Super-connectors: Two good,
two bad? — October 2018

Our view of the Super-connector sector is: there are two very successful models — Emirates, with its mega-bub at Dubai operated with A380s and 777s, and THY’s long-haul, mostly 737, operation based at Istanbul — with both airlines achieving consistent profitability, displaying financial transparency and, despite the closeness of their relationships with their respective governments, not receiving direct subsidies. Then there are two models — Etihad and Qatar Airways — which have been successful in copying Emirates operationally, but which have never achieved commercial viability, have been supported financially by their governments and have been very opaque about their accounts.

Consequently, there is a supply/demand imbalance in the Super-connector sector. The graph below summarises the outlook, relating historic seat capacity offered by the Super-connector group compared to a probable demand projection. Following the series of political and economic crises in the Middle and Near East, the Super-Connectors as a group are no longer growing traffic at anything any their pre-2014 rates of around 15% pa. They have reverted to a “normal growth” profile, roughly 4-5% pa, yet the fleet plans and official scheduled deliveries still imply a 10%-plus capacity growth rate for the Super-connector group.