Middle East’s Next Frontier: Unlocking Intra-Regional Air Travel

The Middle Eastern aviation sector has long been a titan of global long-haul travel, masterfully connecting continents and establishing mega-hubs that serve as worldwide crossroads. However, a new report from aerospace manufacturer Embraer, released at the Dubai Air Show on November 18, 2025, suggests the industry’s next great opportunity lies much closer to home. The report, titled “Middle East’s Next Frontier: The Untapped Connectivity Potential,” argues that a significant, underexploited market exists for Commercial-Aircraft within the region itself, a market that could redefine growth and profitability for local carriers.

For years, the prevailing strategy has centered on a “bigger is better” philosophy, utilizing large widebody and narrowbody aircraft to connect distant global capitals. While this model has been incredibly successful, it has left the regional network comparatively underdeveloped. According to Embraer’s analysis, only 22% of Available Seat Kilometers (ASKs) in the Middle East are dedicated to intra-regional routes. This figure stands in stark contrast to more mature markets like Europe, where 52% of ASKs are for regional flights, and North-America, at 64%. This disparity signals a clear and present opportunity to pivot toward strengthening local connections, fostering greater economic integration, and opening new revenue streams.

The challenge, as outlined in the report, is that the current fleet composition of many Middle Eastern Airlines is not optimized for this task. The reliance on larger aircraft, while efficient for high-density international routes, proves economically unviable for thinner, shorter-haul city pairs within the region. This has led to a stagnation in the growth of direct flight connections over the last 15 years. Embraer posits that a strategic shift towards smaller, new-generation narrowbody aircraft is the key to unlocking this latent demand and building a more resilient, profitable, and interconnected regional network.

The Case for Right-Sizing Fleets

The core of Embraer’s argument rests on the principle of “right-sizing”, matching the aircraft to the mission. The historical approach of deploying larger narrowbody jets to lower per-seat costs has, paradoxically, hindered regional expansion. Many potential routes lack the consistent high demand needed to fill these larger planes, resulting in low load factors and unprofitable operations. Consequently, airlines have been hesitant to launch new services, leaving a significant number of city pairs completely unserved.

Embraer’s data highlights this gap with precision. The report identifies over 120 unserved city pairs within the Middle East that possess sufficient passenger demand to sustain direct flights, provided the right aircraft is used. These are not marginal routes but viable markets waiting to be connected. The solution, Embraer suggests, lies in modern small narrowbody jets, such as their E-Jets E2 family. These aircraft offer significantly lower trip costs, making it feasible to operate on routes with less dense demand. Crucially, their seat costs are comparable to their larger counterparts, ensuring that efficiency is not sacrificed for flexibility.

This right-sizing strategy addresses multiple inefficiencies. Beyond opening new routes, it allows airlines to increase the frequency of existing services. Middle Eastern hubs, for all their global reach, operate with fewer daily flights per destination compared to major hubs in Europe and North America. By adding frequencies with smaller jets, airlines can offer more convenient schedules for business and leisure travelers, thereby enhancing the attractiveness of their hubs and capturing a larger share of the regional market. Furthermore, with 36% of existing intra-regional markets currently operating with low load factors, deploying smaller aircraft can immediately improve profitability by better matching capacity to demand.

A New Model for Regional Profitability

The adoption of smaller narrowbody aircraft represents more than just a fleet adjustment; it signifies a fundamental shift in strategic thinking. It challenges the long-held belief that only large aircraft can be profitable and proposes a more nuanced model for network development. By focusing on trip costs rather than just seat costs, airlines can build a more diversified and resilient route network that is less vulnerable to fluctuations in demand on a few key routes.

“Middle Eastern aviation has achieved global prominence by connecting continents, but the next frontier lies in connecting the region itself. Our report shows that small narrowbody aircraft are the key to unlocking new routes, increasing frequencies, and building a more profitable and resilient regional network.” – Stephan Hannemann, SVP for Africa and Middle East, Embraer Commercial Aviation.

