Flydubai Resume Operating Some Flights over Iraq”, Reuters, December 11,
2017, available at: www.reuters.com.
61. “Emirates and Etihad in Near Miss over Mumbai Airspace”, Gulf News, March 31, 2015,
available at: www.gulfnews.com.
52
Saudi army prevented the occurrence of a disaster that would have strongly
affected the air traffic flying over and/or serving the country.62
These different events illustrate the vulnerability of the aviation sector
to any form of instability. The links that are developing between Gulf
companies and third-party carriers are also increasing the dependence of
many aviation players on their Middle Eastern partners which may be
strongly affected by regional tensions. The consequences of regional
instability could thus spread more widely within the global aviation sector,
through the weakening of third-party companies.
Future developments of the Gulf airlines

faced with competition and the lack
of sustainable models
Faced with today's challenges in the Gulf emirates and the Middle East, it
seems legitimate to question the future of strategies deployed by local
airlines. These could potentially take the form of an expansion outside of
their powerful hubs, if the companies' desire for development is pushed to
its limits. Emirates Airline’s strategy stands out here, as it already operates
some 5th freedom routes, taking advantage of the policies pursued by some
states that have traditionally favored the granting of such rights to boost
passenger flows.63 This is particularly the case for Thailand, with Emirates
transiting some of its aircraft through Bangkok Airport, where the airline
welcomes new passengers to other destinations in Asia and Oceania. Qatar
Airways also operates similar services in other regions. The choice of such
routes demonstrates the potential development of these companies beyond
their hubs. However, these services remain marginal in the large networks
currently exploited by the Gulf companies.
Moreover, the transformation of Emirates Airline, Etihad Airways or
Qatar Airways into carriers with a global identity could carry risks, since it
may upset the internal equilibria of the emirates. Such a mutation could in
fact result in a change of name for the companies concerned, eliminating
all local references and attachments. This would weaken the “flag bearing”
role of the carriers concerned, which may seem incompatible with the
objectives currently pursued by the political actors who are driving the
62. S. Almosawa and A. Barnard, “Saudis Intercept Missile Fired From Yemen That Came Close to
Riyadh”, The New York Times, November 4, 2017, available at: www.nytimes.com.
63. According to the freedoms of the air defined in the Chicago Convention in 1944, the 5th
freedom allows an airline to operate flights between two third-party countries, as the continuation
of a first segment whose origin is in its home country. 5th freedom connections thus imply the
absence of a transit hub for the operating company for passengers using it.
53
expansion of powerful companies and so contributing to the international

