Saturday, February 6, 2010

Finally Liberalized ... Aviation In Jordan

On 5th of February 2010 the exclusive right accorded to Royal Jordanian (RJ) in 2002 as the sole scheduled carrier in the country came to an end. A new era of market liberalization came into being.

In 2002 and as part of the government assistance in the privatization effort of RJ, it was agreed:
1. For 4 years RJ will be designated as the only scheduled carrier operating under any of the
bilateral agreements signed by Jordan.
2. For the remaining 2 years the government allowed other Jordanian carriers to operate
scheduled flights on any route not served by RJ and a Charter authority for routes operated by RJ.

As of today, 6th of February 2010, and if a bilateral allows for the designation of a second carrier, they any operator can request scheduled flights authority.
What does that mean to RJ and to the industr? In the short term not much.

However, in the medium and longer term it changes the economic dynamics of aviation in Jordan.
1. Potentially increases competition on existing lucrative routes (Dubai, Beirut, Cairo to name a few
2. It changes the economics of the business plan for existing and start ups alike. How so, it adds
a revenue stream and an option that did not exist before "Scheduled Flights" on routes with
a known economic potential, in a nutshell it makes it easier to start an airline, at least on
paper.

How soon are the existing operators, Jordan Aviation, Royal Falcon Air Services and Transworld Airfreighter Co., ready to take on RJ on its well established routes. The levels of service will have to improve and commercial structures have to be put in place in order to compete with RJ that offers a "One World Alliance" passenger services and extensive connectivity on a fairly new and modern fleet.

Realistically, the effects of this decision will not be felt for a few more years, but it opens real opportunities and competition on a market that has been the exclusive turf of Royal Jordanian since 1963.



3 comments:

  1. Thank you for an insightful Bolg Salah.
    Despite liberalization, we believe that competition with RJ is not an opportunity, at least in the coming few years. RJ shall remain for a while benefiting from the image gained with merit as the ex-flag carrier of Jordan.
    Therefore what we see from within Jordan is a room for sharing responsibilities and services. Each airline in Jordan has its segment and all compliment each other. Jordan is lacking a true LCC that would be qualified enough to compete with Air Arabia, Fly Dubai and others who reach Amman yet to serve as a complimentary to the services RJ offers all over the world.
    RJ shall remain the big brother for years to come.

    ReplyDelete
  2. I agree with you that RJ will remain the dominant carrier in Jordan for a long time. But for the first time other entrants have a realistic opportunity to grow and provide an alternative

    ReplyDelete

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