Flip through the latest issue of Gulf Weekly.
Gulf Air, Bahrain's flag carrier will add 13 new aircraft to its fleet through leasing and buying before the end of 2009.
The airline wants to take advantage of the global economic crisis by ordering new aircraft at a time when many international airlines have been forced to stop or delay their deals with aircraft manufacturers.
Elsewhere, Emirates, Qatar Airways and Etihad are all expected to more than triple their current fleet by 2015.
Emirates operates 131 planes at present and will receive two aircraft every month this year. The carrier has 163 planes on order worth $55 billion at list prices. Etihad Airways operates a fleet of 44 aircraft and will be getting 11 planes this year. It has 205 planes worth $43 billion on order.
Qatar Airways operates 68 planes and has ordered for more than 200 aircraft worth over $30 billion.
This is in contrast to sharp capacity reductions and route terminations by airlines in places such as the US, Europe and Japan.
Won't this capacity growth significantly outpace the expected passenger increase?
"Yes, it will," says A T Kearney, a global strategic management consulting firm.
Current aircraft order backlogs for GCC airlines will add considerable capacity to the market during the next seven years and will more than triple the then available seat kilometres (ASK) from an estimated 207 billion ASKs per year in 2007 to 647 billion ASKs per year in 2015, says Bill McKnight, head of Aviation/Aerospace Practice, A T Kearney, Middle East.
"This will clearly generate more capacity than can be profitably operated. In addition, the pilot shortage challenge that GCC airlines face will continue under these growth plans, likely driving additional costs due to related recruiting, training, and retention activities," McKnight says.
Therefore, regional airlines should review their plans to expand their fleet as capacity is growing faster than passenger demand.
"The increase in capacity combined with the current crisis means that regional airlines must rethink and adjust the fundamentals of their business."
Overall 2008 passenger growth already decreased to seven per cent from 18.1 per cent in 2007, with December 2008 showing a low 3.9 per cent growth. While lower fuel prices have reduced costs it is expected to be insufficient to cover the lower demand. Why so?
Fuel makes up only about 40 per cent of the total budgets of most major airlines. Labour is now the biggest expense for airlines.
The International Air Transport Association (IATA) says the world's major airlines racked up combined losses of as much as $8.5 billion last year, far worse than the $5 billion previously predicted.
Soaring fuel prices and the economic downturn combined to create the sort of turbulence that downed weak players, including charter airline XL Airways, all-business class start-ups, Silverjet and Eos, and a host of carriers little known out of their home markets - Mexico's Alma, Denmark's Sterling Airlines, Canada's Zoom and America's Aloha Airlines, to name a few.
Meanwhile, air travel demand in the Middle East will increase by 1.2 per cent this year but significant seating capacity expansion means carriers in the region will post a combined loss of $900 million.
IATA revised its loss forecast for the Middle East airlines from the previous $800 million as the widening global economic downturn takes its toll on the travel business.
Despite the difficult economic conditions, the Middle East will be 'the only region with demand growth in 2009', IATA notes but adds that the projected growth of 1.2 per cent will be overshadowed by the impact of a 3.8 per cent increase in capacity.
"While this is significantly below the double-digit growth of previous years, the region continues to add capacity ahead of demand," says IATA.
With capacity outstripping demand there will be further pressure on airlines in the region.
"Price pressures are likely to increase in order to fill the new capacity from a smaller overall global market unless some slowdown in deliveries takes place. It may well be possible that one or more of the Middle East carriers will look to slow their growth rates to ameliorate these problems," John Strickland, director of Britain-based aviation consultancy JLS, says.
"The state of the airline industry today is grim. Demand has deteriorated much more rapidly with the economic slowdown than could have been anticipated even a few months ago," says IATA director-general Giovanni Bisignani.
Until now, most GCC airlines have been able to avoid any turbulence. Going forward however, A T Kearney suggests that airlines must consider with an open mind how to best mitigate both regional and global challenges facing the aviation industry in the current economic climate.
Winners and losers will be defined by the quality and timeliness of key decisions made by management teams, concerning overall strategies, capacity utilisation, rigorous cost controls, creative marketing and, in some cases, rethinking fundamental aspects of the current business model.
