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Weakening demand from the crisis-hit Gulf countries has turned the Middle East into one of the worst performing regions for vehicle sales this year, a new report has found.

According to BMI Research, Qatar’s auto market has particularly been hard hit by this summer’s dispute.

The group forecasted that the blockade would cause double-digit declines in sales for both passenger and construction vehicles in Qatar this year, to the tune of 18 and 15 percent, respectively.

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In a statement, BMI explained:

“Overall, we believe that the Gulf diplomatic crisis – and resultant restrictions on cross-border movements of goods and people between Qatar and Saudi Arabia, the UAE, Bahrain and Egypt – will weigh on consumer and investor confidence in Qatar over the coming months, while also directly disrupting activity in certain non-hydrocarbon sectors.”

BMI added that declining tourism numbers are hurting rental car companies, which helps explain why the passenger vehicle market is faring worse than the construction sector.

“We expect the Qatari government to make efforts to ensure infrastructure projects linked to the 2022 FIFA World Cup and the national diversification program progress without substantial delay,” the report said.

Contracting market

It’s been a buyer’s market for cars in Qatar since at least 2015, amid energy sector layoffs that affected thousands of residents.

Qatar is no different in this regard than many other Gulf countries hit by lower global oil prices.

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According to BMI, a region that was once a “safe haven for carmakers” is now the “worst performing globally in 2017.”

Going forward, BMI forecasts that new vehicle sales in Oman will fall some 25 percent this year, while construction vehicle sales will fall a whopping 43.8 percent in Saudi Arabia.

Are you buying or selling a car anytime soon in Qatar? Thoughts?

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Cardiff Bay

The first Qatar Airways flight to the Welsh capital of Cardiff will depart Doha on May 1, 2018, the airline has announced.

Qatar’s national carrier is the first of the Gulf airlines to operate a flight to the city.

Cardiff will become Qatar Airways’ fifth UK destination, in addition to existing routes to London Heathrow, Manchester, Birmingham and Edinburgh.

The seven-hour daily flight will be operated by a Boeing 787 Dreamliner with 22 seats in Business Class and 232 seats in Economy.

A ‘huge boost’

The new route, first announced in April, has been described by the UK government as a “huge boost for Wales.”

Victoria Scott

The Snowdonia National Park in Wales

“It will open up Wales’ links with the rest of the world and deliver new economic, leisure and travel opportunities for Welsh businesses and the people of Wales,” Carwyn Jones, the First Minister of Wales, said in a statement.

The route will also give Doha residents a new option for leisure breaks, as Cardiff airport provides easy access to Wales’ dramatic coastline, historic castles and beautiful national parks.

Additionally, Cardiff airport is a useful gateway for popular destinations in the southwest of England, like Bristol, Devon and Cornwall.

Are you excited about the new route? Thoughts?

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A Lufthansa Boeing 747

Germany’s national airline Lufthansa has announced plans to cease flying to Doha next month for financial reasons.

The last Lufthansa flight from Doha to Frankfurt will leave on Oct. 27.

The move will leave Qatar residents with even fewer options when flying to long-haul destinations in the US and South America, as well as connecting to other European countries.

Hamad International Airport

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Hamad International Airport

In a statement to Doha News, Lufthansa said that the route was not making enough money.

“Despite substantial sales efforts, this route was found to be commercially not viable,” the airline said.

However, the airline will retain its stopover in Kuwait, a spokesperson said.

“Only one year back, Lufthansa had to again connect its operation from Doha to Frankfurt via Kuwait, due to the unsatisfactory commercial development of the route over the past few years.”

The airline added that passengers with existing bookings on flights after Oct. 27 will be contacted directly and offered re-booking or refunds.

The cancelation follows Dutch airline KLM’s decision last November to also cease flying to Qatar.

At the time, the airline said that its Amsterdam-Doha route had “proven unprofitable” due to competition from Qatar Airways.

Impact on passengers

Fewer flying options could impact residents’ wallets.

Up until now, Lufthansa’s daily route to Frankfurt has offered a generally cheaper way to fly to the Americas and Europe.

Boeing

A Qatar AIrways Boeing 777

After October, Qatar Airways will have very little competition on flights to these destinations.

Additionally, British Airways is set to become the only European airline to fly into Hamad International.

Meanwhile, the ongoing blockade of Qatar and the suspension of flights by Etihad, Emirates and Gulf Air means that passengers can no longer easily connect through Abu Dhabi, Dubai or Bahrain to visit the US or Europe.

A difficult market

However, passengers may not want to get too concerned about higher ticket prices just yet.

Although Lufthansa’s decision may give Qatar Airways some advantage on European routes, these are still troubling times for the national carrier.

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Earlier this year, it was hit by an economic slowdown brought about by lower oil prices, as well as (now-removed) restrictions on electronic devices for US routes.

And over the summer, the ongoing blockade forced Qatar Airways to cease flying to 18 destinations, losing a fifth of its seating capacity in the process.

According to the Financial Times, this equates to a 1 percent decrease in seat demand this year. This is a significant change from the constant rise in demand the airline has experienced up until now.

Meanwhile, the airline’s rivals, Etihad and Emirates, have been even harder hit for various reasons.

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Photo for illustrative purposes only.

Emirates reported a 82 percent drop in profits for the last fiscal year, its first decrease in five years.

And Etihad reported a loss of $1.9bn for last year, partly a result of its decision to invest in a number of smaller, struggling airlines.

According to industry analysts, all three of the big Gulf carriers will have to take a financial hit and drop their prices to attract travelers.

John Grant of OAG, an aviation data consultancy, told the Financial Times that connecting traffic, which is central to their business models, is “always vulnerable to price.”
“Such low local market demand, particularly for Qatar and Etihad, does highlight a real risk in their traffic and business structure,” he added.

Thoughts?