The Aviation Outlook MENA and the Low Cost MENA conference Middle East was held in Cairo in April 2010.
The conference is MENA region’s annual meeting for the global aviation sector. It offers the opportunity to gain expert insight, network and strategise with aviation experts from around the world and in particular the Middle East and North Africa.
They had over 300 attendees, including all of the region’s network carriers and LCC. The 3rd annual Aviation Outlook MENA 2010 brought together the key stakeholders in the region’s aviation industry. This year there was an addition to the conference. Low Cost Airlines World MENA was included. There was innovation and opportunity for traditional and low cost carriers and investors. The low cost aviation industry has proved its efficiency and profitability to the point that legacy carriers are unveiling plans to launch low cost subsidiaries.
The Middle East and North Africa have positioned themselves at the forefront of the world’s aviation market. Regional low cost carriers have played a key role in increasing air traffic, eating their own markets as well as migrating passengers from legacy carriers.
Low cost carriers are expanding and connecting the dots in their route network through strategic partnerships, coping with the challenges of low cost operations. They are competing not only on price, but convenience, service and experience.
Low cost airlines have emerged in recent years as the leaders in efficiency, meeting market needs, profitability and style. Legacy carriers are enhancing their offering and their bottom lines by following the lessons of their low cost colleagues. Low Cost does not necessarily mean no frills but it targets airlines keen to adopt low cost operating principles.
In his introductory remarks, Peter Harbison, Executive Chairman, Centre for Asia Pacific Aviation put the emphasis on the potential threat of fuel prices if it reaches 100 USD and on the fact that the low cost model is changing the world of air traffic.
The keynote speaker, Adel Ali, CEO of Air Arabia, analyzed the Middle East market stating first that the airports of the region are very well developed and that some of the expenses made to upgrade them are unnecessary making the airports expensive and unattractive.
He continued by presenting the importance of the privatization of Air Arabia that has helped the company to become more efficient in operations and how Air Arabia changed the aviation by opening up new markets and by allowing more people to fly in more stimulating prices.
Lastly, he maintained that air transportation in MENA area is underdeveloped and has a lot to offer to the world and to prove his point he made the comparison between United States that has a population similar to the Arab world but in the MENA area air travel represents only the 15% of the US market despite the fact that air travel is the only mean of transport in this area. He concluded by saying that: “I hope that Air Arabia can be the pan-arab airline”.
The CEO of Egyptair Maintenance and Engineering presented the competitiveness of his company versus other similar companies- namely the geographic location of Cairo. This competitive advantage is based on the low facilities costs, the low cost of labor and he concluded by saying that there is a growing trend for airlines to outsource maintenance.
Mr Nico Bezuidenhout, Chief Executive Officer, Mango Airlines presented how their airline has managed to change the airline industry in South Africa and is now able to fly 4.5 million passengers and to obtaining a 17% market share after the airline was established. Mango, due to the social characteristics of South Africa, which has low access to the Internet has adopted a strategy that included two multi -skilled contact centres, 600 retail stores, more than 1000 travel agencies and offered the passengers the option to buy their tickets by retail credit cards and mobile phone payments.
In the ATR’s presentation of Jerome Gabory, Director Market Strategy stated that short haul routes dictate smaller capacity and higher frequency and it is the increasing competition that often leads to that direction.
In this year’s Aviation Outlook Middle East panel discussion the keynote speaker, Capt Alaa Ashour, Chief Executive Officer of Egyptair, said that they are preparing themselves for the liberalization of the Egyptian market.
In the panel discussion regarding the effect of the crisis and liberalization Majdi Sabri, Regional Vice President IATA said that a revision of the plan of deliveries of aircrafts by the airlines was made and he stated that according to IATA predictions consolidation will not come soon because there are cultural issues blocking such a development but most probably they see the possibility of the emergence of airlines that will not be government owned.
AACO Secretary General, Mr Abdul Waha Teffaha said that Arab airlines haven’t faced any crisis as the traffic has increased by 7% and the Arab airlines have recorded an increase of 11% of RPK and he added that Arab airlines are not subsidized explaining that government requirements to fly to non -profitable routes does not mean government support. He concluded by saying that liberalization will come sooner or later to the arab world and soon the area will see a euromed area since privatization is a must.
Nawal Taneja stated that the competitive landscape is changing and he offered two examples of crucial emerging trends: on the one hand there are legacy carriers, as for example American Airlines, that outsource most of their domestic services and on the other hand there is the increasing control customers have over the travel parameters via mobile internet, mobile devices, social media and search engines. Such developments are radically changing air traffic.
IATA Regional Vice President, Majdi Sabri, presented the situation of MENA by saying that MENA is the most dynamic aviation area recording an increase of 11.2% in passenger traffic and of 3.9% in cargo during 2009 in comparison to 2008 and the forecast for 2010 is 15.20%. He also said that the fleet of the region will double by 2018.
CEO of Airport International Group, Curtis Grad said that during 2009 20 airlines added new destinations or increased their capacity and that Amman has by now a good reach from New York to Hong Kong with 560 flights per week, 36 of which performed by low cost airlines.
Finally, the Director General of Lebanon, Dr Hamdi Chaouk, in his speech emphasized the need for unified rules and regulations since in some cases the regulator follows the airline and air traffic developments. He also stressed that regulator should be free and capable of applying enforcement rules.
