2011 is coming to an end and it has been a rocky year regionally and globally.
Politically, The Arab Spring has resulted in regime changes and more uncertainty. Europe is in turmoil over the Euro debt and the USA goes from one funding crisis to another. Rating agencies have been downgrading major economies deepening the Euro Zone crisis. India is facing a weakening of its currency and a relative slow down in its GDP same as China.
In MENA/GCC 2011 has been an interesting and challenging year for the airlines and aviation.
Most airlines managed to expand and no aircraft orders were cancelled or deferred. Most of the MENA carriers managed to recover from the Arab Spring effects. Passenger numbers were comparable to 2010 if not better but yields suffered. Fuel amounted to 40% to 60% of the airlines cost however ticket prices remained at the same level in fear of losing passengers.
Mega aircraft orders were made during the Dubai Air Show. Emirates became the largest B777 operator same as the A380. Etihad ordered additional B787s to become the largest operator. Qatar Airways will be the launch customer for the
A320NEO after browbeating Airbus and ordering 50 firm and 30 options. Oman Air ordered B787s keeping Boeing happy.
The airlines of the region expanded into Africa, the CIS and South America in addition to the traditional markets in Europe, India and Saudi Arabia. Relatively new markets, in order to sustain their capacity growth in face of increasing global and regional political and economic turmoil.
There has been several major events during the year that will have an impact on 2012 and beyond:
Etihad increased its stake in Airberlin to 29% providing much needed cash to the European carrier and providing access to Etihad's network, just as Airberlin will provide Etihad with access to Germany and Europe.
The second event is the announcement by GACA of the completion of their proposals to allow foreign investment and regional carriers to operate domestic flights within Saudi Arabia and international flights from any point in the Kingdom. GACA does not know how successful this will be, but are willing to wait and see and then adjust depending on the response.
There has been other events such as the privatization of Kuwait Airways after its restructuring and the code share agreement between Royal Jordanian and Airberlin.
As 2011 passes away, I wish you all a Happy and Prosperous 2012
Friday, December 30, 2011
Tuesday, December 20, 2011
Etihad and Airberlin More Than a Partnership
Etihad Airways has boosted its stake in Air Berlin from 2.9% to 29.21% and signed an extensive code share partnership that covers all Airberlin's extensive European operation and Etihad's extensive global network.
The deal provides Airberlin with needed cash and Etihad access to Germany and Europe.
Not wanting to read too much into this, one cannot but wonder about a few things:
- Etihad already code shares with AA, Malev and S7 who are Oneworld partners and now Airberlin who
will join Oneworld in early 2012, an interesting alignment with the alliance.
- This arrangement will place Etihad in the backyard of Lufthansa, Air Canada's partner in Star Alliance and
one of the greatest critics of the GCC global carriers (Emirates, Etihad and Qatar Airways). Remember the
spat between the UAE and Canada over additional traffic rights to Canada; well, maybe just maybe, this is
Etihad's quiet way of paying back. Between Emirates A380 services to Hamburg and Munich and this
partnership, Lufthansa is surely uncomfortable, to say the least.
Regardless of all the speculation, this is a win win deal with both partners benefiting and almost
makes Oneworld the preferred alliance in case Etihad is interested in joining.
Friday, December 2, 2011
The UAE 40th National Day
I arrived to the UAE in May 1996 in time for the 25th National Day of the UAE; to join GAMCO.
Today marks the 40th anniversary of the country. I came at the time the Abu Dhabi - Dubai road was not yet completed. Jumeirah was not built and the old Hard Rock Cafe was literally in the middle of nowhere.
The aviation scene had two major national players Emirates Airlines and GAMCO (now ADAT) and Gulf Air was the airline of Abu Dhabi. In 1996 Emirates had a fleet of 18 Airbus A310/A300-600 and the delivery of the 7 Boeing B777 order just started in the Spring of that year. GAMCO was practically the maintenance facility of Gulf Air (GF had a 40% share of GAMCO at the time) with less than 30% of its work performed for other airlines.
Aviation has come a long way in the last 15 years; Emirates is a Global airline with a fleet of 160+ aircraft and orders in excess of 210 aircraft and Dubai International Airport is poised to become the number 2 airport in the world, and definitely the most connected airport with more than 120 airlines serving it.
I was fortunate and privileged to be a part of this success story and was directly involved with GAMCO and by extension with Etihad Airways and Air Arabia in one capacity or another.
I was with GAMCO at the time Gulf Air started facing financial difficulties in 1997 and the decision was made to decrease the reliance on GF business in favour of third party work. In 1997 GAMCO won a 5 years contract to maintain the UK RAF fleet of 9 Lockheed L1011s which was subsequently renewed in 2002. Several other European, North American and regional airlines had long term contracts for the maintenance of their fleets. GAMCO was instrumental in the launching of Etihad Airways in 2003; Etihad has become an airline with Global reach. The Etihad fleet maintenance is currently managed and performed by ADAT.
Air Arabia the first LCC of the region was also launched in October 2003 a month before Etihad with GAMCO providing maintenance support. Air Arabia is a true success story pioneering a concept in a region used to full service airlines. I joined when Air Arabia had 5 Airbus A320s and left 4 years later when they had 16 aircraft and an order of another 44 A320 aircraft. The challenge facing everyone was to sustain profitable growth and in 2007 Air Arabia launched a successful IPO for 700 million USD which was 1.5 times oversubscribed to become the first airline in the region to go public, it is listed in the Dubai Financial Market.
Of course there are other success stories like Flydubai, DAE, Strata, Sanad and Amroc to name a few.
Congratulations to the UAE, a progressive, tolerant and forward thinking country in a turbulent region.
Today marks the 40th anniversary of the country. I came at the time the Abu Dhabi - Dubai road was not yet completed. Jumeirah was not built and the old Hard Rock Cafe was literally in the middle of nowhere.
The aviation scene had two major national players Emirates Airlines and GAMCO (now ADAT) and Gulf Air was the airline of Abu Dhabi. In 1996 Emirates had a fleet of 18 Airbus A310/A300-600 and the delivery of the 7 Boeing B777 order just started in the Spring of that year. GAMCO was practically the maintenance facility of Gulf Air (GF had a 40% share of GAMCO at the time) with less than 30% of its work performed for other airlines.
Aviation has come a long way in the last 15 years; Emirates is a Global airline with a fleet of 160+ aircraft and orders in excess of 210 aircraft and Dubai International Airport is poised to become the number 2 airport in the world, and definitely the most connected airport with more than 120 airlines serving it.
I was fortunate and privileged to be a part of this success story and was directly involved with GAMCO and by extension with Etihad Airways and Air Arabia in one capacity or another.
I was with GAMCO at the time Gulf Air started facing financial difficulties in 1997 and the decision was made to decrease the reliance on GF business in favour of third party work. In 1997 GAMCO won a 5 years contract to maintain the UK RAF fleet of 9 Lockheed L1011s which was subsequently renewed in 2002. Several other European, North American and regional airlines had long term contracts for the maintenance of their fleets. GAMCO was instrumental in the launching of Etihad Airways in 2003; Etihad has become an airline with Global reach. The Etihad fleet maintenance is currently managed and performed by ADAT.
Air Arabia the first LCC of the region was also launched in October 2003 a month before Etihad with GAMCO providing maintenance support. Air Arabia is a true success story pioneering a concept in a region used to full service airlines. I joined when Air Arabia had 5 Airbus A320s and left 4 years later when they had 16 aircraft and an order of another 44 A320 aircraft. The challenge facing everyone was to sustain profitable growth and in 2007 Air Arabia launched a successful IPO for 700 million USD which was 1.5 times oversubscribed to become the first airline in the region to go public, it is listed in the Dubai Financial Market.
Of course there are other success stories like Flydubai, DAE, Strata, Sanad and Amroc to name a few.
Congratulations to the UAE, a progressive, tolerant and forward thinking country in a turbulent region.
Monday, November 28, 2011
2011 A Challenging Year - Revisited
2011 A Challenging Year was written in May 2011and discussed the various challenges facing the airlines in MENA and GCC and of course globally.
Four (4) challenges were listed at the time
Four (4) challenges were listed at the time
1. The natural disasters in Japan and the ensuing damage and problems;
2. The deepening Euro zone financial woes;
3. The political upheavals in MENA and GCC; and
4. The increase of fuel prices.
As we approach the end of 2011 three (3) out of the four (4) are very real. The world have moved beyond the natural disasters in Japan and a couple of ash clouds in the southern hemisphere.
Political and financial upheavals are still with us and will probably spill over in 2012 and the price of oil, although relatively stable at this time, is still unpredictable. Most airlines in the region including those in the India has performed well.
People still travelled and the airlines compensated by operating to new destinations;
- Air Arabia and Flydubai looked towards the CIS and specially the Ukraine among other destinations
- Several airlines started operations to new destinations in Saudi Arabia.
- Gulf Air started flying to Copenhagen, Nairobi, Milan and Geneva with Rome, Entebbe and Juba to follow
and embarked on a marketing campaign "From the Heart" in an attempt to woo back passengers.
- Royal Jordanian is eyeing Africa with a plan to operate to Lagos, Accra, Nairobi and Addis Ababa in the
near future in addition to several other destinations.
- Etihad is looking to start flights to Maldives, Seychelles, Chengdu, Dusseldorf, Shanghai and Nairobi.
- Emirates is looking at Dallas and Seattle, Lusaka, Harare, Dublin, Baghdad, St. Petersburg, Rio de Jainero
and Buenos Aires
- Qatar Airways is starting flights to Entebbe, Tiblisi and Baku in addition to increased frequencies.
All airlines have posted increases in passengers carried and in revenues coupled with a reduction in yield, including the embattled airlines in India like Jet Airways and Kingfisher.
The effects of the Arab Spring, with the exception of Syria, are subsiding in most countries and economic activities are improving or are expected to improve. The deepening Euro Zone debt crisis is taking the world on a roller coaster ride, but eventually a plan will be devised and the world will limp towards recovery.