visibility of their hubs.
The prevailing hub-and-spoke model deployed by the Gulf companies,
however, seems to be reaching its limits due to increasing congestion
problems in the Gulf’s regional airspace, especially when territories are
confronted with conflicts and/or tensions which directly affect the
organization of air routes. The growth of the exploited fleets is also
reflected in an increase in traffic, leading to saturation problems at the
airports in which the Gulf companies are based.
This situation has convinced some emirate leaders to pursue major
expansion and/or reorganization projects for existing platforms, as in the
case of Abu Dhabi and Doha. For Dubai, it was even decided to build a new
airport (partially open since 2010) to accommodate increasing air traffic.
These various projects have in fact allowed the political actors concerned to
compete in the race for world records for the reception of tens of millions
of international passengers. Indeed, the leaders of the Gulf companies and
the political actors have regularly demonstrated their support for
expanding air transport activities. However, the stated ambition of strong
growth in air traffic raises real environmental problems in the zones
hosting large hubs, which are set to grow further.
The investments made by political actors who intend to support the
expansion of a strong air sector cannot, for their part, be unlimited. This is
especially the case when the territories concerned may expect a decline in
their revenues (due to the end of oil and gas exploitation by the emirates,
for example), if this is not in fact already happening (as with the
fluctuations of the oil price affecting certain entities like Abu Dhabi).
Moreover, the Gulf companies are totally tied to the strategies of the ruling
families, and so remain vulnerable to any political upheaval.
More generally, we need to think about the future of the base
territories of powerful carriers, in the current context of instability in the
Middle East. The imposition of an embargo on Qatar in June 2017 by Saudi
Arabia and its allies illustrates this problem. Figure 9 shows the direct
effects of the embargo on the operations of the Qatari carrier, which was
forced to suspend all of its services to Saudi Arabia, Egypt, the United Arab
Emirates and Bahrain. These were equivalent to about half of the services
offered by Qatar Airways at the regional level, at the time.
Henceforth, the company can no longer fly over the territories of these
same states and had to reorganize the routes taken by many flights, with
significant detours in some cases. By pushing Qatar into such isolation, on
the basis of accusations of being too tied with Iran, the Saudi regime and
54
its allies have only increased Qatar’s dependence on its Persian neighbor.
At the same time, the air sector remains a strategic tool for Qatari leaders,
and they intend to maintain Qatar Airways operations, effectively
overcoming the barriers imposed by the neighbors of this small emirate.
It must be emphasized, however, that the situation in Qatar is delicate
from the point of view of the partitioning of airspace. Given its small size,
the emirate only has a limited airspace above its territory, and the
management of the latter is integrated into a larger area (or Flight
Information Region, FIR) associated with the Bahraini archipelago which
controls it. This partitioning results from historical dynamics, Bahrain
having emerged relatively early as an air hub in the region, thanks to the
activities of the inter-emirate company Gulf Aviation Company in 1950,
whose services were very extensive from Manama.
55
Figure 9. The Maintenance of Operations by Qatar Airways in the Face of Qatar’s
Regional Isolation
At the same time, the growth of airports in Sharjah and Dubai has led
to an increase in regional air traffic whose flows were mainly from Kuwait
to the United Arab Emirates. In order to facilitate air operations, the
division of air control spaces has resulted in the formation of the Bahrain
FIR, covering a large part of the Persian Gulf and thus preventing the
aircraft from crossing multiple areas of control within short distances.
However, these airspace areas are not inalterable. The Bahrain FIR
covered a much larger area until 2014 because its boundaries included part
of Saudi territory, especially areas with numerous oil fields. These were
acceded by aircraft when they first came into operation, thanks to the
connections operated by Gulf Aviation Company from airports in the
emirates. But by signing an agreement with Bahrain in 2013, validated by
the International Civil Aviation Organization (ICAO), Saudi Arabia has
established complete control over its airspace. It may be noted that this
decision occurred when relations between the Saudi and Qatari authorities
were deteriorating. At the same time, the ruling family of Bahrain became
increasingly dependent on the support of its powerful Saudi neighbor, in
order to counter local repercussions of the Arab spring in its archipelago,
and put down the protests of its Shia majority.
Contrary to what the Saudi rulers had apparently envisaged, the crisis
now seems to be continuing between Saudi Arabia and the gas emirate. In
this context, the Bahraini and Emirati authorities quickly concluded with
Qatar some arrangements to allow Qatar Airways to use restricted air
corridors. But these do not allow the airline to overfly their land territory,
and even less to resume its links to local airports. The detours taken by
Qatar Airways planes involve many additional costs, which appear also as
an ideal pretext to explain the “very important” losses of the company
announced in spring 2018 by Akbar Al Baker (Qatar Airways’ CEO), and
hence justify the financial support of emirate’s authorities.64 Such regional
tensions can have an effect on the behavior of passengers, who would have
to avoid certain hubs in case of major unrest. This would inevitably lead to
the collapse of the models created by the Gulf companies.
Qatar Airways is nevertheless pursuing sustained development, which
has resulted in the opening of many stopovers in recent years, despite the
growing tensions between Qatar and some of its neighbors.65 The small
64. “Qatar Airways subira une perte annuelle très importante, selon son DG”, Reuters, March 7,
2018, available at: https://fr.reuters.com.
65. The announcement by Qatar Airways at the ITB tourism fair in Berlin in March 2018 should
be noted. It concerned the strengthening of flight frequencies by the company on various routes,
as well as the opening of 16 new routes during the period 2018-2019: London Gatwick and Cardiff
(United Kingdom), Lisbon (Portugal), Malaga (Spain), Valletta (Malta), Mykonos and
57
emirate intends to counter any attempt at isolation. In such a context, the

