If you think about the railways, the logistics went railway tracks were laid down was, how far till the steam boiler needed water and fuel? Then with the invention of diesel locomotives, the issue was how far did the next gas station? and each time technology improved the railway, a stop on the railway was discontinued and the community changed.
In the airline business, most airlines flew in and out of London, England as a hub. In the US, Delta and American have hub and spoke systems and the feeder airlines fly in Atlanta or Dallas or Chicago or LA. There are great efficiencies in the way the logistics are run. In worldwide travel, the oil money from the Middle East wanted to change where airlines used as a hub and spoke. Great sums of money were spent to make Dubai, the major stopover.
In an article by John Yoon of the New York Times News Service, before the war between Iran and the US, major Persian Gulf airlines such as Emirates, Qatar Airways and Etihad dominated intercontinental travel. Roughly 1/3 of the traffic between Europe and Asia and 50% of travelers between Europe and Australia went through the Middle East airports.
Since the war, airlines have shifted and now are stopping in Hong Kong, Istanbul, Seoul, South Korea, and Singapore.
The major Middle Eastern hubs Dubai and Abu Dhabi, UAE, and Doha in Qatar sit at the intersection of Africa, Asia and Europe, a few hours away from most of the world’s population. 16% of the world’s 417 million passengers went through the region according to the International Air Transportation Association.
After the war started, according to Alton Aviation Consultancy, transfer traffic is down 47%. Airlines are looking for alternatives and found them in Asia, where they grew 33%.
Seoul, South Korea’s airport is called Incheon International Airport and business is up 18% over last year and 63% on European routes. This has made it the busiest airport in the world passing Dubai International and Heathrow in London.
Airports stand to benefit because travelers whether they are landing or transmitting, pay passenger fees. Each traveler spends between $29 and $44 on airport shopping, dining and non-aviation expenses, according to Airport Council International and JD Power.
When there is peace in the Middle East airlines tend to like Dubai the best and bookings to the Middle East has increased or the surge to the Asia is a little less.
Linking to dividend paying stocks, in all industries there are alternatives. Sometimes the alternatives are not seen right away but there are alternatives that can be done, unless there is a shock to the system but alternatives exist. For your investments, what are the alternatives?
There are more questions than answers, till the next time – to raising questions.