This approach aligns with the ambitious national aviation strategies being pursued across the region. While these plans have historically focused on building global hubs, strengthening intra-regional connectivity is the logical next step for sustained growth. A more interconnected Middle East would not only benefit airlines but also stimulate trade, tourism, and economic cooperation between neighboring countries. It would make it easier for businesses to expand across borders and for people to connect with friends and family, fostering a greater sense of regional identity.

Recent developments concerning aircraft technology further bolster this case. For a time, concerns over the Pratt & Whitney PW1900G engines, which power the E2 jets, may have given some carriers pause. However, at the Dubai Air Show, Embraer Commercial Aviation CEO Arjan Meijer provided a confident update, stating that the second half of 2025 marked a “turning point” for the engine issues. He projected that by the end of 2026, zero aircraft would be grounded due to these problems, a sentiment echoed by customers like Royal Jordanian Airlines CEO Samer Majali, who reported a trouble-free summer of operations. This resolution of technical hurdles removes a significant barrier for airlines considering the E2 platform for their regional expansion plans.

Conclusion: The Future is Regional

Embraer’s report presents a compelling, data-driven vision for the next phase of aviation growth in the Middle East. By highlighting the vast untapped potential for intra-regional connectivity, it challenges carriers to look beyond the established long-haul model and embrace a more flexible, right-sized approach to fleet and network planning. The evidence is clear: a significant market exists, and the technology to serve it profitably is available. The strategic deployment of small narrowbody aircraft offers a clear path to unlocking over 120 new city pairs, increasing flight frequencies, and improving the economic performance of existing routes.

As the region’s nations continue to diversify their economies and pursue ambitious development goals, the importance of a robust and efficient regional air transport network cannot be overstated. The shift towards enhanced intra-regional connectivity is not merely an opportunity for airlines to boost their bottom line; it is a crucial enabler of broader economic and social integration. By closing the connectivity gap, Middle Eastern aviation can build upon its global success and forge a new frontier of growth, resilience, and shared prosperity within its own borders.

FAQ

Question: What is the main argument of Embraer’s report?
Answer: The report argues that there is a large, untapped market for air travel within the Middle East itself. It suggests that airlines can unlock this potential by using smaller, new-generation narrowbody aircraft, like the Embraer E-Jets E2, to profitably serve routes with less demand.

Question: How does intra-regional connectivity in the Middle East compare to other regions?
Answer: Only 22% of Available Seat Kilometers (ASKs) in the Middle East are for intra-regional routes. This is significantly lower than in Europe (52%) and North America (64%), indicating a substantial opportunity for growth.

Question: Why are smaller aircraft better for these regional routes?
Answer: Smaller narrowbody jets have lower trip costs, making them profitable on “thinner” routes where larger planes would fly with low load factors. Their seat costs are comparable to larger jets, so airlines don’t sacrifice efficiency. This allows for the opening of new routes and increasing frequencies on existing ones.

Question: Were there any concerns about the engines on Embraer’s E2 jets?
Answer: Yes, there were previous issues with the Pratt & Whitney PW1900G engines. However, Embraer’s CEO has stated that these issues are being resolved, with a projection that no aircraft will be grounded for this reason by the end of 2026. This has been supported by positive feedback from airline executives.

Sources

Embraer

Berlin Court Rules on eDreams Prime Terms

We are witnessing a significant development in the ongoing legal dispute between Ryanair and the online travel agent eDreams ODIGEO. On November 26, 2025, the Berlin Regional Court granted a permanent injunction against eDreams. This ruling specifically targets certain terms and conditions associated with the company’s Prime subscription service, which the court found to be in violation of German consumer protection laws. This decision marks the latest chapter in a multi-jurisdictional conflict regarding how third-party platforms sell air travel.

The core of this legal action revolves around transparency. The court prohibited eDreams from utilizing specific clauses that were deemed misleading regarding the savings consumers could achieve through the Prime subscription. Furthermore, the ruling addressed the mechanisms of the subscription itself, specifically how fee increases were communicated to users. The court found that eDreams failed to provide adequate disclosure regarding when membership fees might rise, ruling that terms implying a customer’s continued use of the service constituted tacit acceptance of these price hikes were unlawful.

