The impact of Holiday Travel on Middle Eastern Airlines and the UAE Tourism Sector 

With a population of nearly 10 million people in the United Arab Emirates, where foreigners make up 88.1% of the population, the Christmas period is a crucial time for airlines. During this period, many expatriate workers return to their countries to celebrate the holidays with their families, while a considerable influx of tourists seeks the warmth and attractions of the Emirates.

This intense flow of people puts strong pressure on travel costs. Recently, there has been a significant increase in airfare prices during the Christmas holidays in the UAE. In December 2023, airfare costs rose by 50-60% compared to the start of the school holidays. This increase is due to various factors, such as high demand, reduced capacity compared to pre-pandemic times, airline debts, and the general rise in prices.

According to the latest statistics from the World Tourism Organization (UNWTO), between January and September 2023, about 975 million tourists traveled internationally, recording a significant increase of 38% compared to the same period in 2022. Overall, the tourism industry has recovered 87% of pre-pandemic levels in the first nine months of 2023. The Middle East leads this recovery with a 20% increase in arrivals compared to pre-pandemic levels in the first nine months up to September 2023. It is important to note that this region is the only one in the world to exceed 2019 levels in the same period. Qatar and Saudi Arabia lead the growth in 2023 with YTD changes compared to 2019 of +91% and +50%, but the United Arab Emirates also recorded an increase of +10%.

Airlines can benefit from these increases in ticket prices, especially considering the decrease in fuel costs. The price of jet fuel in the Middle East and Africa has recorded a 21.2% annual decrease.

Among the major listed airlines, with a capitalization of more than 1,000 million and excluding Russian Aeroflot, the overall performance in 2023 showed a progress of about +15%. SkyWest, an American airline, stood out at the top of the ranking with a remarkable progress of +196.8%, followed by the Greek Aegean with +119%. In fourth place, the Turkish company Turk Hava leads the ranking of Middle Eastern operators, continuing the positive trend that characterizes its path since 2021, with an impressive growth of +55% in 2021 and a surprising +603% in 2022.

Middle Eastern companies, including Turk Hava, Air Arabia, and Pegasus Hava, maintain a series of uninterrupted positive performances since 2021. In contrast, the economic slowdown in China has had negative impacts on Chinese carriers. All Chinese/Hong Kong flag carriers report a negative annual performance, with Cathay Pacific registering a -2.58% and China Express Airlines even reaching -44.5%.

In Europe, investors' focus is on companies like Ryanair and other low-cost carriers, while flagship companies are going through merger processes, as in the case of ITA with Lufthansa. Further clarifications on the situation of the Portuguese company TAP are currently awaited.

The global airline industry forecasts a revenue growth of 7.6% next year, accompanied by increasing operating margins to 5.1%. Furthermore, recent estimates indicate that airline total revenues in 2023 have recovered about 107% of the pre-Covid level. This exceptional growth is driven by strong passenger revenue, although partly offset by a decline in air cargo revenue. In 2024, passenger and cargo revenues are expected to approach the pre-pandemic distribution, with respective shares of 88% and 12%. Passenger revenues are expected to reach $642 billion in 2023, a significant increase of 47% compared to 2022. The main driver of this growth has been passenger demand."