Market Trends of middle east and africa aviation Industry
The re-opening of Asian markets is boosting traffic through Gulf hubs
- Air passenger traffic recovery has been strong for the African and Middle Eastern carriers, with year-over-year growth of 87.1% and 64.6% in the first quarter of 2023. In the Middle East & Africa, the number of international and domestic travelers increased by 15% in 2022 compared to 2021. The Middle East has also seen sustained recovery, with most countries having rebounded, except for Iran and Kuwait, where traffic was 26% and 4% short of full recovery, respectively. Jordan, Qatar, Saudi Arabia, and the United Arab Emirates posted strong growth numbers compared to 2019.
- In Q4 2022, Egypt and Nigeria witnessed their passenger traffic perform over 20% above pre-pandemic levels. Qatar’s traffic increased nearly 40% Y-o-Y over the same period, boosted by travelers attending the first World Cup hosted in the Arab country. However, passenger volumes in South Africa, Iran, and Kuwait are still more than 10% below their pre-pandemic levels as of Q4 2022.
- According to IATA, The world’s busiest hub for international traffic, Dubai International Airport (DXB) recorded 22.9 million passengers in the third quarter of 2023, the highest quarterly traffic since 2019, rising by nearly 40% over a year.
- In 2022, load factors reached 77% and 80% for the Middle Eastern & African airlines, respectively, up more than ten percentage points compared to the 2021 load factors. These facts indicate that the travel recovery continues to gather momentum post the COVID-19 restrictions. Many major international route areas within the Middle East are already exceeding pre-COVID-19 levels. Tourism and the high willingness to travel continue to foster the industry’s recovery in the Middle East & Africa.
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Major military powers in the region have surged their defense expenditure
- Defense expenditures in the Middle Eastern region were around USD 184 billion in 2022, a decline of over 3.2% compared to 2021. In contrast, it was around USD 39.4 billion in Africa in 2022, with a decline of over 5% from 2021. Countries such as Saudi Arabia, Egypt, Qatar, United Arab Emirates, and Algeria were the major countries in the region with a high defense expenditure during 2017-22. They have active procurement programs for multi-role and utility aircraft in fixed-wing segments.
- Sub-Saharan Africa’s combined military expenditure stood at USD 20.3 billion in 2022, down by 7.3% compared to 2021 and 18% compared to 2013. Nigeria and South Africa, the sub-regions two largest spenders, led the decline in military spending in 2022. In 2022, Israel’s military spending fell for the first time since 2009. Its total of USD 23.4 billion was 4.2% lower than in 2021.
- The year-on-year (Y-o-Y) growth in Saudi Arabia's military spending was 16% in 2022 compared to 2021, the first Y-o-Y increase since 2018. Saudi Arabia's military expenditure was estimated at USD 75.0 billion last year. The reduction coincided with accusations that Saudi Arabia had started to remove its military personnel from Yemen. However, the Saudi government denied the allegations and insisted that the personnel were just being redeployed. Since 2015, Saudi Arabia has been leading a coalition in a military campaign against the war-torn nation of Yemen, and the fighting continued into 2022. Saudi Arabia had the second-largest military budget in the world, at 7.4% of GDP, after Ukraine in 2022.
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OTHER KEY INDUSTRY TRENDS COVERED IN THE REPORT
- The opening of new routes and demand for both global and international cargo operations are significant driving factors
- Rising air travel is driving the growth of RPKs in the Region
- Fleet replacement programs for older aircraft are projected to be the main driver for Middle Eastern military aviation
- The increased inflation has adversely impacted the growth of the region
- The ongoing military conflicts have worsened the economic conditions in the region
- Oil and gas and real estate were the major industries that boosted the growth of HNWIs in the Middle East
