Arab Spring hindering airlines’ growth, laments Arab Air Carriers Organisation boss

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Top aviation industry officials revealed Arab Spring protests have badly affected the influx of Arab airlines?in Middle East and North Africa (MENA) region, and coupled with European debt crisis, hit carriers? growth hard during the present year and will possibly continue next year.

Abdul Wahab Teffaha, secretary-general of the Arab Air Carriers Organisation (AACO) has disclosed national ownership and control rules as the main barriers that are hindering airlines growth. ?It is an artificial barrier imposed by Arab governments for cross-border mergers and acquisitions and we are calling for removal of these barriers,? Teffaha told reporters on the sidelines of a regional aviation meeting.

Middle East is home to some of the fastest growing airlines, primarily in the Gulf region where Dubai?s Emirates airline, Qatar Airways and Etihad, one of Gulf?s youngest airlines, are vying for dominance.

Arab carriers are major investors in airports and related infrastructure which are mainly state-owned in the region.

The overall grim situation is giving sleepless nights to most of the major players. However, Etihad expects to post its first profit in 2012. ?I always take advantage of a good crisis by shaking up the company,? Veteran Etihad chief executive James Hogan said last month.

According to AACO, in 2010, Arab airlines grew more than 17 per cent in revenue passenger kilometres, a key performance yardstick. But the figure is expected to drop to 7 percent in 2011, going against the international trend of the growth level.

However, International Air Transport Association (IATA) in last month?s assessment said overall industry has shifted gears downward. As per their assessment, year-on-year growth slowed from six per cent in July to 4.5 per cent in August and the global passenger numbers may be up against 2010.

Also, freight markets, who were often seen as a bellwether for wider economic prospects are already declining, as their contraction accelerated to 3.8 per cent in August.

In this regard, Tony Tyler, IATA?s director general and chief executive said: ?In this region there has not been much consolidation because it is politically difficult. Regional airlines are fighting for market share … if you break down some of the national barriers it could be quite profitable.?

Asked on whether Arab League sanctions against Syria would have an impact on airlines, Teffaha said political situation in the region is the ?biggest worry? for Arab airlines, as they have no choice but to adhere to their government directives.

?It is because of what is happening in the Middle East, the Arab world. For 2012, it all depends on the situation in the region and Europe,? he said. ?If it deepens, it will be lesser than double digit growth. We have no stand on this, it is purely a government issue.?

At least 25 airlines from the Arab world are members of AACO.

(By Aliya Bashir; Edited by Moign Khawaja)

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