The kicker here is the price of oil, airlines have reported increases in their fuel bill for 2011 ranging from 40% to 80%. The airlines are reluctant to increase ticket prices; on the contrary they are discounting to stimulate traffic. With Europe facing financial problems, Europeans may be less inclined to travel especially if fares increase. On the other hand, the airlines need to offset the rising fuel costs, the traditional fuel surcharge may not be the best means, fares have to eventually reflect the true cost of travel and the realities of the market.
Airlines are between a rock and a hard place, they cannot raise fares to offset oil prices for fear of losing traffic.
This will probably be the biggest challenge of 2012
This will probably be the biggest challenge of 2012
Sunday, November 13, 2011
Etihad Airways Eighth Anniversary
This is not meant to be a chronological history of the airline, but my impressions as someone who was involved with the starting of the airline.
Etihad Airways flew on 5 November 2003 from Abu Dhabi to Al Ain and then on 12 November flew its frst commercial flight to Beirut. At the time the airline had Beirut, Damascus and Amman as destinations. Etihad Airways has expanded at a relatively faster rate than its competitors Emirates Airlines and Qatar Airways. The airline started with 2 Airbus A330s leased from TAM and an A340 leased from Boeing to a fleet of 63 aircraft (100 on order) serving 63 destinations in 43 countries and a cargo operation serving 14 destinations.
Very few people know how Etihad Airways started. The Amiri decree forming Etihad Airways was issued in July 2003, also appointing HE Dr. Sheikh Ahmed Bin Saif Al Nahyan as the first Chairman of the airline. He also was the Chairman of GAMCO now ADAT.
GAMCO's commercial, legal, contracts and finance resources were mobilized to set up the initial business plan and proceed with the AOC. Two aircraft were leased from TAM and then one A340 ex Singapore Airlines from Boeing. An MRO team of engineers and technical personnel had to become the start up team for the airline. A building slated to be the training center became the head office of the airline and the team handled functions like recruitment, purchasing of catering and commercial equipment. At the time Air Arabia was starting and GAMCO was called upon to provide full maintenance and engineering support for it and Etihad which was not a problem for an MRO. One challenge was to set up airline functions like scheduling and maintenance control from scratch. GAMCO had extensive experience performing these functions for Gulf Air using GF's facilities, eventually that function was tuned over to the airline.
The airline was set up between July and November 2003 with aircraft leased and delivered and all commercial and cabin equipment provided. One challenge was the IFE system which was from Rockwell Collins a system that was not very popular in the region. Collins was called on to provide support and ensure a greater than 95% dispatch reliability of the system. A task that they performed efficiently.
Another challenge, that I was personally involved with, was providing logistics support for the A330s and the A340 at short notice. A support package was prepared and acquired from AJ Walter Aviation. The agreement was made during the 2003 Dubai Air Show.
Etihad Airways is an airline that a lot of us are proud to have been associated with it and believed in the vision that now is a world class airline spanning the globe.
Finally, everyone is dazzled with the performance of the airline that they all forget that it all began in an MRO by a bunch of engineers and technical people.
Etihad Airways flew on 5 November 2003 from Abu Dhabi to Al Ain and then on 12 November flew its frst commercial flight to Beirut. At the time the airline had Beirut, Damascus and Amman as destinations. Etihad Airways has expanded at a relatively faster rate than its competitors Emirates Airlines and Qatar Airways. The airline started with 2 Airbus A330s leased from TAM and an A340 leased from Boeing to a fleet of 63 aircraft (100 on order) serving 63 destinations in 43 countries and a cargo operation serving 14 destinations.
Very few people know how Etihad Airways started. The Amiri decree forming Etihad Airways was issued in July 2003, also appointing HE Dr. Sheikh Ahmed Bin Saif Al Nahyan as the first Chairman of the airline. He also was the Chairman of GAMCO now ADAT.
GAMCO's commercial, legal, contracts and finance resources were mobilized to set up the initial business plan and proceed with the AOC. Two aircraft were leased from TAM and then one A340 ex Singapore Airlines from Boeing. An MRO team of engineers and technical personnel had to become the start up team for the airline. A building slated to be the training center became the head office of the airline and the team handled functions like recruitment, purchasing of catering and commercial equipment. At the time Air Arabia was starting and GAMCO was called upon to provide full maintenance and engineering support for it and Etihad which was not a problem for an MRO. One challenge was to set up airline functions like scheduling and maintenance control from scratch. GAMCO had extensive experience performing these functions for Gulf Air using GF's facilities, eventually that function was tuned over to the airline.
The airline was set up between July and November 2003 with aircraft leased and delivered and all commercial and cabin equipment provided. One challenge was the IFE system which was from Rockwell Collins a system that was not very popular in the region. Collins was called on to provide support and ensure a greater than 95% dispatch reliability of the system. A task that they performed efficiently.
Another challenge, that I was personally involved with, was providing logistics support for the A330s and the A340 at short notice. A support package was prepared and acquired from AJ Walter Aviation. The agreement was made during the 2003 Dubai Air Show.
Etihad Airways is an airline that a lot of us are proud to have been associated with it and believed in the vision that now is a world class airline spanning the globe.
Finally, everyone is dazzled with the performance of the airline that they all forget that it all began in an MRO by a bunch of engineers and technical people.
Saturday, November 12, 2011
Dubai Airshow 2011 #dxb11
Twitter traffic bearing #dxb11 is on the increase as we near the opening of Dubai Airshow 2011.
Dubai Airshow usually brings cheer to an otherwise depressed industry with mega orders form the GCC airlines. Expectations are high, certainly because we have been told by Emirates and Qatar Airways to expect "bombshell" orders. What they did not tell us was what are the orders.
I don't usually like to speculate, but #dxb11 is tomorrow and it is a festive occasion so why not.
Starting with the easy ones
- ALAFCO the leasing company from Kuwait announced they will order 50 A320 NEOs.
- Qatar Airways hinted strongly about additional A380s and A320 NEOs. Now, probably a
Bombardier C series order (as a pay off for getting Canada traffic rights at the time the airlines of
the Gulf were the bad guys) maybe forthcoming, someone has to cheer up Bombardier.
- Emirates will probably order some A380s (two dozen or so) and probably B777s. What will be cool
is, if they have managed to push Boeing to offer the upgraded B777 bringing the aircraft performance on
par with the A350.
Enough, so patience please, will find out in the coming few days, for sure
Dubai Airshow usually brings cheer to an otherwise depressed industry with mega orders form the GCC airlines. Expectations are high, certainly because we have been told by Emirates and Qatar Airways to expect "bombshell" orders. What they did not tell us was what are the orders.
I don't usually like to speculate, but #dxb11 is tomorrow and it is a festive occasion so why not.
Starting with the easy ones
- ALAFCO the leasing company from Kuwait announced they will order 50 A320 NEOs.
- Qatar Airways hinted strongly about additional A380s and A320 NEOs. Now, probably a
Bombardier C series order (as a pay off for getting Canada traffic rights at the time the airlines of
the Gulf were the bad guys) maybe forthcoming, someone has to cheer up Bombardier.
- Emirates will probably order some A380s (two dozen or so) and probably B777s. What will be cool
is, if they have managed to push Boeing to offer the upgraded B777 bringing the aircraft performance on
par with the A350.
Enough, so patience please, will find out in the coming few days, for sure
Saturday, November 5, 2011
Qatar Airways and The Iran Connection
Qatar Airways is increasing its presence in Iran. The airline added 31 flights a week to its schedule, bringing it to 52 flights from 31 flights a week, a 150% increase (read the full story). It added a new destination, Isfahan with a daily flight and increased its frequencies to Tehran, Mashad and Shiraz.
What is more interesting is the news that Qatar Airways will start domestic flights within Iran by code sharing with a local carrier (read full story) to get around ownership issues.
Iran has been suffering from sanctions which prevented it from getting spares needed for western aircraft. The safety record of Iran aviation leaves a lot to be desired, 13 incidents since 2008 (view here). Interestingly more incidents on Russian built aircraft than western ones. It is welcome news to have modern well maintained aircraft flying domestic routes. That will definitely be a boost to civil aviation safety.
Qatar Airways will commercially do very well and will be able to channel passengers away from the competition to its regional and international services out of Doha. However, politically this maybe an
enterprise fraught with danger, unless of course the Americans and Europeans have tacitly given their
agreement to this venture. No speculations here, the future will tell.
What is more interesting is the news that Qatar Airways will start domestic flights within Iran by code sharing with a local carrier (read full story) to get around ownership issues.
Iran has been suffering from sanctions which prevented it from getting spares needed for western aircraft. The safety record of Iran aviation leaves a lot to be desired, 13 incidents since 2008 (view here). Interestingly more incidents on Russian built aircraft than western ones. It is welcome news to have modern well maintained aircraft flying domestic routes. That will definitely be a boost to civil aviation safety.
Qatar Airways will commercially do very well and will be able to channel passengers away from the competition to its regional and international services out of Doha. However, politically this maybe an
enterprise fraught with danger, unless of course the Americans and Europeans have tacitly given their
agreement to this venture. No speculations here, the future will tell.
Monday, October 31, 2011
Kuwait Airways .... Privatization The Way Ahead
Finally, the government of Kuwait has decided to provide the legal framework for the restructuring of Kuwait Airways as a precursor to its privatisation (read full story). The PrivComm has recommended the restructuring to the government despite the broad expressions of interest in the airline.
The recommendation does not come as a surprise, the airline has several issues ranging from chronic loss making over the last couple of decades. Staffing issues including numbers and productivity, their staff went on strike a week back for better wages. On top of that the airline is being investigated by the Government for corruption.
At last, the project is on the right track, how long the restructuring effort will take is unknown yet, but it will not be easy and probably painful.
Interesting times are ahead, as another GCC airline restructure.
