Friday, May 21, 2010

MENA Airlines... Bucking The Trend

In the last decade or so the MENA airlines bucked the world airline industry trends, ever since 911, SARS, Avian Flu, H1N1 and even the current Recession. In every occasion the MENA airlines traffic and networks expanded, stayed profitable or sustained minimal losses. There are a few airlines that has always been high loss makers regardless of conditions like Kuwait Airways and Gulf Air to name a few.

The MENA airlines have a different way of achieving productivities and efficiencies than North American and European carriers. The conventional wisdom in North America and Europe is to downsize, lay off people and defer aircraft deliveries.

MENA region carriers actually react in the opposite way.
1. Aircraft deliveries are seldom deferred, but once delivered they are utilized because:
2. The airlines open up new stations that generate additional revenues and passenger uplift;
3. As traffic to North America and Europe reduces the intra MENA region traffic tends to increase and offset any losses on other routes.
The above achieve asset efficiencies

4. The airlines very seldom layoff personnel, except in cases of restructuring. They rely on recruitment freezes, attrition and unpaid leaves.
The above provides employee efficiencies and ensures the availability of highly trained and motivated staff when conditions change and the need to expand is urgent.

5. The airlines will look at means of reducing and realigning costs such as catering, overheads, and fuel to enhance their profitability.

The region suffers from the same world problems but reacts using different dynamics.

1 comment:

  1. I think point 4 has been a key differentiator - you nailed it on the head on having access to highly trained personnel.

    Unpaid leave is so much better than layoffs - certainly the accrued end of service benefits (if, in fact, they do accrue during the unpaid leave) must be far less than the cost of recruiting skilled and experienced staff.



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