This judgment is particularly notable because it reinforces the strict transparency requirements mandated by the German Unfair Competition Act. For the aviation and travel technology sectors, this serves as a critical case study on the boundaries of digital subscription models and the presentation of price comparisons. While Ryanair views this as a confirmation of their long-standing complaints against Online Travel Agents (OTAs), the implications extend to how digital services across the European Union structure their auto-renewal and pricing policies.

The Battle of Narratives: “Pirates” vs. “Legacy” Systems

Following the ruling, the response from both stakeholders highlights the intense competitive friction between direct airline bookings and OTA aggregators. Ryanair immediately welcomed the decision, utilizing the verdict to bolster their campaign against what they term OTA Pirates. The Airlines’s position is that these intermediaries often overcharge consumers or obscure the true cost of travel services. By securing this injunction, Ryanair aims to pressure EU Consumer Protection Authorities to enforce similar standards across the continent, arguing that such transparency is essential for consumer welfare.

“We welcome the Berlin Regional Court’s decision to grant a permanent injunction prohibiting eDreams from using eDreams Prime terms and conditions that the Court has previously found to be ‘unlawful’ or ‘misleading’.”, Ryanair Spokesperson.

Conversely, eDreams ODIGEO has publicly dismissed the ruling as substantially irrelevant to their current operations. In their response issued on November 27, 2025, the company argued that the injunction pertains to a legacy version of their website and specific display formats that have long been discontinued. According to eDreams, the court’s decision does not impact the core value proposition of the Prime subscription or the benefits currently offered to subscribers. They maintain that the ruling is strictly limited to the visual placement of information on an outdated interface.

We must also consider the broader context of this rivalry to understand the full picture. While Ryanair secured this victory in Berlin, the legal landscape is mixed. For instance, in July 2025, a commercial court in Barcelona ruled in favor of eDreams, ordering Ryanair to cease its denigration campaign. In that instance, the Spanish court found that Ryanair’s accusations that eDreams deceives customers constituted unfair competition. This back-and-forth suggests that while individual battles are being won and lost, the war for market dominance and customer ownership remains unresolved.

Implications for the “Approved OTA” Model

A central element of Ryanair’s Strategy is the push for its Approved OTA model. The airline has successfully negotiated agreements with several other travel aggregators, such as Loveholidays, Kiwi, and On the Beach. These agreements typically require the OTA to cease screen scraping, the practice of using software to extract data from the airline’s website without permission, and to provide the airline with direct customer contact details. This ensures the airline can communicate directly with passengers regarding flight changes or ancillary services.

eDreams remains the most significant holdout in this strategy, refusing to sign such an agreement. The Berlin ruling provides Ryanair with additional leverage to argue that non-approved OTAs operate with insufficient transparency. However, eDreams continues to argue that their model provides unique value through interlining (combining flights from different carriers) and bundled discounts that a single airline cannot replicate. The friction here is fundamentally about who owns the customer relationship: the carrier operating the flight or the platform facilitating the booking.

Looking ahead, we anticipate that this ruling will encourage further scrutiny of digital subscription models in the travel industry. The Berlin Regional Court’s decision aligns with a wider trend among European regulators to crack down on dark patterns, user interface designs that may trick users into doing things they didn’t mean to, such as agreeing to hidden fees. Whether eDreams is forced to alter its current interface or if their legacy defense holds up in the court of public opinion remains to be seen.

Conclusion

The permanent injunction granted by the Berlin Regional Court represents a tangible legal victory for Ryanair in its campaign for greater transparency in the OTA market. By successfully challenging the terms and conditions of the eDreams Prime subscription, the airline has highlighted the legal risks associated with misleading savings claims and opaque renewal clauses. However, the practical impact of this ruling may be tempered if, as eDreams claims, the judgment applies only to discontinued website iterations.

Ultimately, this case underscores the evolving regulatory environment surrounding digital travel sales. As courts in Germany, Spain, and the United States continue to weigh in on issues ranging from screen scraping to defamation, the industry is moving toward a pivotal moment. We expect that the pressure for clear, transparent pricing and fair competition will force both airlines and OTAs to refine their digital strategies to ensure compliance and maintain consumer trust.