The recommendation does not come as a surprise, the airline has several issues ranging from chronic loss making over the last couple of decades. Staffing issues including numbers and productivity, their staff went on strike a week back for better wages. On top of that the airline is being investigated by the Government for corruption.
At last, the project is on the right track, how long the restructuring effort will take is unknown yet, but it will not be easy and probably painful.
Interesting times are ahead, as another GCC airline restructure.
Wednesday, October 19, 2011
The Up Side Of The Arab Spring
A lot was said about the down effect of the Arab Spring on the economies of the region, tourism, investments etc... Nevertheless, the Arab Spring, Euro Zone debt crisis and oil prices have pushed the airlines in MENA to the their limit. There has been winners and losers among the airlines of course but everybody has been adversely affected.
MENA airlines are a resilient bunch and have always been able to transform adversity and challenges into opportunities.
In typical fashion the airlines kept on taking delivery of new aircraft in spite of the down turn and have looked at expansion as a means of countering their problems
- Air Arabia and Flydubai looked towards the CIS and specially the Ukraine among other destinations
- Several airlines started operations to new destinations in Saudi Arabia.
- Gulf Air started flying to Copenhagen, Nairobi, Milan and Geneva with Rome, Entebbe and Juba to follow
and embarked on a marketing campaign "From the Heart" in an attempt to woo back passengers.
- Royal Jordanian is eyeing Africa with a plan to operate to Lagos, Accra, Nairobi and Addis Ababa in the
near future in addition to several other destinations.
- Etihad is looking at acquisitions; 25% of Aer lingus and a tie up with Virgin Atlantic if the obtain a stake in
BMI and are looking to start flights to Maldives, Seychelles, Chengdu, Dusseldorf, Shanghai and Nairobi.
- Emirates is looking at Dallas and Seattle, Lusaka, Harare, Dublin, Baghdad, St. Petersburg, Rio de Jainero
and Buenos Aires
- Qatar Airways is starting flights to Entebbe, Tiblisi and Baku in addition to increased frequencies.
This is only a glimpse of the proposed expansion which comes on top of additional frequencies to existing destinations.
The profit forecast for 2011 has been increased from a 100 Million USD to 800 Million USD by IATA, as airlines started recovering from the Arab Spring and restoring flights to Egypt, Tunis and Libya. The bulk of these profits will probably be generated by Emirates with Dubai slated to become the second largest airport in the world. Definitely several airlines will reduce their earlier losses and may break even by the end of the year.
The region has survived 2011 but 2012 promises to be a tougher year.
MENA airlines are a resilient bunch and have always been able to transform adversity and challenges into opportunities.
In typical fashion the airlines kept on taking delivery of new aircraft in spite of the down turn and have looked at expansion as a means of countering their problems
- Air Arabia and Flydubai looked towards the CIS and specially the Ukraine among other destinations
- Several airlines started operations to new destinations in Saudi Arabia.
- Gulf Air started flying to Copenhagen, Nairobi, Milan and Geneva with Rome, Entebbe and Juba to follow
and embarked on a marketing campaign "From the Heart" in an attempt to woo back passengers.
- Royal Jordanian is eyeing Africa with a plan to operate to Lagos, Accra, Nairobi and Addis Ababa in the
near future in addition to several other destinations.
- Etihad is looking at acquisitions; 25% of Aer lingus and a tie up with Virgin Atlantic if the obtain a stake in
BMI and are looking to start flights to Maldives, Seychelles, Chengdu, Dusseldorf, Shanghai and Nairobi.
- Emirates is looking at Dallas and Seattle, Lusaka, Harare, Dublin, Baghdad, St. Petersburg, Rio de Jainero
and Buenos Aires
- Qatar Airways is starting flights to Entebbe, Tiblisi and Baku in addition to increased frequencies.
This is only a glimpse of the proposed expansion which comes on top of additional frequencies to existing destinations.
The profit forecast for 2011 has been increased from a 100 Million USD to 800 Million USD by IATA, as airlines started recovering from the Arab Spring and restoring flights to Egypt, Tunis and Libya. The bulk of these profits will probably be generated by Emirates with Dubai slated to become the second largest airport in the world. Definitely several airlines will reduce their earlier losses and may break even by the end of the year.
The region has survived 2011 but 2012 promises to be a tougher year.
Saturday, September 10, 2011
India Joins the Club
India's National Auditor declared that Emirates and other Middle East carriers should be forced to reduce their flights to save Air India (read full story here).
This is wishful thinking, not the reduction of the flights but the saving of Air India. The number of flights are controlled through bilaterals; the Indian Government is not the easiest in awarding flight authorities, a lot of these authorities were awarded to allow Kingfisher, IndiGo, Jet Airways and others to operate international flights to the Gulf region in addition to Air India, Air India Express and Indian Airlines. A forced reduction will be probably met by a reciprocal action from the various governments of the region and they will have the choice of which airline authority to revoke, my guess would be Air India's. Any reduction of flights will affect the millions of Non Resident Indians working in the region.
The Government of India should face up to Air India's problems and tackle them heads on. Competition from GCC airlines and other airlines is only a small part of the problem. Government interference, over staffing and failed policies need to be resolved. These are issues that to this date the Government does not have the political will to face.
This is wishful thinking, not the reduction of the flights but the saving of Air India. The number of flights are controlled through bilaterals; the Indian Government is not the easiest in awarding flight authorities, a lot of these authorities were awarded to allow Kingfisher, IndiGo, Jet Airways and others to operate international flights to the Gulf region in addition to Air India, Air India Express and Indian Airlines. A forced reduction will be probably met by a reciprocal action from the various governments of the region and they will have the choice of which airline authority to revoke, my guess would be Air India's. Any reduction of flights will affect the millions of Non Resident Indians working in the region.
The Government of India should face up to Air India's problems and tackle them heads on. Competition from GCC airlines and other airlines is only a small part of the problem. Government interference, over staffing and failed policies need to be resolved. These are issues that to this date the Government does not have the political will to face.
Wednesday, August 31, 2011
BA Spring
I flew on British Airways today 31 August 2011 from Dubai to London on my way to Detroit. It reminded of a blog I read on Innovation Analysis Group entitled "Pride in BA Brand" a campaign that is supposed to improve the battered image of BA after 2 years of fighting with UNITE.
According to IAG Blog "Central to the drive is a 90-second film addressing five decades of BA, focusing on the role of BA's role in the history of aviation. Topics are set to include British Overseas Airways Corporation (BOAC), which merged with Imperial Airways in 1971 to create the modern BA, as well as Concorde. Images of BA staff are expected to feature prominently in the campaign." This comes after an internal communications campaign designed to inspire the BA Brand in the 32000 BA staff.
For some reason BA reminded me of the MENA regimes, extolling the glorious past in order to improve a present passenger perception. It is laudable that BA is addressing its staff problems because the current problem is not a passenger perception, it is a lack of consistent performance. Staff that is not smiling, cool and abrupt. A Customer Support organisation that is failing to adequately respond to its passenger complaints. A Frequent Flyer Program that does not use emails as a means of contacting it.
Basically a staff problem, the same staff and organisation that a few years back were "the World's Favorite Airline".
Just like people in MENA, BA passengers are not interested in the past but more in the present and the future and this is what BA needs to address. BA needs to convince passengers that it is aware of the problem(s) and they are being fixed, otherwise BA might be looking at a BA Spring.
According to IAG Blog "Central to the drive is a 90-second film addressing five decades of BA, focusing on the role of BA's role in the history of aviation. Topics are set to include British Overseas Airways Corporation (BOAC), which merged with Imperial Airways in 1971 to create the modern BA, as well as Concorde. Images of BA staff are expected to feature prominently in the campaign." This comes after an internal communications campaign designed to inspire the BA Brand in the 32000 BA staff.
For some reason BA reminded me of the MENA regimes, extolling the glorious past in order to improve a present passenger perception. It is laudable that BA is addressing its staff problems because the current problem is not a passenger perception, it is a lack of consistent performance. Staff that is not smiling, cool and abrupt. A Customer Support organisation that is failing to adequately respond to its passenger complaints. A Frequent Flyer Program that does not use emails as a means of contacting it.
Basically a staff problem, the same staff and organisation that a few years back were "the World's Favorite Airline".
Just like people in MENA, BA passengers are not interested in the past but more in the present and the future and this is what BA needs to address. BA needs to convince passengers that it is aware of the problem(s) and they are being fixed, otherwise BA might be looking at a BA Spring.
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.
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.
Saturday, July 23, 2011
Dubai World Central, A Vision Delayed
In my previous Blog "Dubai The Brand" I wrote " As for DWC it will slowly be buried until they figure out what to do with it." I was wrong, the waiting is over, Dubai World Central's (DWC) fate is sealed.
EMIRATES AIRLINES will not move to DWC until 2025, seven years after the last upgrade, Concourse 4 of Dubai International. Currently DWC has one runway and a low cost terminal. Several cargo forwarders and an FBO are based there. The airport is connected to Jebel Ali Free Zone with an overpass that allows cargo to move between both areas without having to go through customs.
This shifts any sizable investment until about 2018. DWC Phase 2 (2018-2023) will cover the construction of another four (4) runways and a terminal capable of 160 million passengers annually and a cargo facility capable of 12 million tons annually.
EMIRATES AIRLINES will not move to DWC until 2025, seven years after the last upgrade, Concourse 4 of Dubai International. Currently DWC has one runway and a low cost terminal. Several cargo forwarders and an FBO are based there. The airport is connected to Jebel Ali Free Zone with an overpass that allows cargo to move between both areas without having to go through customs.
This shifts any sizable investment until about 2018. DWC Phase 2 (2018-2023) will cover the construction of another four (4) runways and a terminal capable of 160 million passengers annually and a cargo facility capable of 12 million tons annually.
The question now is what happens at DWC between now and 2018. Dubai Airports has to come up with some plans to keep the facility operational and grow the business. My guess would be to attract MROs and Aviation related OEMs to set up facilities there.
