2013 Round The Corner

Having survived the Mayan Apocalypse and we are assured of a 2013, it is a good time to look
at what is happening in the MENA region now and what will shape events in 2013.

1. Australian Regulators tentatively approved the Emirates/Qantas agreement to relocate the Qantas
    Singapore hub to Dubai and code share.

2. Etihad is rumored to be looking at purchasing 49% of Kingfisher or maybe 24% of Jet Airways, either
    way it is looking for big time expansion in India.

3. Qatar Airways joined Oneworld and started operating the B787.

4. Saudi Arabia's GACA postponed the third airline license until 2013. However, it is reported that domestic
    fares will rise by 10% in 2013. This has been a sticking point with the new entrants.

5. The CEO of Gulf Air will be leaving by the end of the month and the Deputy CEO has been appointed
    acting CEO, until such time the Board decides on a permanent replacement. He is expected to be a
    Bahrain national. The last Gulf Air PCE from Bahrain was Mr. Ibrahim Al Hamar now Managing Director
    of Bahrain Air who was replaced by James Hogan. The airline scaled down their B787 and converted the
    A330 orders into A320s.

6. Iraqi Airways took delivery of its first A330-200 and B737-800. Now that the dispute with Kuwait
    Airways over damages resulting from the first Gulf War in 1990 has been settled, Iraqi Airways is
    expected to expand.

7. The privatisation of Kuwait Airways has been launched with the formation of a company to manage the
    airlines fleet renewal and staff issues. Certainly, the resolution of the dispute with Iraq will help matters
    specially that the airline will get half of the award as a cash infusion ($250 millions).

8. Royal Jordanian is counting down towards its 50th anniversary and took delivery of the last A320 in its
    fleet renewal plan.

Of course there are many many other exciting stories about the airlines of the region that will certainly unfold in 2013.

2012 An Exciting Beginning

The Chinese New Year is upon us and the Year of the Dragon is supposed to be much better than last year.
Well, it looks like it maybe so. January has been an interesting month with lots of exciting news for the region.

The opening of the Saudi Domestic and International market tops the list. The Kingdom of Saudi Arabia is a large market with a population of 27 Millions and 27 domestic airports, effectively served domestically by two airlines; Saudi Arabian Airlines, the national carrier and NAS Air a low cost carrier. As early as April 2011 General Authority of Civil Aviation (GACA) has declared its intention to liberalise the market in order to better serve the consumers by allowing foreign airlines especially those from the GCC to operate domestically and internationally subject to bilaterals. This January GACA declared that by April 2012 they will issue an RFP for interested airlines wishing to participate. In the meantime airlines like Emirates and Gulf Air among others have shown interest and are in discussion with the authority.

Qatar Airways has indicated that they have identified a European take over target, but they are not saying which airline (maybe Czech Airlines). keeping in mind that the airline has acquired 35% of Cargolux last year and right after Etihad's 29.21% in AirBerlin, who by the way inaugurated their first flight into Abu Dhabi on 16 January 2012. It appears that THY Turkish Airlines maybe interested in acquiring LOT Polish Airlines.
That will make a total of five (5) airlines in Europe that have been bought (BA/BMI) or a large stake acquired in them (Qatar Airways/Cargolux and Etihad/Airberlin) or are targeted.

On a more sobering note, Gulf Air ruled out its privatisation effort for the time being due to the events in Bahrain and it will probably be looking for the Saudi market to improve its financial position. This is a reversal of the trend of privatising airlines in the region, keeping in mind that Kuwait Airways privatisation was put on hold in October 2011pending restructuring of the airline.

2012 maybe a tough a year but for sure it is going to be an interesting one.

2012 ... A Tough Year

Is 2012 going to be a repeat of 2011? The chances are yes. Not much has changed except a lot of issues of 2011 are going to be resolved one way or another. The uncertainty that prevailed in 2011 is still with us and in some cases it is getting worse.

2012 is full of geopolitical issues affecting the region
- Tunis, Egypt, Morocco and Libya will be governed by Islamists, who for decades were in the opposition.
   They will face the test of governing, the realities of the world and the well being of their people and
   economies. With the exception of Libya the other three depend heavily on tourism and the test will be the
   balancing act between beliefs and pragmatism.
- Syria remains a problem with no apparent solution in sight in the mean time casting shadows on Lebanon.
- Yemen is still the same with very little movement in spite of the accords signed in Riyadh.
- Iraq seems destined to even more political instability that may end up in its break up.
- Iran's threats to close the Straits of Hormuz could lead to a major conflict coupled with the nuclear
  capability problem with  Israel threatening to bomb Iran's nuclear installations.
- The Palestinian Israeli conflict that keeps worsening with the intransigent position of Israel relative to the
   Peace Process and Palestinian Statehood.
- The Euro zone debt crisis deepens with the downgrading of France, Austria and others including the
   European Financial Stability Facility (ESFS) leading Europe into recession and potential country defaults
   affecting tourism to the region.

On the other hand there are some good news
- Dubai and Abu Dhabi are developing into destinations of their own attracting more and more visitors.
- Saudi Arabia is embarking on an interesting experiment in airline liberalization by allowing GCC and other
   foreign airlines to operate domestic and international flights from the Kingdom.
- The airlines of the region are still expanding into new markets mainly South America, Africa and the CIS.
- Cargo operations are on the rise and with the reconstruction in Libya and hopefully Iraq will cause an
   increase in regional cargo operations.
- GCC airlines are expanding by acquisition with Etihad and Airberlin following Qatar Airways and Cargolux
   in 2011. Qatar Airways indicated that they have identified a target airline in Europe for acquisition. Who
   knows, Royal Jordanian may revive the plans of a merger with an airline a la Air France/KLM model.
- India is allowing Foreign Direct Investments (FDI) in its ailing airlines and hopefully more restructuring
   of the industry. India remains a large and expanding market that attracts not only Oneworld and Star
   Alliance but every GCC airline.

In a nutshell nothing changed from 2011.
- The capacity of the MENA/GCC airlines will increase and so would their networks through additional
  aircraft deliveries and mergers and acquisitions.
- Kuwait Airways will hopefully restructure.
- Saudi Arabia will launch its new initiative allowing regional airlines to expand within the Kingdom by
  operating domestically and internationally and allowing carriers to serve more and more destinations.
- Cargo is assuming a higher importance with airlines like Emirates, Etihad, Qatar Airways and Royal
   Jordanian.

Will the airlines of the region make profits, probably if everyone in the neighborhood behaves.
"Plus ca change, plus c'est la meme chose" (The more things change, the more they remain the same).

Wishing you all a prosperous and safe 2012.