Shifting sands in the Middle East

It wasn’t that long ago that, in the air freight world, “big news from the Middle East” was just a way of saying that Emirates had reported another double-digit increase in cargo volume. Then, Etihad Airways and Qatar Airways joined the conversation, regularly reporting gains approaching, and sometimes surpassing, 20%. Not much was ever heard from Saudia, but, given that it had the largest freighter fleet of any of the Gulf region carriers, it seemed safe to assume that it, too, was hauling an ever-increasing volume of cargo.

This growth, during a time of relative weakness in the worldwide air freight industry, came as the result of market share taken from Western European and Asian carriers, but now the shoe is on the other foot. Demand for air freight is surging worldwide, but it is now the European and Asian carriers that are reporting the biggest year-over-year increases, while growth has stalled for the Gulf-based carriers…

…with the exception of Qatar.

Cargo volume growth has stalled at both Emirates and Etihad, but, according to data in its just-released annual report for fiscal year 2017, Qatar Airways Cargo had a terrific year. As can be seen in the chart, cargo volume was up 20.9% in fiscal 2017 (ended 31 March), to 1.15 million tonnes. By way of comparison, Emirates’ volume was up 2.7% in the same period, and Etihad reported cargo volume in calendar 2016 flat with 2015 at 593,000 tonnes. Qatar’s cargo revenue growth wasn’t quite as strong as volume growth, up 13.5% to US$1.75 billion, but nonetheless cargo’s share of total revenue increased slightly to 18.0%.

But what of Saudia? The flag carrier of the Kingdom of Saudi Arabia does not publish annual reports or monthly statistics, but, according to data published by IATA, despite its large fleet, Saudia’s cargo traffic has been almost insignificant compared to its regional competitors. In 2015, the latest year for which full IATA data is available, cargo traffic for the Gulf region carriers was:

• Emirates Airlines: 12.32 billion RTKs
• Qatar Airways: 7.71 billion RTKs
• Etihad Airways: 4.56 billion RTKs
• Saudia: 0.85 billion RTKs

Given that, at the beginning of 2015, Saudia had the largest freighter fleet of the four, the above numbers seem bizarre (even if some of Saudia’s traffic was being reported by carriers from which it was ACMI-leasing freighters). Two-and-a-half years later, in mid-2017, the sands in the cargo landscape have shifted. The Emirates and Etihad freighter fleets have remained relatively stable, but, while Qatar Airways has more than doubled its freighter fleet, Saudia has shrunk its fleet to just over half what it was.

The lower chart shows the current freighter fleets of the four carriers, as well as what we know of their plans. What jumps out in the chart immediately is that the first aircraft column – for the 747-8F – is empty. “But wait,” I hear you saying, “Doesn’t Saudia have two 747-8 freighters?” And then, as you look two columns to the right, “And what happened to their four 777Fs?”

The short answer is “Saudia has parked all six of its owned freighters.” According to the flight-tracking service FlightAware, the last flight for any of the six was almost two months ago. Two of the 777Fs were parked in December 2016, while the remaining two 777Fs and the two 747-8Fs were grounded in March and April of this year.

Why? We don’t know. The most recent rumor is that the carrier can’t find pilots, but it may have just as much, or more, to do with the fact that despite having a huge freighter fleet, Saudia was just not carrying much freight.