To read about Dubai Airport expansion click here
Friday, July 8, 2011
Dubai The Brand
Dubai has been in the news again. A couple days back Dudai Airports announced a massive investment in Dubai International Airport (around 7.8 billion USD) to build Concourse 4 (Concourse 3 is currently under construction), upgrade Terminal 2 and increase cargo capacity by almost 30%. This will bring the airport capacity to 90 million passengers by 2018 from the current 60 million passengers.
Great news! well yes but what about Dubai World Central Airport at Jebel Ali. This was supposed to be a six runways (now 5 runways planned) airport able to handle 180 million passengers annually. The airport has one runway operational and a low cost terminal built. Cargo operation has started but operators prefer the International Airport. Passenger operation has been delayed till 2012. No airline wants to use the airport it is very far from Dubai or Abu Dhabi.
The other Bad news is the cancellation of Dubai Aerospace Enterprises of all its Airbus orders (45 aircraft. 11 A350-900 and 34 A320, worth 5.8 billion USD) and is in discussion with Boeing about the possibility of canceling their orders 56 aircraft. DAE has never risen to become a strategic business for Dubai. DAE owns Standard Aero.
How do these events affect the Dubai brand? Positively.
Financially it looks great Dubai just reduced 5.8 Billion USD of liability and is looking to reduce it further when they cancel the Boeing orders.
The expansion of Dubai Airport was associated with increased jobs in the aviation sector and a greater contribution to the GDP. As for DWC it will slowly be buried until they figure out what to do with it.
Great news! well yes but what about Dubai World Central Airport at Jebel Ali. This was supposed to be a six runways (now 5 runways planned) airport able to handle 180 million passengers annually. The airport has one runway operational and a low cost terminal built. Cargo operation has started but operators prefer the International Airport. Passenger operation has been delayed till 2012. No airline wants to use the airport it is very far from Dubai or Abu Dhabi.
The other Bad news is the cancellation of Dubai Aerospace Enterprises of all its Airbus orders (45 aircraft. 11 A350-900 and 34 A320, worth 5.8 billion USD) and is in discussion with Boeing about the possibility of canceling their orders 56 aircraft. DAE has never risen to become a strategic business for Dubai. DAE owns Standard Aero.
How do these events affect the Dubai brand? Positively.
Financially it looks great Dubai just reduced 5.8 Billion USD of liability and is looking to reduce it further when they cancel the Boeing orders.
The expansion of Dubai Airport was associated with increased jobs in the aviation sector and a greater contribution to the GDP. As for DWC it will slowly be buried until they figure out what to do with it.
Monday, July 4, 2011
Who Is On My Flight?
"Oluwaseun Noibi, 24, reportedly boarded a flight in New York last week using an expired boarding pass with someone else’s name on it. The flight crew didn’t even realize there was a stowaway on the plane until halfway through the flight, when they realized they had an extra passenger in a premium seat. TSA insists Noibi was screened properly but that it didn’t “properly authenticate the passenger’s documentation.”" Read the full blog on Elliott.org
This incident is pure incompetence and someone not paying attention. The fact that it slipped through the TSA does not absolve the airline from the responsibility of making sure who is flying on board their aircraft. All airlines check boarding passes electronically against their departure control system database to ensure all checked in passengers have boarded the aircraft.
A few airlines still have the Senior Cabin Crew Member perform a final check, at the aircraft door, of the boarding pass against the passport. It is not only for the identity of the passenger but more importantly the flight number, destination and date; followed by a quick passengers count to make sure it tallies with the manifest.
Airlines stopped doing this because they want to board passengers fast, this procedure does not delay a turnaround, Air Arabia turns around their flights in 45 minutes.
This incident is pure incompetence and someone not paying attention. The fact that it slipped through the TSA does not absolve the airline from the responsibility of making sure who is flying on board their aircraft. All airlines check boarding passes electronically against their departure control system database to ensure all checked in passengers have boarded the aircraft.
A few airlines still have the Senior Cabin Crew Member perform a final check, at the aircraft door, of the boarding pass against the passport. It is not only for the identity of the passenger but more importantly the flight number, destination and date; followed by a quick passengers count to make sure it tallies with the manifest.
Airlines stopped doing this because they want to board passengers fast, this procedure does not delay a turnaround, Air Arabia turns around their flights in 45 minutes.
The TSA procedures are indirectly making it easier for airlines to relax their procedures. This is not a security problem, a passenger with a valid boarding pass can still get on the wrong flight. A lot of countries have security checks performed prior to Check In which ensures that the passenger has a valid ticket and is issued with the proper boarding pass.
Monday, June 27, 2011
MENA Airlines the Elusive Recovery
As we approach the end of Q2 2011, airline recovery in MENA is as elusive as ever. The Arab Spring has not subsided and with no end in view; Libya, Syria and Yemen are still in turmoil with causalities recorded daily. Other countries still face peaceful protests on daily basis. Oil prices are still hovering around a $100 a barrel with no clear direction threatening to derail the global recovery coupled with a Euro zone debt crisis.
MENA airlines continued with business as usual, well almost business as usual. No new aircraft deliveries were postponed by most airlines, showing their belief that this is a short term issue and their confidence in the medium and long term positive outlook of the future. The airlines did what they did best, expand with most of the carriers in the region increasing capacity to destinations in response to seasonal (summer) demand or rising traffic and operating to new destinations.
However, all these events are taking their toll on the airlines. The UAE seems to be the least affected with the traffic increasing around 8% in Dubai and 14% in Abu Dhabi while QAIA saw a 2.8% increase in Q1.
It appears that the Global airlines (EK, EY and QR) are faring better than most. Most airlines reduced prices and introduced promotions to keep their revenues up which has caused tremendous pressure on yields. Fuel surcharges have been introduced to compensate for the high fuel prices.
Air Arabia postponed its plans for Air Arabia Jordan for the time being and several airlines reduced or combined flights to reduce the number of empty sectors.
How long would this last no one knows. For sure, a reduction of oil prices is desirable and will help reduce losses and improve margins, even a stable oil price is better than nothing (it allows for planning).
As long as violence is the response to the reform movement in some countries, the region's economies
will be adversely affected. Regimes should deal with their people in a civilized manner and respond to their aspirations. Once peaceful protest becomes the norm and reforms materialize, only then things will get better.
MENA airlines continued with business as usual, well almost business as usual. No new aircraft deliveries were postponed by most airlines, showing their belief that this is a short term issue and their confidence in the medium and long term positive outlook of the future. The airlines did what they did best, expand with most of the carriers in the region increasing capacity to destinations in response to seasonal (summer) demand or rising traffic and operating to new destinations.
However, all these events are taking their toll on the airlines. The UAE seems to be the least affected with the traffic increasing around 8% in Dubai and 14% in Abu Dhabi while QAIA saw a 2.8% increase in Q1.
It appears that the Global airlines (EK, EY and QR) are faring better than most. Most airlines reduced prices and introduced promotions to keep their revenues up which has caused tremendous pressure on yields. Fuel surcharges have been introduced to compensate for the high fuel prices.
Air Arabia postponed its plans for Air Arabia Jordan for the time being and several airlines reduced or combined flights to reduce the number of empty sectors.
How long would this last no one knows. For sure, a reduction of oil prices is desirable and will help reduce losses and improve margins, even a stable oil price is better than nothing (it allows for planning).
As long as violence is the response to the reform movement in some countries, the region's economies
will be adversely affected. Regimes should deal with their people in a civilized manner and respond to their aspirations. Once peaceful protest becomes the norm and reforms materialize, only then things will get better.
Saturday, June 25, 2011
Social Media and the MENA Airlines
The Arab Spring was attributed to the use of Social Media by the Arab younger generations. Social Media has galvanized opinions and coordinated marches and sit ins that changed regimes. Yet, MENA airlines have not tapped this resource.
It appears that most of these airlines have Info pages with no interaction with passengers or potential passengers and it is sometimes hard to figure out if the page is the airlines official page. Of the twenty one (21) airlines, that I have looked at both legacy and LCC that have Facebook pages; only four (4) have flight booking and other facilities on their pages; Royal Jordanian, Gulf Air, Bahrain Air and Etihad.
The most liked so to speak page is Qatar Airways (161200 fans) but it is not growing and that maybe attributed to their successful promotion celebrating its 100th destination.
The fastest growing is Royal Jordanian's page (53500 fans) which adds around a 1000 fans a day and is probably the most balanced page among the region's airlines. It has a lot of traffic directed from the airline which prompts comments and likes but not much customer service content that the airline should encourage.
The most interactive page with customer service issues is Air Arabia's but only has 5500 fans.
Interestingly Emirates (43000 fans) has an info page only but is not growing, Etihad (31000 fans) is not very interactive same as Gulf Air (15500 fans) even though both airlines provide booking and other facilities on their pages.
It appears the MENA airlines are not very serious about social media yet, a few of them have advanced Facebook Pages but are not very successful in promoting them to the public probably due to lack of resources..
Of all the airlines Royal Jordanian seems to take the effort seriously, they launched their efforts with an aircraft on ground tweet up with the 20 most popular bloggers in Jordan and have allocated resources to maintain the effort and it seems to be successful; around a 1000 fans per day for an airline the size of Royal Jordanian and a country the size of Jordan is no mean feat.
Sunday, June 19, 2011
The New Challenges ... Manpower and Training
One of the greatest challenges facing the Aviation Industry globally and including MENA is trained manpower: pilots and engineers. The Industry is losing its appeal to the younger generations to sectors in the economy that are less physically demanding, less regulated and with less expensive training requirements. With the expansion of the world aircraft fleet expected to increase in the coming 25 years by another 25000 aircraft over the current fleet of 17000, the training needs become more important. By 2026 there will be a need for an additional 480,000 technicians and 350,000 pilots to maintain and fly these aircraft. Staggering numbers, a real global challenge.