financial resources deployed by the emirate are likely very important and it
is interesting to note that in November 2017 the QIA publicly announced
its intention to “invest” in the airline. Officially, this is to reorganize the
strategy implemented by the main sovereign fund of the gas-producing
emirate. The decision appears, however, to be linked more to the
willingness of the authorities to provide the funds necessary to Qatar
Airways for the company to maintain its activities and deal with significant
additional costs.
The Dubai carrier Emirates Airline is in direct competition with the
continued expansion of Qatar Airways, and continues to be a major player
in the industry. The company benefits from its early growth and from the
strategies implemented by the emirate over several decades. These have
allowed it to be well-established worldwide: it may be recalled, for
example, that the carrier has recently started operating on transatlantic
routes, with the inauguration of 5th freedom flights from Milan to New York
in 2013, and then from Athens in 2017. The opening of such links remains,
however, relatively discreet, especially considering the dynamic
development pursued by the company during the last decade, linking its
hub in Dubai with many international destinations (3rd and 4th freedom
routes), and the steady increase of flight frequencies. Emirates intends to
remain cautious, given the many criticisms raised by the operation of 5th
freedom routes. This strategy, which appears to be highly selective,
reinforces the attractiveness of the Dubai company in terms of soft power.
Etihad Airways is more fragile than its Dubai neighbor, yet has
distinguished itself by unprecedented development since its creation in
2003. Its strategy is based on growing through equity participation in the
capital of other carriers, and has drawn the attention of many international
observers in recent years. However, this strategy seems to have failed
today, as Etihad has not been able to transform its various “partner”
companies into means of expansion and tools for disseminating its
influence in Europe and beyond. While the emirate of Abu Dhabi intends
to revise its spending against a backdrop of declining oil rents, Etihad
Airways has undertaken a major overhaul of its development model.
The possibility of a merger between Etihad and Emirates, as
mentioned by the international press since 2017, still remains very
uncertain, given the persistent rivalries and differences between Abu Dhabi
Thessaloniki (Greece), Luxembourg, Tallinn (Estonia), Bodrum, Antalya and Hatay (Turkey),
Cebu and Davao (Philippines), Langkawi (Malaysia), Da Nang (Vietnam).
58
and Dubai.66 A deepening of the cooperation between the two companies is

nevertheless taking shape.67
Etihad Airways is thus looking for a way to exist alongside more
powerful players. This could result in the implementation of a niche
strategy, depending on the ambitions of the Abu Dhabi leaders, whose
resources are strongly affected by changes in oil prices. The company could
therefore strengthen its position in the high-end market segment, by
duplicating the development model pursued by Abu Dhabi, highlighting its
cultural sector, or by promoting its local identity.
66. See for example J. Koenen, “Sheikhs Discussed Emirates-Etihad Merger”, Handelsblatt
Global, March 9, 2017, available at: https://global.handelsblatt.com . New rumors about a merger
surfaced in September 2018, see A. Cornwell, “Emirates, Etihad Airlines Deny Report They May
Merge”, Reuters, September 20, 2018, available at: www.reuters.com .
67. See for example S. Townsend, “Etihad Pilots Offered Two-Year Secondment to Emirates”, The
National, June 25, 2018, available at: www.thenational.ae.
59
Conclusion
Since the 2000s, Emirates Airline, Etihad Airways and Qatar Airways have
recorded unprecedented growth in the history of civil aviation. Aside
purely commercial considerations, the success of these companies has been
part of a framework of broad strategies implemented within their home-
base emirates. Reigning families have been seeking political benefits from
the companies’ development, while increasing their visibility
internationally. The sustainability of these models nevertheless raises
questions, as internal and regional instability poses real threats to the
future of these powerful carriers based in Dubai, Abu Dhabi and Qatar.
In order to overcome current challenges, the Gulf companies have
embarked on transformations that will have to continue, such as the
ongoing readjustment strategy of Etihad Airways. This is taking place in
the context of the alignment of Abu Dhabi’s foreign diplomacy with its
Saudi neighbor. Dubai meanwhile is consolidating its aviation sector with
the creation of a partnership between Emirates and Flydubai, a low-cost
company that is also based in the emirate and which operates smaller
aircraft. Faced with the embargo imposed by Saudi Arabia and its allies,
Qatar is relying more than ever on the network of its national company to
limit its isolation and strengthen strategic partnerships. The three airlines
are in competition with each other, while being real tools in the service of
the soft power of their respective base emirates, each pursuing a specific
strategy.
While the announced opening of Iran in the aftermath of the July 2015
Vienna agreement could be perceived as a threat to the future of the Gulf
hubs, the strengthening of US sanctions (particularly in civil aviation)
wanted by Donald Trump is preventing a return of the country on the
international scene. That said, the transformations undertaken by
neighboring actors, notably by Saudi Arabia and its “Vision 2030” plan led
by Crown Prince Mohammed bin Salman, could raise new issues that will
not fail to affect the Gulf companies, whose activities rely mainly on transit
traffic. Global air connectivity is therefore increasingly based on hubs
perceived as strategic, yet vulnerable to significant future disruptions.
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études de l’Ifri

