Friday, December 30, 2011

Adieu 2011

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

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.


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