MENA will be affected, some countries less than others. Taking into consideration that the UAE and Qatar have the fastest growing fleets and networks along with the corresponding additional maintenance requirements, they will be the hardest hit. Both countries have a relatively small indigenous population that can be tapped to support the aviation sector resulting in an increased dependence on an expatriate work force. However, their traditional sources will also be hard hit, India is in need of thousands of technicians to support the existing and new aircraft orders of the airlines there and countries like Jordan, Egypt and others will be struggling to cope.
The GCC carriers need to look at their manpower requirements for the long term and figure out how they will face the challenge of ensuring a steady flow of well trained and capable workforce. Certainly the training requirements will somewhat vary for the newer generation B787 and A350. There is a real need for an innovative approach in manpower supply and the airlines should look beyond their national training schemes offered to their citizens to start including expatriates who have been residing for generations in the country or even sponsoring people beyond their borders.
The availability of well trained and efficiently capable engineers, technicians and pilots, is what will make or break an airline and to a certain extent the aviation industry in MENA and globally.
MENA will be affected, some countries less than others. Taking into consideration that the UAE and Qatar have the fastest growing fleets and networks along with the corresponding additional maintenance requirements, they will be the hardest hit. Both countries have a relatively small indigenous population that can be tapped to support the aviation sector resulting in an increased dependence on an expatriate work force. However, their traditional sources will also be hard hit, India is in need of thousands of technicians to support the existing and new aircraft orders of the airlines there and countries like Jordan, Egypt and others will be struggling to cope.
The GCC carriers need to look at their manpower requirements for the long term and figure out how they will face the challenge of ensuring a steady flow of well trained and capable workforce. Certainly the training requirements will somewhat vary for the newer generation B787 and A350. There is a real need for an innovative approach in manpower supply and the airlines should look beyond their national training schemes offered to their citizens to start including expatriates who have been residing for generations in the country or even sponsoring people beyond their borders.
The availability of well trained and efficiently capable engineers, technicians and pilots, is what will make or break an airline and to a certain extent the aviation industry in MENA and globally.
Wednesday, June 8, 2011
"The Cracked Record"........ Legacy Carriers vs. GCC Carriers
It flared up again, the accusations and arguments and counter arguments in the IATA AGM in Singapore (click here for full story). Mr. Giovanni Bsignani the outgoing Director General of IATA called for an end of the dispute between Gulf carriers and European/North American carriers in a civilized manner. He pointed out that the solution to call governments as advocates or referees has not worked and will not work and as responsible leaders of this global industry we should find a resolution by ourselves.
Of course, Air Canada will not have any of this and the litany of the Gulf carriers being supported by their governments as if Air Canada is not the darling of the Canadian Government the only difference is that the governments of the UAE and Qatar embrace an open sky regime while the government of Canada has one of the most noncompetitive and restrictive policy (read my blog Canada's Air Transport Competitiveness) Air Canada was supported by Austrian, a subsidiary of Lufthansa that has a record of opposing entry allowed under EU open sky agreements.
The problem lies in the fact that the Legacy carriers of Europe and North America are not able to match the growth of the Gulf carriers. I agree that they are at a disadvantage but it is not caused by government, it is caused by location, location location. The Ultra Range aircraft shifted the geographical center of aviation from Europe to MENA and the Gulf and allowed the carriers of the region to become real global airlines. The UAE and Qatar have always been open economies, yes they have requirements for local partners but they also have free zones that allow foreign companies to operate without a local partner.
So far the Europeans and the North American carriers have elected to lobby their governments to limit access for almost every airline from MENA. This is a failed policy, they forget that the Gulf carriers are developing markets in South America, Africa, the CIS and Asia locations where their governments have no influence.
The lack of innovative thinking and problem solving is indicative of organisations that have been very comfortable for a long time with the status quo and are at loss when the world changed. As long as these carriers bury their heads in the sand and go screaming to their governments there will be no solution. These Gulf carrier add value to the destinations they serve, they advertise them as holiday destinations something that the European and North American governments on the whole don't do.
So far no one knows exactly what they want other than stop the rapid growth of the Gulf carriers, in their countries, but would the threat go away when these carriers dominate traffic in Africa, South America and shut them out of there. I don't think so
The solution is to stop accusations and counter accusations and sit down and work equitable solutions that are win win.
Of course, Air Canada will not have any of this and the litany of the Gulf carriers being supported by their governments as if Air Canada is not the darling of the Canadian Government the only difference is that the governments of the UAE and Qatar embrace an open sky regime while the government of Canada has one of the most noncompetitive and restrictive policy (read my blog Canada's Air Transport Competitiveness) Air Canada was supported by Austrian, a subsidiary of Lufthansa that has a record of opposing entry allowed under EU open sky agreements.
The problem lies in the fact that the Legacy carriers of Europe and North America are not able to match the growth of the Gulf carriers. I agree that they are at a disadvantage but it is not caused by government, it is caused by location, location location. The Ultra Range aircraft shifted the geographical center of aviation from Europe to MENA and the Gulf and allowed the carriers of the region to become real global airlines. The UAE and Qatar have always been open economies, yes they have requirements for local partners but they also have free zones that allow foreign companies to operate without a local partner.
So far the Europeans and the North American carriers have elected to lobby their governments to limit access for almost every airline from MENA. This is a failed policy, they forget that the Gulf carriers are developing markets in South America, Africa, the CIS and Asia locations where their governments have no influence.
The lack of innovative thinking and problem solving is indicative of organisations that have been very comfortable for a long time with the status quo and are at loss when the world changed. As long as these carriers bury their heads in the sand and go screaming to their governments there will be no solution. These Gulf carrier add value to the destinations they serve, they advertise them as holiday destinations something that the European and North American governments on the whole don't do.
So far no one knows exactly what they want other than stop the rapid growth of the Gulf carriers, in their countries, but would the threat go away when these carriers dominate traffic in Africa, South America and shut them out of there. I don't think so
The solution is to stop accusations and counter accusations and sit down and work equitable solutions that are win win.
Monday, June 6, 2011
Emirates Airlines Brighter Prospects
Emirates Airlines must be very happy with the news of the last couple of weeks. Having posted its best ever profit results of USD 1.5 Billions (click here for details) in 2010, the airline had more good news;
1. Emirates closed a USD 1 Billion Bond Issue which was indicative of the investor community confidence in
the airline financial health and strength.
2. The Oxford Economics Report concluded that the success of Emirates is not the result of unfair
competition or government support but because of effective aviation policy. The report concluded that
the aviation sector in Dubai generates 125000 jobs and their spending supports an additional 134000
jobs which contribute an additional USD 7.9 Billions in Dubai's GDP. In total the aviation sector's
contribution to Dubai's economy is 250000 jobs and USD 22 billion representing around 19% of total
employment and 22% of GDP.
1. Emirates closed a USD 1 Billion Bond Issue which was indicative of the investor community confidence in
the airline financial health and strength.
2. The Oxford Economics Report concluded that the success of Emirates is not the result of unfair
competition or government support but because of effective aviation policy. The report concluded that
the aviation sector in Dubai generates 125000 jobs and their spending supports an additional 134000
jobs which contribute an additional USD 7.9 Billions in Dubai's GDP. In total the aviation sector's
contribution to Dubai's economy is 250000 jobs and USD 22 billion representing around 19% of total
employment and 22% of GDP.
3. MasterCard Index of Global Destination Cities ranked Dubai as the #9 most popular destination City
in the world in 2011 with 7.9 million visitors and a USD 7.8 Billion spend.
All the above and the rebound of passengers growth in April compared to March is validating Emirates policies and plans
All the above and the rebound of passengers growth in April compared to March is validating Emirates policies and plans
Monday, May 30, 2011
Challenges Facing MROs in MENA
Last week (24 -25 May 2011) I attended the Airline Engineering and Maintenance Middle East Conference at Abu Dhabi organized by UBM Aviation. This conference came at a time the region faces political turmoil and rising oil prices that may affect the global economic recovery. The turnout was exceptional with several major airlines in the region attending.
As usual the conference offered thought provoking ideas. discussed below are a few that I found interesting;
Global MROs was something pursued by Mubadala Aerospace and Turkish Technic where the idea of leveraging and aligning several MROs and JVs with OEMs to provide a full service to the extent that Mr. Abdulla Shadid, Manager Business Development, Mubadala Aerospace said in the keynote address of the conference "The days of the independent non aligned MROs are over", declaring the demise of the Independent MRO.
AACO expanded on the dangers facing the MROs of the region and summed them up as follows:
1. Regulations and educating the regulators in the needs of the industry and how the lack of harmonised
regulations is affecting the business.
2. Shortage of maintenance personnel not only in the region but worldwide.
The issue of manpower development was addressed by the Gulf Aviation Academy and the shortage of human capital was considered one of the main issues facing the region.
Operating engines in the harsh environment of MENA especially the Gulf region was discussed by Saudi Arabian Airlines and Etihad, both outlining their experience in that regards.
Managing inventories and all related activities were put in perspective from different points of view. Emirates shared their efforts on managing the inventory to support a fleet of 152 aircraft over a network of 100+ stations. AJ Walter Aviation discussed how they can provide support for airlines in this regard.
The dilemma of outsourcing or developing inhouse capabilities was discussed by the low cost carriers of the region Jazeera Airways, Air India Express and Jordan Aviation. The pitfalls associated with outsourcing, power by the hour versus time and material and the importance of paying attention to aircraft and engine return conditions.
Thanks again to UBM Aviation for providing a venue for networking and sharing ideas affecting the MENA region.
As usual the conference offered thought provoking ideas. discussed below are a few that I found interesting;
Global MROs was something pursued by Mubadala Aerospace and Turkish Technic where the idea of leveraging and aligning several MROs and JVs with OEMs to provide a full service to the extent that Mr. Abdulla Shadid, Manager Business Development, Mubadala Aerospace said in the keynote address of the conference "The days of the independent non aligned MROs are over", declaring the demise of the Independent MRO.
