Royal Jordanian ... Exciting Times

In the last couple of weeks Royal Jordanian announced the lease of seven (7) new Airbus aircraft from AWAS to replace 6 Airbus aircraft currently operating in the fleet. The replacement consists of 4 A320s and 2 A321s and an additional A320.. The first delivery is scheduled for April of next year when 3 A320s will join the fleet, while 2 A321s and 2 A320s will follow in 2012. The aim is to renew the fleet, upgrade the IFE across the fleet and reduce maintenance cost.

Further, Royal Jordanian added flights to several destinations to meet demand during the Summer season raising the daily departures to about 110.

In addition two (2) Airbus A330-200 joined the fleet on 24 May 2010 to be used on the London and Kuala Lumpur routes starting June 1, 2010.

Earlier, Royal Jordanian announced their intention to refurbish at least two (2) of their four (4) A340s by changing the interior and the IFE system starting at the end of 201 early 2011.

Royal Jordanian will be facing more competition both domestically and internationally, QAIA has attracted more than twenty plus (20+) new and/or upgraded air services over that past year through both introduction of new airlines, as well as increased frequency and/or routes by established carriers

To add to the buzz Mr. Hussein Dabbas President and CEO of Royal Jordanian, brought up again the issue of mergers and consolidation. "There is room for airlines like RJ to merge with another carrier," he said. "I think consolidation will happen, but not now and it will be like Air France KLM, British Airways and Iberia, Lufthansa-Swiss…Airlines will maintain their national identity."

The fleet renewal and expansion of the fleet coupled with the refurbishment of the A310s earlier and the A340s later this year is an indication of Royal Jordanian’s efforts to improve its services to ward off the competition and position itself for a merger.

Emirates at 90 A380s

On Friday 19 June there were several tweets regarding Emirates purchase of an additional 32 A380s to bring up the total of ordered aircraft to 90. The other issue was how will deal with Emirates recent order and the prospects of mergers between Emirates and Etihad or Etihad and Qatar Airways.

Emirates success so far did not come from luck but was and is the result of well thought strategies and most of all, the efficient implementation of these strategies.

I am not going to try to second guess Emirate's reasoning for their latest order however;

1. Emirates operates into many congested airports and the A380 is the best way to increase its traffic without adding more aircraft. This will reduce the operating cost in the long run.

2. Many countries even those that profess open skies and liberal regimes are protective of their airlines. Last week France rejected additional slots requested by UAE carriers.

3. The aircraft will be delivered by 2017 and hopefully the global recession will be over and traffic would have picked up and financing will be easier to obtain especially if Emirates keeps producing healthy profits.

The Merger buzz was started by Qatar Airways CEO in his remarks at the IATA AGM as reported on ATW (click here for full story.). He asserted that there will only be two carriers in the Gulf and Qatar Airways is one of them, and all others will disappear. The response was, the region's airlines will undergo some consolidation.

Looking at the three big carriers in the region Emirates, Etihad and Qatar Airways they all share a common trait; most of their traffic is transiting traffic through their hubs. However, the UAE carriers have an advantage, a larger population, almost 7 million, as opposed to 1.5 million in Qatar. This provides additional traffic from expatriates and their extended familiestravelling to and from the UAE to their home countries. Further, Dubai and Abu Dhabi are more popular as tourist destinations than Doha. Qatar Airways is in a more vulnerable situation than its two competitors.

Is there going to be mergers between any pair of the three, I don't think so, simply because all three are considered by their governments as an integral part of their development plans.

Will any of them disappear I doubt it, why should they when their catchment area goes way beyond the region to encompass the world. They have become global airlines with networks that span the world.

Air Arabia Jordan

Air Arabia has in the last six (6) years created a brand that transcends the GCC and MENA into the Indian Subcontinent, Africa, CIS and Southern Europe. The Air Arabia brand is probably one the most well known airlines in the region and the most dominant among the Low Cost Carriers in the region, Kudos.

Air Arabia's hub airlines, although new are proving to be successful, both Air Arabia and Air Arabia Morocco have weathered the global recession fairly well and managed to extend the brand reach into Europe. The start of Air Arabia Egypt will only increase that reach.

The announcement of Air Arabia Jordan will further extend that reach into Europe.

Jordan is a different market;
1. For starters it is the least populous with six millions as compared to the UAE at 8 millions or Morocco at 29 millions or Egypt at 75 millions;

2. Most of the Jordanian expatriate community is located in the GCC where competition is very high; on the other hand

3. Jordan has a very liberal aviation regime with unused bilaterals

4. The Tantash Group has one of the largest travel agencies in Jordan which will allow packaging of holidays.

5. Jordan has a vast tourism potential.

One major pitfall is the pace of expansion, that affects the corporate team.

The expansion into Jordan of Air Arabia will definitely change the way Jordanians view air travel in the same manner it has affected the UAE market.

Airlines and Iraq

Aviation in Iraq was in the news in the last few weeks and it was a mixed bag, the good news is that in the last few weeks both Emirates and Air Arabia announced services into Iraq with Flydubai to follow.

This brings air services into Iraq from three (3) MENA counties; Royal Jordanian and Royal Falcon from Jordan, Gulf Air and Bahrain Air from Bahrain and Etihad, Emirates, Air Arabia with Flydubai following soon from the UAE.

These are countries that either have a large Iraqi expatriate community or can provide a venue for Iraqis living abroad to visit their country or both. These airlines are taking calculated risks and reaping the benefits to provide links to Iraq.

The bad news is the dissolution of Iraqi Airways as a result of Kuwait Airways claims against the airline in the UK. The government is contemplating a new private airline for the replacement of Iraqi Airways. Finding investors and the startup phase is a process that will take anywhere between a year to two years, in addition to the effort to transfer bilaterals and aircraft orders. This will delay the development of an airline that can meet the needs of the people of Iraq and the countries development requirements.