UAE: Falling Oil Price Helps Reduce fares

Travellers in the UAE are reaping the benefits from a price war among the major Gulf airlines who are fighting for regional market share.

The airlines are increasingly competing head-to-head on many Middle Eastern routes with their hubs only a short distance from each other. The falling oil price has helped cut fares with fuel often the single largest operating cost of carriers worldwide.

Emirates, Etihad Airways and Qatar Airways have launched promotions this year that has seen the average fare on some Middle East routes from the Emirates drop by more than 10 per cent.

According to data from travel portal Cleartrip, the average Emirates round-trip fare from the UAE to a destination in the Middle East last January was Dh1,441, 17.6 per cent cheaper compared to the same month in 2015.

Etihad Airways’ average fare to the region was Dh1,211 last month, down 12.2 per cent compared to Dh1,380 in January 2015.

“Generally speaking, due to the drop in the price of crude oil in global markets, all airlines have reduced their fares. However, based on demand and supply on certain routes (and specific competitors strategy) airlines decide to adjust their pricing strategy,” Amit Taneja, chief revenue officer of Cleartrip, said by email. Crude oil prices have collapsed by more than 70 per cent since mid-2014.

Manu Mehrotra, general manager of Al Tayer Travel Agency, said that there are more airfare promotions this year compared to 2015. “Airlines want to secure more bookings earlier,” he said. Europe

But average fares from the UAE to Europe have increased this year since “demand from the UAE to Europe grew year-on-year”, outpacing seat supply, according to Cleartrip’s Taneja.

The average Etihad round-trip ticket to Europe last month cost Dh2,959, 21.7 per cent more compared to the same period in the previous year.

But Qatar Airways “has not increased its fares to Europe, the Middle East and Asia. It has reduced its fuel surcharge which ultimately reduces its overall pricing,” Dubai-based Alpha Tours said in a statement.

While air travel demand from Dubai to India has increased this year, fares dropped year-on-year “due to aggressive pricing strategy by low cost carriers and Jet Airways,” Taneja said.

India is a major market for Gulf carriers. Etihad Airways and Jet Airways saw a 63 per cent jump in passenger numbers between Abu Dhabi and India last year, flying 3.3 million.

The average Qatar Airways round-trip fare from the UAE to India last January was Dh1,097, 14.6 per cent cheaper compared to January last year.