AACO expanded on the dangers facing the MROs of the region and summed them up as follows:
1. Regulations and educating the regulators in the needs of the industry and how the lack of harmonised
regulations is affecting the business.
2. Shortage of maintenance personnel not only in the region but worldwide.
The issue of manpower development was addressed by the Gulf Aviation Academy and the shortage of human capital was considered one of the main issues facing the region.
Operating engines in the harsh environment of MENA especially the Gulf region was discussed by Saudi Arabian Airlines and Etihad, both outlining their experience in that regards.
Managing inventories and all related activities were put in perspective from different points of view. Emirates shared their efforts on managing the inventory to support a fleet of 152 aircraft over a network of 100+ stations. AJ Walter Aviation discussed how they can provide support for airlines in this regard.
The dilemma of outsourcing or developing inhouse capabilities was discussed by the low cost carriers of the region Jazeera Airways, Air India Express and Jordan Aviation. The pitfalls associated with outsourcing, power by the hour versus time and material and the importance of paying attention to aircraft and engine return conditions.
Thanks again to UBM Aviation for providing a venue for networking and sharing ideas affecting the MENA region.
Friday, May 27, 2011
Global MROs
A year ago I blogged about Hub MROs (click here for blog). ADAT was advocating this one stop shop as the wave of the future. One year later in the same venue, The Middle East Airlines Engineering and Maintenance conference, Mubadala Aerospace the parent company of ADAT and SRT put forward the concept of a Global MRO. Mr. Abdulla Shadid, Manager Business Development, Mubadala Aerospace said in the keynote address of the conference "The days of the independent non aligned MROs are over". These are powerful words and they were echoed by Turkish Technic.
So what is an aligned MRO, well it does not exist as one physical entity, but rather several MROs offering different services aligned together (not independent) as an example ADAT, SANAD, SRT and several Joint Ventures with OEMs (Landing gear, engines etc..) offering services jointly. Mubadala is trying to create a leading edge concept by aligning all its holdings and so is Turkish Technic. This is made possible through leveraging large aircraft orders by Etihad and deep pockets of Mubadala, and THY orders .
This alignment is not as easy as it sounds there are several challenges facing this and they have not changed from last year:
1 Human capital, there is a world shortage of technicians and releasing engineers and this has not been
resolved in the UAE and many other countries in the region. Not enough trained Emaratis are available to
run these JVs and will not be available for a long time;
2 There is a tremendous management challenge in aligning several JVs and entities to work together to
provide a competitive single all encompassing quotation to an airline. The tendency is for each one to go its own way.
Is it impossible? of course not; is it needed? we will have to see. In the mean time and I beg to differ, the Independent MROs will survive and thrive. Not every airline wants all the services or wants all the services from one entity and are happy to deal with an efficient independent MRO.
Will this concept catch up and become the norm of the industry, we will need to wait ad see.
The Independent MROs are here to stay.
So what is an aligned MRO, well it does not exist as one physical entity, but rather several MROs offering different services aligned together (not independent) as an example ADAT, SANAD, SRT and several Joint Ventures with OEMs (Landing gear, engines etc..) offering services jointly. Mubadala is trying to create a leading edge concept by aligning all its holdings and so is Turkish Technic. This is made possible through leveraging large aircraft orders by Etihad and deep pockets of Mubadala, and THY orders .
This alignment is not as easy as it sounds there are several challenges facing this and they have not changed from last year:
1 Human capital, there is a world shortage of technicians and releasing engineers and this has not been
resolved in the UAE and many other countries in the region. Not enough trained Emaratis are available to
run these JVs and will not be available for a long time;
2 There is a tremendous management challenge in aligning several JVs and entities to work together to
provide a competitive single all encompassing quotation to an airline. The tendency is for each one to go its own way.
Is it impossible? of course not; is it needed? we will have to see. In the mean time and I beg to differ, the Independent MROs will survive and thrive. Not every airline wants all the services or wants all the services from one entity and are happy to deal with an efficient independent MRO.
Will this concept catch up and become the norm of the industry, we will need to wait ad see.
The Independent MROs are here to stay.
Saturday, May 21, 2011
2011 A Challenging Year
2011 started with several challenges that did not only affect airlines in MENA and GCC, but the whole industry globally;
1. The natural disasters in Japan and the ensuing damage and problems;
2. The deepening Euro zone financial woes;
3. The political upheavals in MENA and GCC; and
4. The increase of fuel prices.
According to IATA air traffic shrunk in March (read story here) due to events in MENA and Japan. Traffic shrunk in MENA with growth measured in single digits which in April improved with Dubai and Abu Dhabi posting double digit passengers increase.
Political upheaval has struck Tunisia, Egypt, Yemen, Libya and Syria very hard while other countries were affected to a lesser degrees. In any case these most of these countries are tourist destinations predominantly from Europe. Jordan had tours cancellations and I am sure other MENA countries experienced the same. As a result flights to places like Cairo and Tunis have been reduced and of course totally stopped to Libya.
The airlines did not cancel or defer any aircraft deliveries, Yemenia took delivery of its first A320 on 28 April 2011 and RJ its 32nd Aircraft an A320 on 29 April 2011. This is an indication that they consider the medium and long term prospects as being good. Oil prices are fluctuating and trending downwards, at this time, to the extent that Emirates reduced its fares as a response to that reduction after having increased them.
The airlines will do what they always do in times of crisis, expand their networks to maintain their existing capacity; Emirates is planning Geneva and Copenhagen this Summer and Rio de Janeiro and Buenos Aires in January 2012, Royal Jordanian is planning flights to Berlin in June, a code share with BA for closer ties with a One World partner has been signed and has increased frequencies to compensate for the reduction in other areas, Etihad has a code share with Virgin Blue Group and ANZ and that goes for most the airlines of the region.
As Summer starts the movement of expatriates to their home countries will start and this is not politically very sensitive. People will go home regardless of the political situation in their home countries.
Oil is the biggest challenge that faces the airline industry not only in the region but globally. Oil prices are not only a rising cost to airlines they also represent a threat to recovering economies, that might falter and as a result experience less travel.
Thursday, April 7, 2011
KSA: Foreign Airlines Operating Domestic Routes
The Secretary of Saudi Arabia's Executive Council in February 2011 and later on 5 April 2011 the Assistant Minister of Defense and Aviation (click for full story) suggested that foreign airlines specifically from the Gulf enter the Saudi Domestic market to increase competition and stabilize prices to better serve the consumer. In the past Gulf carriers like Bahrain Air, Emirates, Etihad and Qatar Airways have shown interest in entering the domestic market, Air Arabia (click for full story) defended the Saudi Government stance of keeping foreign airlines out of the Saudi Market.
The Saudi domestic market is a large market with an estimated population as of mid July 2010 of 25.7 millions of which 5.6 millions are expatriates and 27 airports. This market is currently served by the national carrier SAUDIA and NASAIR a Low Cost Carrier. So, in principle increased competition will benefit consumers by providing alternatives and lowering ticket prices.
Opening up the domestic market to local and/or foreign airlines is easier said than done, there are several legal and regulatory measures that have to be put in place or resolved:
The Saudi domestic market is a large market with an estimated population as of mid July 2010 of 25.7 millions of which 5.6 millions are expatriates and 27 airports. This market is currently served by the national carrier SAUDIA and NASAIR a Low Cost Carrier. So, in principle increased competition will benefit consumers by providing alternatives and lowering ticket prices.
Opening up the domestic market to local and/or foreign airlines is easier said than done, there are several legal and regulatory measures that have to be put in place or resolved:
- The most important is to remove all subsidies that SAUDIA enjoys. Last August 2010, SAMA ceased operation citing high operating costs and inability to compete.
- There are legal and regulatory issues to be resolved:
- The Criteria of selecting and qualifying the foreign airlines;
- The mechanism of awarding routes;
- The required legal status of these airlines in KSA. Are they required to register as Saudi companies? or will they be allowed to actually operate as a foreign entity?;
- Aircraft basing issues related to countries of registry and regulatory oversight, including AOCs.
The idea maybe exemplary, but unless the airline domestic market is restructured to allow home grown airlines like SAMA to compete and prosper, it will be very difficult for foreign airlines to do the same.
Wednesday, March 30, 2011
Airline Branding in the Air
There has been a lot of work and debate on Airline Branding and the role of social media in engaging customers and enhancing the brand. It is all concentrated on how to keep passengers loyal and of course engage more and more passengers. My contention is, it should be on how to get the brand to be loyal to me as an individual and as a frequent flyer.
As a frequent flyer the airline provides perks on the ground. All the customer engagement happens on the ground; the priority check in, fast track through security, priority boarding and baggage claim and of course the use of a lounge.
If one is travelling economy and if you have hundreds of thousands of air miles, I don't care which airline it is, the airline is oblivious to you in the air. The cabin crew gets handed a list of the First and Business passengers and the service is personalized.
As a frequent flyer passenger, translate a loyalist to the brand, I want the brand to engage me during the most important segment of my travel experience, the actual flight.
I have flown several airlines were cabin crew did not even walk through the economy cabin for more than three (3) hours after the service, or kept the 'Fasten Seat Belt" sign on during smooth flights to control passenger movement.
For an airline to engage their frequent flyers is not very difficult. I am sure IT can provide a list of frequent flyers in the economy cabin. The cabin crew can then provide some sort of a personalized service during the flight. It could range from addressing the passenger by his name during beverage and food services instead of the regular "chicken or beef" litany; check on these passengers during the flight between services to see if they require anything; or provide them with a fast track voucher through immigration on arrival. It does not cost much but does wonders to the brand.
These days it seems one can buy the personalized service on an airline much easier than earning it
As a frequent flyer the airline provides perks on the ground. All the customer engagement happens on the ground; the priority check in, fast track through security, priority boarding and baggage claim and of course the use of a lounge.
