Air bridging the Gulf

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LONDON, England (CNN) -- If you want to see real money being spent on airlines and aviation, the Middle East is the place to be.

Responding to the huge growth in air traffic to the region in recent years and the prediction that passenger numbers may triple by 2030, the four major airlines - Gulf Air, Emirates, Etihad and Qatar Airways - have invested billions of dollars expanding their fleets.

The number of intercontinental flights to and from the Middle East grew by 15 percent compared to this time last year, according to the latest figures from the OAG -- the highest percentage growth of any region.

But despite the huge orders from Emirates, Etihad and Qatar Airways, there are doubts over whether the competing airlines can survive as each of them try and create hub-and-spoke networks.

Airline chiefs are, naturally enough, confident of their growth forecasts and investments. Sheikh Ahmed al Maktoum, Emirates CEO, dismisses the suggestion that the four main Gulf airlines cannot survive together.

"When Emirates fly to any airport we are competing with all the airlines who operate there. So there will always be competition. I believe that all four airlines can survive, but it's not only four, when you look at them today, there is a new low-cost carrier in Kuwait and there are three to come in Saudi Arabia servicing the domestic market," Sheikh Ahmed al Maktoum told CNN.

The confidence is backed up by enormous amounts of money. Emirates' order for new aircraft from last year is worth $30 billion, which includes Boeing 777s and 43 Airbus A380s.

Qatar Airlines has ordered ten Airbus A340-600 and by 2008 Etihad, which only had its first flight three years ago, will have a fleet of 52 planes.

With the growth in aircraft number, so the airports of the region are being expanded.

Less than one million people live in Qatar, but they are building an airport in Doha that can take an annual capacity of 50 million people with a dedicated terminal for Qatar Airways premium passengers flying in their business and first class cabins.

Dubai Airport is undergoing a $9 billion expansion with plans for a new airport on the outskirts of the city. Abu Dhabi, home of Etihad is expanding the airport there too. Each is styling themselves as the region's main hub.

"The growth of the airport, too, is justified. We have to build it, we have to invest, we have to go to investors, to banks to finance this project, and also out of our own resources," Sheikh Ahmed al Maktoum told CNN.

While publicly the airlines maintain they're servicing national demand as much as international transfer passenger, it's clear that there is not the domestic need for a 50 million capacity airport in Qatar.

To some analysts and industry observers such as CNN's Richard Quest, the unprecedented growth in such a small geographical area is slightly baffling.

"It doesn't make much sense that three airlines are trying to beat the living daylights out of each other, especially as they are located 200 miles from each other."

Akbar al Bakar, CEO of Qatar Airways, maintains that the domestic market is growing and their forecasts are accurate.

"As far as we are concerned, thirty percent of our traffic is point to point and seventy percent is transfer. As the economic development of Qatar is growing, so is this gap from point to point increasing," he told CNN.

Rather than look to increased passenger numbers from Europe and America, the Gulf region's international carriers are positioning themselves to capture the booming Asian market, especially in India and China.

"The Indian market is set to open in 2007, bringing more competition and capacity in the industry," said Abdul Wahab Teffaha, general secretary of Arab Air Carrier Organization earlier this month.

"The growth will represent an expansion of the Indian middle classes and increasing numbers of travellers in the region. The evidence is ongoing," he said at a recent industry conference.

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