Virgin Atlantic says goodbye to Dubai as competition gets too fierce

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Dubai is likely to have been an unprofitable route for Virgin for some time, according to aviation expert Jason Rabinowitz. (Shutterstock)
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Analysts said Virgin was too small a player in the market to compete. (Shutterstock)
Updated 28 June 2018
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Virgin Atlantic says goodbye to Dubai as competition gets too fierce

  • Having operated flights from Heathrow to Dubai for more than a decade, Virgin Atlantic said it was “no longer economically viable” to operate the route.
  • With Dubai’s flagship airline Emirates operating numerous daily flights to London’s Heathrow as well as serving six other UK airports, Virgin Atlantic was poorly positioned to compete, experts said.

LONDON: Increasingly tough competition on London-Dubai flights pushed Virgin Atlantic out of the market, underscoring the dominance of Emirates on the prized route.
Having operated flights from Heathrow to Dubai for more than a decade, Virgin Atlantic said it was “no longer economically viable” to operate the route.
With Dubai’s flagship airline Emirates operating numerous daily flights to London’s Heathrow as well as serving six other UK airports, Virgin Atlantic was poorly positioned to compete, experts said.
“London to Dubai is served not only by Emirates, but also by British Airways. Both offering several flights per day, thus, there is obviously sufficient offer,” said Tobias Ruckerl, CEO and consultant at Advanced Aviation Consulting. BA operates regular flights from its London Heathrow hub.
“Virgin is a smaller player in this market and obviously they cannot stand the competition any more,” he said.
“Dubai probably has not been a profitable route for Virgin Atlantic in some time,” added US-based aviation expert Jason Rabinowitz.
“Emirates now has up to 10 daily flights to the London area, with nearly 5,000 seats offered each day each way. Virgin, on the other hand, offered a single flight.
“Even if Virgin could compete on price, and it probably cannot, there is simply too much competition on the London-Dubai route to keep it up,” he said.
Virgin Atlantic cited “external factors” behind its decision to cancel the route, in a statement issued late Wednesday.
“It’s never an easy decision to withdraw a route, and we’d like to thank our customers and dedicated team in Dubai for their loyalty over the last 12 years,” said Shai Weiss, chief commercial officer for Virgin Atlantic. The airline will continue to fly to Dubai until March 31 next year.
It is the second airline this year to ditch flights between the emirate and the UK capital, with Royal Brunei Airlines announcing last month that it would no longer fly from Brunei to London via Dubai.
Direct non-stop Brunei-London flights are to launch later this year.
Last year, Australia’s airline Qantas announced plans to return its transit hub from Dubai to Singapore.
While such developments have raised concerns that transit traffic and tourist numbers traveling via the Gulf airport could be negatively affected, most analysts have said that the strength of Emirates airline will maintain Dubai’s global predominance.
“As long as Emirates remains the powerful airline it is, I don’t see Dubai being in any sort of risk of losing its status as a major transit hub,” said Rabinowitz.
“While some airlines have opted to start ultra long-haul flights, offering non-stop routes where previously they stopped in Dubai, that is still a very small niche for airlines. The few other airlines that do stop at Dubai are insignificant when compared to the massive Emirates operation,” he said.
Andrew Charlton, managing director at Switzerland-based Aviation Advocacy was similarly upbeat. “No destination likes to see airlines leave, but in the scheme of things it is part of the parry and thrust of commercial aviation and should be seen in that context, not as a major statement on the health of Dubai or of aviation in the market.”
Emirates has further strengthened its presence in the UK this year, with the launch of its new daily service between Dubai and Stansted airport — located on the outskirts of the capital — this month.
The Middle Eastern airline is also set to launch a new service to Edinburgh later this year. It already flies to Glasgow, Newcastle, Manchester, Birmingham and London Gatwick and Heathrow.
Passenger traffic at Dubai International reached 7.6 million in April, relatively flat compared to the same month the previous year.
Year-to-date, traffic reached 30.35 million passengers, up 0.8 percent on the same time period last year, according to Dubai Airports data.
Dubai remained the third busiest airport in 2017, with passenger traffic rising by 5.5 percent last year, according to the Airports Council International. It is the world’s busiest airport in terms of international passengers.


Gulf defense spending ‘to top $110bn by 2023’

Updated 15 February 2019
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Gulf defense spending ‘to top $110bn by 2023’

  • Saudi Arabia and UAE initiatives ‘driving forward industrial defense capabilities’
  • Budgets are increasing as countries pursue modernization of equipment and expansion of their current capabilities

LONDON: Defense spending by Gulf Arab states is expected to rise to more than $110 billion by 2023, driven partly by localized military initiatives by Saudi Arabia and the UAE, a report has found.

Budgets are increasing as countries pursue the modernization of equipment and expansion of their current capabilities, according to a report by analytics firm Jane’s by IHS Markit.

Military expenditure in the Gulf will increase from $82.33 billion in 2013 to an estimated $103.01 billion in 2019, and is forecast to continue trending upward to $110.86 billion in 2023.

“Falling energy revenues between 2014 and 2016 led to some major procurement projects being delayed as governments reigned in budget deficits,” said Charles Forrester, senior defense industry analyst at Jane’s.

“However, defense was generally protected from the worst of the spending cuts due to regional security concerns and budgets are now growing again.”

Major deals in the region have included Eurofighter Typhoon purchases by countries including Saudi Arabia and Kuwait.

Saudi Arabia is also looking to “localize” 50 percent of total government military spending in the Kingdom by 2030, and in 2017 announced the launch of the state-owned military industrial company Saudi Arabia Military Industries.

Forrester said such moves will boost the ability for Gulf countries to start exporting, rather than purely importing defense equipment.

“Within the defense sector, the establishment of Saudi Arabia Military Industries (SAMI) in 2017 and consolidation of the UAE’s defense industrial base through the creation of Emirates Defense Industries Company (EDIC) in 2014 have helped consolidate and drive forward industrial defense capabilities,” he said.

“This has happened as the countries focus on improving the quality of the defense technological work packages they undertake through offset, as well as increasing their ability to begin exporting defense equipment.”

Regional countries are also considering the use of “disruptive technologies” such as artificial intelligence in defense, Forrester said.

Meanwhile, it emerged on Friday that worldwide outlays on weapons and defense rose 1.8 percent to more than $1.67 trillion in 2018.

The US was responsible for almost half that increase, according to “The Military Balance” report released at the Munich Security Conference and quoted by Reuters.

Western powers were concerned about Russia’s upgrades of air bases and air defense systems in Crimea, the report said, but added that “China perhaps represents even more of a challenge, as it introduces yet more advanced military systems and is engaged in a strategy to improve its forces’ ability to operate at distance from the homeland.”