If one is travelling economy and if you have hundreds of thousands of air miles, I don't care which airline it is, the airline is oblivious to you in the air. The cabin crew gets handed a list of the First and Business passengers and the service is personalized.
As a frequent flyer passenger, translate a loyalist to the brand, I want the brand to engage me during the most important segment of my travel experience, the actual flight.
I have flown several airlines were cabin crew did not even walk through the economy cabin for more than three (3) hours after the service, or kept the 'Fasten Seat Belt" sign on during smooth flights to control passenger movement.
For an airline to engage their frequent flyers is not very difficult. I am sure IT can provide a list of frequent flyers in the economy cabin. The cabin crew can then provide some sort of a personalized service during the flight. It could range from addressing the passenger by his name during beverage and food services instead of the regular "chicken or beef" litany; check on these passengers during the flight between services to see if they require anything; or provide them with a fast track voucher through immigration on arrival. It does not cost much but does wonders to the brand.
These days it seems one can buy the personalized service on an airline much easier than earning it
Almost an Emergency
I have been in the airline business for more than thirty three (33) years and I traveled extensively. Throughout this period I had one inflight emergency, a bird strike that took out an engine on take off from Toulouse in 1987 in a Lear 35.
All my flights have been uneventful not even an unruly passenger, until my flight on the 29th of March, on the first leg of my flight to Detroit. I had my second inflight emergency, well almost an EMERGENCY. On BA0107 a B747-400 out of Dubai at 01:55 lt to London Heathrow. About 3 hours into the flight I opened my eyes to see the Oxygen Masks deploy and the deep prerecorded Boeing voice instructing us to use the oxygen masks. As I grabbed mine and pulled it towards me, the captain came on the PA system to tell us not to use the masks. Everything is OK and nothing is wrong with the aircraft and this was the result of a "SPURIOUS" technical error. The aircraft was quite, no panic. I suppose it helps when almost everyone was asleep and just woke up.
It was surreal to watch these oxygen masks deploy. I was not panicking or heart racing and pounding. I suppose years of listening to safety briefings pays off. Most of the passengers went back to sleep. This"spurious"technical error took down the entertainment system and the passenger service modules (no reading lights).
The cabin crew was flustered, I could here lots of nervous giggling. The remainder of the flight was uneventful.
The BA Customer Relations staff were at the bottom of the stairs handing out apology forms for us to fill.
A couple of things I like to share:
1. The passengers were calm, probably sleepy as most woke up due to prerecorded announcement
2. I was wide awake and I did not panic.
3. The cabin crew became subdued and lucky for us this was not a real emergency.
4. We were not told what really happened. I don't accept this "spurious"technical error theory. I subscribe to
the "finger problem" theory.
So much for my second emergency. However, looking at BA vs UNITE and the cabin crew saga that has been going on for the last two years, my personal feeling is I really did not want to be with this particular crew in a real emergency.
All my flights have been uneventful not even an unruly passenger, until my flight on the 29th of March, on the first leg of my flight to Detroit. I had my second inflight emergency, well almost an EMERGENCY. On BA0107 a B747-400 out of Dubai at 01:55 lt to London Heathrow. About 3 hours into the flight I opened my eyes to see the Oxygen Masks deploy and the deep prerecorded Boeing voice instructing us to use the oxygen masks. As I grabbed mine and pulled it towards me, the captain came on the PA system to tell us not to use the masks. Everything is OK and nothing is wrong with the aircraft and this was the result of a "SPURIOUS" technical error. The aircraft was quite, no panic. I suppose it helps when almost everyone was asleep and just woke up.
It was surreal to watch these oxygen masks deploy. I was not panicking or heart racing and pounding. I suppose years of listening to safety briefings pays off. Most of the passengers went back to sleep. This"spurious"technical error took down the entertainment system and the passenger service modules (no reading lights).
The cabin crew was flustered, I could here lots of nervous giggling. The remainder of the flight was uneventful.
The BA Customer Relations staff were at the bottom of the stairs handing out apology forms for us to fill.
A couple of things I like to share:
1. The passengers were calm, probably sleepy as most woke up due to prerecorded announcement
2. I was wide awake and I did not panic.
3. The cabin crew became subdued and lucky for us this was not a real emergency.
4. We were not told what really happened. I don't accept this "spurious"technical error theory. I subscribe to
the "finger problem" theory.
So much for my second emergency. However, looking at BA vs UNITE and the cabin crew saga that has been going on for the last two years, my personal feeling is I really did not want to be with this particular crew in a real emergency.
Wednesday, March 23, 2011
Royal Jordanian - MENA's Trend Setter
In a recent interview on Aviation Business the CEO of Royal Jordanian (one of the few publicly listed airlines in the region) stated that the way forward for the airline is a strategic alliance and joint venture similar to the BA/Iberia, Air France/KLM or Lufthansa/Swiss, where the airlines strengthen each other while each maintains its identity, The time frame is between a year and a decade. He also emphasized that any partner can not be a government owned airline.
Royal Jordanian is a trend setter in the region. The airline was;
1. The first government owned airline to privatize and publicly list, and
2. The first airline to join an airline alliance One World
Since then Gulf Air, Saudia and Kuwait Airways are slated for privatization and Egypt Air joined the Star Alliance with Saudia and MEA slated to join Star Alliance and Sky Team respectively in 2012.
Going back to airline consolidation, Gulf Air responded positively to the idea that BA/Iberia is looking for a middle east partner and so did Royal Jordanian. But then both CEOs come from the same background (Royal Jordanian).
Now, to indulge in some educated speculation;
1. Gulf Air is working towards privatization in the near future.
2. Royal Jordanian and Gulf Air fleets are very similar
3. Both carriers can strengthen each other with Royal Jordanian having a strong presence in Europe and
North America and Gulf Air in India, Africa and the Far East.
4. Both carriers have a strong presence in MENA and the GCC.
Almost meeting the criteria mentioned earlier by Royal Jordanian's CEO
The region is catching up with the industry in terms of alliances and airline failures so why not consolidation.
Royal Jordanian is a trend setter in the region. The airline was;
1. The first government owned airline to privatize and publicly list, and
2. The first airline to join an airline alliance One World
Since then Gulf Air, Saudia and Kuwait Airways are slated for privatization and Egypt Air joined the Star Alliance with Saudia and MEA slated to join Star Alliance and Sky Team respectively in 2012.
Going back to airline consolidation, Gulf Air responded positively to the idea that BA/Iberia is looking for a middle east partner and so did Royal Jordanian. But then both CEOs come from the same background (Royal Jordanian).
Now, to indulge in some educated speculation;
1. Gulf Air is working towards privatization in the near future.
2. Royal Jordanian and Gulf Air fleets are very similar
3. Both carriers can strengthen each other with Royal Jordanian having a strong presence in Europe and
North America and Gulf Air in India, Africa and the Far East.
4. Both carriers have a strong presence in MENA and the GCC.
Almost meeting the criteria mentioned earlier by Royal Jordanian's CEO
The region is catching up with the industry in terms of alliances and airline failures so why not consolidation.
Friday, March 18, 2011
Kuwait - Airline Consolidation
Effective 16 March 2011 Wataniya Airways has ceased all its operations and will enter in a process to determine its future. Jazeera Airways and Kuwait Airways have agreed to carry Wataniya's stranded passengers on their flights on space available basis upon presentation of their Wataniya tickets. Wataniya provided high end service on its flights.
So what happened, this is a repetition of SAMA closing down on 24 August 2010 in Saudi Arabia.
The similarities are so close. Three airlines, with the national carrier subsidized by the government and the other two airlines having to compete for traffic with no government assistance.
So what happened in Kuwait.. Kuwait had three carriers; Kuwait Airways, the national carrier, owned by the government who wants to privatize the airline. Kuwait Airways has been subsidized by the government through direct cash infusions and preferential rates. The airline is being investigated and has not made money for two decades. Jazeera and Wataniya are publicly traded companies and have competed against Kuwait Airways unsubsidized and gained market share at the expense of national carrier.
Kuwait has a fairly liberal aviation policy and the three airlines had to deal with competition on every city pair with regional and international airlines. The field was definitely overcrowded. In February last year Jazeera acquired Sahaab Aircraft Leasing to diversify into different businesses.
Now what.... Jazeera Airways gets another shot at dominating the regional share of the market in Kuwait, leaving Kuwait Airways to compete on international destinations. Financially, Kuwait Airways will probably continue losing money and Jazeera will probably return to profitability. Will Wataniya fly again, well we have to see, my guess is not in the near future.
So what happened, this is a repetition of SAMA closing down on 24 August 2010 in Saudi Arabia.
The similarities are so close. Three airlines, with the national carrier subsidized by the government and the other two airlines having to compete for traffic with no government assistance.
So what happened in Kuwait.. Kuwait had three carriers; Kuwait Airways, the national carrier, owned by the government who wants to privatize the airline. Kuwait Airways has been subsidized by the government through direct cash infusions and preferential rates. The airline is being investigated and has not made money for two decades. Jazeera and Wataniya are publicly traded companies and have competed against Kuwait Airways unsubsidized and gained market share at the expense of national carrier.
Kuwait has a fairly liberal aviation policy and the three airlines had to deal with competition on every city pair with regional and international airlines. The field was definitely overcrowded. In February last year Jazeera acquired Sahaab Aircraft Leasing to diversify into different businesses.
Now what.... Jazeera Airways gets another shot at dominating the regional share of the market in Kuwait, leaving Kuwait Airways to compete on international destinations. Financially, Kuwait Airways will probably continue losing money and Jazeera will probably return to profitability. Will Wataniya fly again, well we have to see, my guess is not in the near future.
Saturday, March 5, 2011
MEA - Comfortable and Complacent
Middle East Airlines (MEA) on 28 February signed an agreement with SKYTEAM to join the alliance in 2012. During that ceremony Minister of Public Works and Transport Mr. Ghazi Aridi announced and vowed that MEA will retain its monopoly and all exclusive rights will be renewed in 2012 (click for full story).