FAQ

What did the Berlin Regional Court rule regarding eDreams?
The court granted a permanent injunction prohibiting eDreams from using specific terms and conditions for its Prime subscription that were deemed misleading and unlawful, particularly regarding savings claims and fee transparency.

How has eDreams responded to the injunction?
eDreams stated that the ruling is substantially irrelevant because it concerns a legacy version of their website and display formats that are no longer in use.

Does this ruling affect all Online Travel Agents (OTAs)?
No, this specific ruling is against eDreams. However, Ryanair is using the verdict to call for broader enforcement of transparency standards across the OTA industry.

Sources

• Ryanair Corporate News

The Battle for TAP Air Portugal: Europe’s Giants Enter the Ring

The privatization process for TAP Air Portugal has officially moved into a critical phase, marking a significant moment in the consolidation of the European aviation industry. As of the deadline on November 22, 2025, Parpública, the Portuguese state holding company, confirmed the receipt of three formal expressions of interest. As many industry analysts anticipated, the contenders are exclusively the “Big Three” of European aviation: Airlines: Lufthansa Group, Air France-KLM, and International Airlines Group (IAG). This development sets the stage for a high-stakes negotiation process that will determine the future of Portugal’s flag carrier and its coveted Lisbon hub.

While the Portuguese government had previously signaled openness to global investors, hoping to attract capital from outside the European Union, the final lineup of bidders tells a different story. No non-EU carriers, such as those from the Middle East, submitted a bid. We observe that this narrows the competition to a purely European affair, driven by the strategic necessity for these legacy groups to secure market share in the South Atlantic. The government is offering a 49.9% stake in the airline, with 5% reserved for employees, retaining a majority hold that likely influenced the absence of non-European bidders.

The next steps in this privatization roadmap are tightly scheduled. Parpública has a 20-day window, extending until mid-December 2025, to evaluate the technical and financial merits of these expressions of interest. Following this evaluation, qualified candidates will be invited to submit non-binding proposals within a subsequent 90-day period. For the Portuguese taxpayer, this sale is not just about offloading an asset; it is an attempt to recover a portion of the approximately €3.2 billion in state aid injected into the airline to save it from bankruptcy during the COVID-19 pandemic.

Strategic Interests and the South American Gateway

To understand why Lufthansa, Air France-KLM, and IAG are vying for a minority stake in TAP, we must look at the map. TAP Air Portugal holds a unique geographic and strategic asset: the Lisbon hub. This airport serves as a primary gateway between Europe and South America, particularly Brazil, as well as offering robust connections to Africa. For the bidding airline groups, acquiring TAP is not merely about adding planes to a fleet; it is about capturing lucrative long-haul traffic flows that are difficult to replicate organically.

Lufthansa and Air France-KLM: Filling the Gaps

For the Lufthansa Group, the rationale is arguably the most straightforward. The German giant is currently the weakest of the three major groups in terms of market share to South America. CEO Carsten Spohr has publicly described TAP as being “of great strategic importance.” By integrating TAP’s network, Lufthansa would gain an immediate, dominant foothold in the Brazil-Europe market, bypassing the need to route passengers exclusively through Frankfurt or Munich, which are geographically less efficient for these specific routes. A partnership here would effectively turn Lisbon into Lufthansa’s primary Atlantic hub for southern routes.

Similarly, Air France-KLM views this acquisition as a consolidation play. While they already possess a strong network, adding TAP would grant them a dominant share of traffic across the South Atlantic. The group submitted its formal expression of interest early in the week leading up to the deadline, signaling strong intent. For them, preventing TAP from falling into the hands of a rival, especially Lufthansa, is as much a defensive strategy as it is an offensive expansion.

IAG and the Competition Conundrum

The position of International Airlines Group (IAG), the parent company of British Airways and Iberia, is more complex. IAG is already the dominant force in the South Atlantic market through Iberia’s hub in Madrid. While they have submitted an expression of interest, they have also explicitly stated that “several issues need to be clarified” before they can commit to a proposal. This hesitation likely stems from regulatory hurdles and the Portuguese government’s specific concerns regarding hub competition.