Emirates Airline, Etihad

Turkey and Middle

How to cite this publication:

Tél. : +33 (0)1 40 61 60 00 – Fax : +33 (0)1 40 61 60 60

Julien Lebel holds a Ph.D. in geography from the French Institute of

FROM THE TRUCIAL STATES UNDER BRITISH PROTECTORATE

The creation of the Gulf emirates: a process marked by the evolution

The early development of air transport provided financial rents

Development strategies to ensure the continued power of ruling

From the discovery of hydrocarbons to the management of powerful

Successful integration into the networks of contemporary globalization21

THE SPECIFIC OBJECTIVES AND DEVELOPMENT DYNAMICS

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

Abu Dhabi: the imperative of maintaining cohesion in the Federation of

Persistent rivalry with Dubai ........................................................... 34

The challenges of maintaining cohesion in the Federation................. 36

Qatar: freeing itself from an unstable regional environment

Building multiple partnerships accompanied by a growing international

THE GROWTH OF GULF AIRLINES AND ASSOCIATED HUBS:

A much-debated disruption of airline networks ................................ 45

Strategic challenges in air transport competition and connectivity ..... 45

The sustainability of the Gulf hubs in question .................................... 49

Future developments of the Gulf airlines faced with competition

The rise of air transport issues

The creation of the Gulf emirates: a process

1. F. Heard-Bey, Les Émirats arabes unis, Paris, Karthala, 1999.

to prevent an important bloc emerging, capable of challenging its maritime

Depression of 1929 in the Western countries (leading to falls in demand),

The early development of air transport

4. F. Heard-Bey, Les Émirats arabes unis, op. cit.

While Sharjah was reaping substantial benefits from its strategic

development of the aviation sector supports the diversification of the

Development strategies to ensure

From the discovery of hydrocarbons to the

revenues. It therefore remains difficult to envisage the development of new

Through powerful, locally-based companies, the airline sector thus

Successful integration into the networks

Dubai: a global hub strategy supported

A boom bucking global trends

17. C. Davidson, Dubai – The Vulnerability of Success, op. cit.

The construction of a global hub based

23. C. Davidson, Dubai – The Vulnerability of Success, op. cit.

Various actors in Dubai, be they businesses or government

25. C. Davidson, Dubai – The Vulnerability of Success, op. cit.

Abu Dhabi: the imperative of maintaining

Persistent rivalry with Dubai

Oil production should continue for several decades in Abu Dhabi.

The challenges of maintaining cohesion

It is also possible to highlight the ambitions of Sharjah, which drew

Qatar: freeing itself from an unstable

Strong political will allied with large revenues

Moreover, it is interesting to note that the leadership of the QIA was

Building multiple partnerships accompanied

they communication infrastructures or vast real estate projects. Although

However, the opening-up strategy of the emirate and the

A much-debated disruption of airline