Sunday, August 7, 2011

MENA Airlines, The Elusive Recovery Revisited

As the world bounces from one financial and political crisis to another MENA airlines continue to grapple with the political events in Libya, Syria and Yemen. Most airlines in the region had a small to modest increase in passenger numbers, Dubai saw an 8.9% increase in H1 2011 compared to 2010 (24.6 vs. 22.6 million passengers); Etihad had a 28% increase in revenues due to a 14% increase in passengers carried and a 5% reduction in cost; Air Arabia Q2 net profit increased by 2% over Q2 2010 due to a 22% increase in revenue and Royal Jordanian posted a 39 million JOD ($55m) H1 loss in spite of a 3.5% sales increase, the loss is attributed to fuel prices which is 44% of operating cost and declining yields, yet the airline remains optimistic for the remainder of the year. Al Jazeera and Qatar Airways had passenger increases, and Gulf Air traffic is starting to recover coupled with a new campaign "Family First" that will hopefully put it on the road to recovery.

All the major players in the region continued to expand their networks and take delivery of new aircraft. Almost all the airlines introduced promotions to increase traffic during the Holy Month of Ramadan.

This is a region that is familiar with political turmoil and has always managed to cope and recover, but events in Syria, Libya, Yemen and Sudan are still taking their toll. High fuel prices and an escalating global debt crisis are major challenges.

Very few airlines outside those in the UAE will be posting annual profits in 2011.

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