“The Portuguese government is wary of any buyer that might ‘cannibalize’ Lisbon’s traffic to feed another hub.”

The proximity of Lisbon to Madrid creates a potential conflict of interest. There is a prevailing fear within Portugal that IAG might downgrade Lisbon’s status to feed long-haul traffic through Madrid, effectively reducing TAP to a feeder airline. Consequently, IAG will likely face the highest scrutiny regarding competition remedies and guarantees regarding the autonomy of the Lisbon hub.

Government Conditions and Financial Realities

The Portuguese government, led by Prime Minister Luís Montenegro, has established strict “strategic conditions” that any potential buyer must meet. These stipulations are designed to ensure that TAP remains a national asset in function, even if it becomes partially privately owned in structure. The primary requirement is the preservation and development of the Lisbon hub (Humberto Delgado Airport) as a crucial link between Europe, Brazil, and Portuguese-speaking African countries (PALOP). Furthermore, the maintenance of the TAP brand and the autonomous management of the route network are non-negotiable prerequisites.

The Absence of Non-EU Bidders

The lack of interest from non-EU entities, despite earlier speculation regarding airlines like Qatar Airways, can be attributed to European Union ownership regulations. Under EU law, non-EU entities are capped at owning 49% of an EU airline to maintain its operating license. Since the Portuguese government is selling exactly 49.9%, and intends to keep the remaining 50.1% in state or employee hands for now, a non-EU investor would have found themselves in a minority position with limited control and no path to majority ownership. In contrast, a European buyer faces no such regulatory ceiling on future ownership, making the initial minority stake a potential stepping stone to full control down the line.

Financial Trajectory

Financially, TAP is in a much stronger position than it was during the crisis years of 2020-2021. The airline reported a net income of €53.7 million for the full year of 2024, alongside record revenues of €4.2 billion. This positive momentum has carried into 2025, with the airline posting a net income of €125.9 million for the third quarter alone, driven by robust summer demand. However, we must note that while profitable, the airline is operating with thinner margins compared to the immediate post-pandemic “revenge travel” boom. The incoming strategic partner will be expected to optimize operations to ensure long-term viability and repay the confidence, and capital, invested by the Portuguese state.

Concluding Section

The privatization of TAP Air Portugal has narrowed down to a classic contest between Europe’s aviation titans. With Lufthansa, Air France-KLM, and IAG all formally in the running, the next few months will be defined by intense scrutiny of their strategic plans for the Lisbon hub. The Portuguese government faces the delicate task of selecting a partner that offers the best financial return while strictly adhering to mandates that protect national connectivity and the airline’s identity.

As we look toward 2026, the outcome of this sale will likely reshape the transatlantic market. Whether TAP becomes the southern wing of the Lufthansa crane, a reinforcement for Air France-KLM, or a consolidated asset for IAG, the decision will have lasting implications for Portuguese travelers and the broader European aviation landscape. The focus now shifts to Parpública’s evaluation, where the fine print of these proposals will determine the future of Portugal’s wings.

FAQ

Question: Who are the confirmed bidders for TAP Air Portugal?
Answer: The three confirmed bidders are the Lufthansa Group, Air France-KLM, and International Airlines Group (IAG), which owns British Airways and Iberia.

Question: Why didn’t any non-European airlines bid?
Answer: Non-EU airlines did not bid likely due to EU ownership rules that cap non-European ownership at 49%. Since the government is only selling a 49.9% stake, a non-EU investor would have had limited control compared to European peers who could potentially increase their stake later.

Question: Is the Portuguese government selling the entire airline?
Answer: No. The government is selling a 49.9% stake. Of this, 44.9% is available to the strategic investor, and 5% is reserved for TAP employees.

Question: Is TAP Air Portugal currently profitable?
Answer: Yes. TAP reported a net income of €53.7 million in 2024 and a net income of €125.9 million for the third quarter of 2025.

Sources

• Reuters