Airline Finance News - Africa / Middle East.

Nov 27, 2006

Arab Air Carriers Organization Secretary General Abdul Wahab Teffaha refuted the mounting calls to curb the expansion of some Arab carriers in the EU because they are subsidized by their governments. "We find these calls unbalanced, as they overlook the forms of indirect support awarded to some airlines in the EU, and in other regions, especially in the area of slots, priority terminals in airports, and sometimes limiting ground services providers in those terminals," he said in his state of the industry speech at the organization's AGM in Kuwait. "We deem it necessary that in the event the issue of government support is brought to the table, then it must include all forms of direct or indirect support, and that it would be balanced and at the same level for all airlines in the world, including those protected under the bankruptcy laws, in order to look into all the issues that lead to unbalanced competitive opportunities." Nov 23, 2006

Arab Air Carriers Organization Secretary General Abdul Wahab Teffaha said members will transport 75 million passengers in 2006, an increase of 7.1% over 2005. RPKs on Arab airlines are expected to grow 12% year-over-year compared to overall industry growth of 7.2%. He called that rise "a pressing element on the economies of operations, slightly lowering load factors on Arab airlines." Cargo traffic, expressed in RTKs, on AACO member carriers is expected to increase 13.5% this year against 5.3% worldwide. "This growth ascertains the ability of the industry in the Arab world to adapt to adjust to the unstable environment," he noted. Nov 23, 2006

Growth does not necessarily mean success in Middle East. IATA DG Giovanni Bisignani warned airlines and governments in the Middle East not to "lose the plot on cost-efficiency" and to "differentiate growth and profitability" in an address to the Arab Air Carriers Organization AGM in Kuwait. Nov 23, 2006

IATA's Bisignani called on the Middle East and North Africa to up their participation in three of IATA's main initiatives: Safety, Simplifying the Business and liberalization. There still are 10 IATA carriers in the region who have not started the IOSA certification process, including four AACO members. Kuwait Airways earned its certificate yesterday. The AGM adopted a resolution making IOSA certification conditional to membership from 2008. Nov 23, 2006

IATA's Bisignani recognized the "emerging and impressive success story" of Arab carriers with their double-digit growth in the past four years and year-to-date increases of 17% in cargo traffic and 15% in passenger traffic. "Both are about three times the global average," he said, while noting that the $38 billion list of major airport projects is "leading the industry" and that airlines are investing significantly to keep pace with $60 billion in orders for 350 aircraft. Nov 23, 2006

IATA's Bisignani said "Growth is not a guarantee for profitability," he warned. "Running four enormous hubs in a small geographic area such as the Gulf will be a challenge. Look at Southeast Asia: Singapore, Bangkok and Kuala Lumpur have world-class hubs. Two are working to meet growing demand and one is struggling to attract traffic. This is with a regional market of 3.5 billion people. The whole MENA population is only 380 million. The critical question is, how do we make sure your emerging success story has a happy ending?" Nov 23, 2006

IATA's effort to achieve 100% e-ticketing by the end of 2007, Bisignani said: "We will surpass our 70% global target for this year. The Middle East/North Africa, however, is dead last at 13%." Some carriers have yet to issue a single e-ticket while Emirates and Oman Air have 59% and 46% penetration respectively. "I am ringing the alarm bell, not raising the white flag. Look at what happened in China. ET went from 11% in 2005 to 80% in a year. They went from nearly last to first, so there is no reason why Arab carriers can't achieve the same. But the clock is ticking and only 405 days remain until the deadline. ET penetration must increase by over 6% per month." Nov 23, 2006

Z

Editor: Aram Gesar, eMail: [e-mail]

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Nov 13, 2006