Middle-Eastern carriers are growing their dominance in Singapore, posing a serious challenge to Singapore Airlines (SIA) on its home ground and putting Changi Airport in a bit of a fix.
Last year, the number of passengers travelling to and from South Asia and West Asia, which include the Middle East and India, grew strongly by 5.6 per cent year-on-year, compared with 0.7 per cent overall for the airport.
More flights and passengers are good for Changi, especially when traffic growth within the region is slowing down.
But with more than nine out of 10 passengers who fly Emirates, Qatar Airways and Etihad Airways from Changi Airport using the Middle East as a stopover for flights to Europe, the United States and elsewhere, there is a risk to Singapore's air hub status, industry analysts said.
"This is a growing threat not just for Changi but other major airports as well," said Endau Analytics analyst Shukor Yusof.
"The three major Middle-Eastern carriers are dominating sectors to key points in Asia, Europe and the Americas. They are pretty much unstoppable."
The trio of airlines have a wider network of destinations and offer more flights to Europe, the Americas and Africa than other carriers. Such strength makes them increasingly the preferred choice for travellers.
Changi said competition is inevitable, but it will continue to work with airlines and other partners to grow traffic. "Closer integration among airlines in the SIA Group, including Scoot and Tigerair, will also benefit the Singapore air hub by encouraging more transfers at Changi," said spokesman Ivan Tan.
The growth of Middle-Eastern carriers will hit the Singapore carrier too, said Centre for Asia- Pacific Aviation analyst Brendan Sobie. "SIA will be most impacted as it accounts for about two- thirds of non-stop seat capacity between Singapore and Europe."
In June, Doha-based Qatar Airways will add a third daily flight to Changi Airport, and by August all three flights will be operated with the Airbus 350 - the newest wide-body aircraft in the market.
Qatar Airways group chief executive Akbar Al Baker said in a recent media release that the upgrade is being implemented as Singapore is one of the world's leading business hubs and the Doha-Singapore sector is an "important and strategic route".
Dubai-based Emirates is also eyeing a larger slice of the Singapore corporate travel market, a sector "traditionally dominated by SIA", said Mr Sobie.
Meanwhile, SIA is cutting seats in economy class to make room for a premium economy product that will be launched in August, offering travellers more space and comfort for a higher fare. While the aim is to boost yields, the move is also seen as a strategic one amid intense competition from Middle-Eastern and other carriers.
SIA spokesman Nicholas Ionides said: "In introducing the new cabin class, we naturally had to make changes to the number of seats in other parts of our aircraft, which has resulted in an overall reduction in seat capacity.
"However, that is to be expected and ultimately is in response to requests from customers for the new class of travel."
But it may lead to further losses to the Arab airlines.
"SIA in theory will carry fewer low-yielding economy passengers to and from Europe, essentially ceding this traffic to Gulf carriers and other aggressive competitors," said Mr Sobie.
This article was first published on February 16, 2015.
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