Middle East is new global travel crossroads

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There are spalike restrooms with heated floors and a shower.

But what really makes these Persian Gulf airlines unique is their focus on direct flights to smaller cities. The hub system they are developing is similar to what U.S. airlines did a generation ago — allowing passengers to fly from, say, Knoxville, Tenn., to Sacramento, Calif., with just one connection.

“Forget Mumbai and New Delhi. There’s another 40 secondary cities in India that I can take advantage of,” says Etihad CEO James Hogan.

Airlines and governments in North America and Europe have been fighting back where they can.

In Canada, the government has limited the number of planes that Etihad, Emirates and Qatar can land at its airports. The move protects Air Canada and its partner Lufthansa, which have a good business flying Canadians to India, Africa and Asia.

Separately, Lufthansa has tried to block the Gulf carriers’ access to German airports. Etihad responded by purchasing 29 percent of rival Air Berlin, gaining entry to key European cities. It also owns 40 percent of Air Seychelles and smaller stakes in Virgin Australia and Irish carrier Aer Lingus.

“Working against us or trying to isolate us will not succeed because there is a very clear vision behind these airlines, and we will keep on expanding,” said Qatar’s CEO, Akbar Al Baker.

There has been a recent thaw. Emirates struck a 10-year deal with Australian airline Qantas; Etihad partnered with Air France-KLM on some routes; and Qatar is joining a global airline marketing and frequent-flier partnership headed up by American Airlines and British Airways.

Still, there is plenty of worry given the size of the Gulf airlines’ jet orders and concerns that they are deeply subsidized by their governments.

European airlines have suggested that the Gulf carriers benefit from access to discounted oil, a favorable tax climate and nonunion labor, particularly low-wage immigrant workers from India and Pakistan.

But the biggest perk comes from Middle East governments who are investing heavily in attractive, efficient airports.

The Qatari government is building a $15.5 billion airport in Doha, designed to handle 24 million people each year, nearly six times the capacity of the existing facility. In Abu Dhabi, the capital of the United Arab Emirates, the government is building a sprawling terminal twice the size of the Mall of America.

And construction was just completed in Dubai of a concourse designed exclusively for Emirates‘ fleet of Airbus A380s. The new building has entire floors dedicated to first and business class customers who board directly from lounges, never interacting with coach passengers.

“Governments here understand the power of connectivity to drive economies,” Tony Tyler, CEO of the International Air Transport Association, said in a recent speech in Abu Dhabi.

The airlines deny getting special treatment.

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