MEA must be thrilled. The airline has become maybe too comfortable and definitely complacent. It has forgotten that with government support and exclusive rights come responsibilities towards the travelling public in Lebanon.
In the recent events in Egypt regional airlines like Etihad and Royal Jordanian operated extra flights to evacuate their nationals and in the case of Etihad expatriates residing in the UAE. More recently when Libya erupted Lebanese nationals were stranded in Tripoli while Royal Jordanian evacuated 2000 people over a period of a week. This is not risk aversion, airlines that operated to Tripoli did their risk assessment and obtained their insurers consent to operate, MEA seems not to be bothered.
On 25 October 2010, the MEA Chairman complained about the unregulated open skies policy of the country (click here for details). He actually joined the criticism leveled at the Emirates, Etihad and Qatar Airways by European and North American legacy airlines.
And now the preservation of its monopoly, sorry exclusivity on routes which makes it unattractive to local competitors. The removal of Royal Jordanian's exclusivity did not affect the airlines that started in the last 36 months in a big way. This will provide a lopsided competitive scene whereas foreign airlines have easier access to the Lebanese market than local companies in the making.
The elimination of competition and the disregard of the Lebanese public interest in case of crisis does not bode well for MEA. There are alternatives provided by 55 other airlines. And political uncertainty and fuel prices may not be the only reasons for the loss of revenue and profits.
MEA must be thrilled. The airline has become maybe too comfortable and definitely complacent. It has forgotten that with government support and exclusive rights come responsibilities towards the travelling public in Lebanon.
In the recent events in Egypt regional airlines like Etihad and Royal Jordanian operated extra flights to evacuate their nationals and in the case of Etihad expatriates residing in the UAE. More recently when Libya erupted Lebanese nationals were stranded in Tripoli while Royal Jordanian evacuated 2000 people over a period of a week. This is not risk aversion, airlines that operated to Tripoli did their risk assessment and obtained their insurers consent to operate, MEA seems not to be bothered.
On 25 October 2010, the MEA Chairman complained about the unregulated open skies policy of the country (click here for details). He actually joined the criticism leveled at the Emirates, Etihad and Qatar Airways by European and North American legacy airlines.
And now the preservation of its monopoly, sorry exclusivity on routes which makes it unattractive to local competitors. The removal of Royal Jordanian's exclusivity did not affect the airlines that started in the last 36 months in a big way. This will provide a lopsided competitive scene whereas foreign airlines have easier access to the Lebanese market than local companies in the making.
The elimination of competition and the disregard of the Lebanese public interest in case of crisis does not bode well for MEA. There are alternatives provided by 55 other airlines. And political uncertainty and fuel prices may not be the only reasons for the loss of revenue and profits.
Thursday, February 24, 2011
Airline Challenges in MENA and GCC
Air Arabia announced its 2010 results which showed a 31.5% decline in net profit compared to 2009 (309.559 million vs 452 million AED) similarly Royal Jordanian announced its 2010 results which showed a 66% decline in net profit compared to 2009 (9.8 million vs 28.6 million JOD). Both carriers had higher revenues, load factors and passenger numbers carried. While passenger numbers and revenues have increased yields are coming under pressure.
The field is getting crowded in the GCC and MENA and not only because of regional airlines but also due to the increase in number of airlines operating into the region.
When everybody advocates "cost savings" as the immediate reaction to lower financial results, the region in addition to lowering costs has always embarked on expanding their networks. Cost savings are subject to the law of diminishing returns and has a finite contribution whereas expansion, the sky is the limit, through the efficient use of assets and resources. This is why almost every airline in the region is expanding its network in 2011. Of course expansion has its difficulties where European and North American legacy airlines fight it every step of the way.
One thing to remember these profits were made on core business, imagine if ancillary fees are added. North American and European airlines showed increased profits in 2010 as a result of Ancillary Fees revenues.
2011 has started with several challenges, upheaval and regime changes in MENA and GCC and the resultant rise of oil prices which were already on an upward spiral did not deter the increase of January 2011 passenger traffic in several countries. These are resilient economies that have gone through major conflicts in the last few decades. Oil prices while affecting airlines is a good thing for the gulf countries where affluence is dependent on oil revenues.
While 2011 looks more challenging than previously thought, these challenges are potentially great opportunities.
The field is getting crowded in the GCC and MENA and not only because of regional airlines but also due to the increase in number of airlines operating into the region.
When everybody advocates "cost savings" as the immediate reaction to lower financial results, the region in addition to lowering costs has always embarked on expanding their networks. Cost savings are subject to the law of diminishing returns and has a finite contribution whereas expansion, the sky is the limit, through the efficient use of assets and resources. This is why almost every airline in the region is expanding its network in 2011. Of course expansion has its difficulties where European and North American legacy airlines fight it every step of the way.
One thing to remember these profits were made on core business, imagine if ancillary fees are added. North American and European airlines showed increased profits in 2010 as a result of Ancillary Fees revenues.
2011 has started with several challenges, upheaval and regime changes in MENA and GCC and the resultant rise of oil prices which were already on an upward spiral did not deter the increase of January 2011 passenger traffic in several countries. These are resilient economies that have gone through major conflicts in the last few decades. Oil prices while affecting airlines is a good thing for the gulf countries where affluence is dependent on oil revenues.
While 2011 looks more challenging than previously thought, these challenges are potentially great opportunities.
Saturday, January 29, 2011
Politics and The Airlines
In the news today "Emirates, Etihad get France Clearance" Gulf News today 29 January 2011 (click here for full story) reported that a tentative agreement was reached to grant additional 22 weekly flights to Emirates and Etihad (4 to Paris and 7 to other French cities). These were granted despite Air France-KLM lobbying the government to refuse granting the authorities on the basis that lower taxes and airport fees in their home bases give the carriers an unfair advantage.
Air France-KLM position has been made public for weeks, right at the time Canada refused to grant additional flights to the UAE carriers. However, a few weeks after both the government and Air Canada opposed Air Services to Qatar, Canada granted authority to Qatar Airways (a CS order with Bombardier was probably at stake). It appears that the French Government are smarter than the Canadian, they did not listen to the parochial demands of their airline, at stake are mega orders with Airbus and a Rafale deal that was faltering. The Government decided that what is at stake transcends the potential losses of an airline on a couple of routes.
Legacy Airlines have conveniently forgotten that aviation and airlines are very much affected by politics and economic conditions and realities that far transcends the immediate needs of individual airlines.
Air France-KLM position has been made public for weeks, right at the time Canada refused to grant additional flights to the UAE carriers. However, a few weeks after both the government and Air Canada opposed Air Services to Qatar, Canada granted authority to Qatar Airways (a CS order with Bombardier was probably at stake). It appears that the French Government are smarter than the Canadian, they did not listen to the parochial demands of their airline, at stake are mega orders with Airbus and a Rafale deal that was faltering. The Government decided that what is at stake transcends the potential losses of an airline on a couple of routes.
Legacy Airlines have conveniently forgotten that aviation and airlines are very much affected by politics and economic conditions and realities that far transcends the immediate needs of individual airlines.
Sunday, January 23, 2011
Canada's Air Transport Competitiveness
On 20 January 2011 in an address in Montreal Mr.Giovanni Bisignani the Director General of IATA called on the Government of Canada "to improve its global competitiveness in air transport, travel and tourism" Government policies has eroded Canada's competitive edge to the extent that Canada became the 15th most visited country in 2009 from the 8th in 2002 and the World Economic Forum Travel and Tourism Competitiveness in 2009 has ranked Canada (106) behind Japan (86), UAE (50), India (46) and China (20).
As a result the government protects Air Canada at the expense of the tourism industry by preventing airlines from freely operating into Canada or allowing Canadian operators the freedom to compete with Air Canada.
Claims of loss of jobs if Emirates and Etihad operated additional flights into Canada are not supported by the realities on the ground. On the contrary, these additional services would have increased the number of visitors to Canada and probably generated additional jobs.
The short sightedness of these policies has resulted into more barriers and a rift with the UAE which is affecting Canadian Businesses and Citizens.
For the full Press Release click here
As a result the government protects Air Canada at the expense of the tourism industry by preventing airlines from freely operating into Canada or allowing Canadian operators the freedom to compete with Air Canada.
Claims of loss of jobs if Emirates and Etihad operated additional flights into Canada are not supported by the realities on the ground. On the contrary, these additional services would have increased the number of visitors to Canada and probably generated additional jobs.
The short sightedness of these policies has resulted into more barriers and a rift with the UAE which is affecting Canadian Businesses and Citizens.
For the full Press Release click here
Friday, January 7, 2011
Qatar Airways Extends Its Global Reach
Qatar Airways is expanding its presence in Brazil in a big way (click here for full story). Six months after starting its Sao Paolo service the airline signed a code share agreement with GOL Linhas aereas inteligentes Brazil's fastest growing low cost low fare airlines. The agreement covers Sao Paolo and 47 destinations in Brazil. The code share agreement allows Qatar Airways to use its QR code on all segments of a flight no matter where it originates on the Qatar Airways network and terminates on the GOL network. Both airlines have submitted a joint application for approvals and anti trust immunity to the Brazilian Civil Aviation Authority and the Antitrust Agency. They are also working on coordinating their Frequent Flyer Programs.
This agreement has the potential to extend the arrangement beyond Brazil to include GOLs international destinations in nine (9) countries, in the future.
Qatar Airways is aggressively pursuing a rapid expansion of its network in Brazil, South America's largest country and one of the world's rising economic powers. This arrangement will probably be replicated in other important markets to give the airline a larger global reach.
This agreement has the potential to extend the arrangement beyond Brazil to include GOLs international destinations in nine (9) countries, in the future.
Qatar Airways is aggressively pursuing a rapid expansion of its network in Brazil, South America's largest country and one of the world's rising economic powers. This arrangement will probably be replicated in other important markets to give the airline a larger global reach.
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