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Regional airlines take off
September 2019 1495

According to the latest International Air Transport Association (Iata) World Air Transport Statistics (2019 WATS) released last month, the development of the low-cost carrier (LCC) segment continues to outpace that of network carriers.

Some 52 of Iata’s 290 current member airlines classify themselves as LCCs, and other new model airlines. Measured in available seat kilometres, LCC capacity grew by 13.4 per cent, almost doubling the overall industry growth rate of 6.9 per cent. LCCs accounted for 21 per cent of global capacity in 2018. When looking at available seats, the global share of LCCs in 2018 was 29 per cent, reflecting the short-haul nature of their business model.

A prominent LCC from the region, Air Arabia reported strong set of results for the first half ending June 30, 2019 registering a net profit of Dh338 million ($ million); a 47 per cent increase compared to the same period last year. Air Arabia served over 5.82 million passengers from all its four hubs in the first half of 2019, an increase of 12 per cent compared to first half of 2018. The average seat load factor – or passengers carried as a percentage of available seats – for the same period stood at an impressive 84 per cent.

The airline posted record second quarter net profit of Dh210 million ($ million), up 75 per cent over the same period last year, while 10 new routes were added to the airline’s global network in first half and over 5.82 million passengers carried, up 12 per cent over the same period of time last year.

Last month during the busy Hajj season, Flynas, the national airline and leading low-cost carries (LCC) of Saudi Arabia, operated the world's largest passenger aircraft, Airbus A380, becoming the first Saudi operator to receive 200,000 pilgrims from 17 countries.

The airline has recently signed a Memorandum of Understanding (MoU) with Airbus to purchase 20 A321XLR and A321LR aircraft to realise its ambition of transporting around five million pilgrims annually, supporting the targets of the Kingdom’s Vision 2030 to increase the number of pilgrims to 30 million by 2030.

Meanwhile, some full-service airlines from the Middle East didn’t perform too badly either.

Royal Jordanian announced a profitable first half of the year. Airline president and CEO Stefan Pichler said in a recent press conference that the airline recorded a JD52.2 million ($ million) gross profit against JD34.8 million ($ million) in the first half of 2018, a 50 per cent increase. Thus, the airline registered a JD1.5 million ($ million) net profit after tax in the first half of this year, against a net loss of JD12.7 million ($ million) in the same period of last year.

Gulf Air, the national carrier of Bahrain, carried 3.2 million passengers in the first half of 2019, up 23 per cent compared to 2.6 million passengers carried in H1 2018. According to the airline's half-year results, seat load factor rose to 77.4 per cent in comparison to 74.3 per cent recorded in the first half of 2018.

“We are extremely proud to report that the national carrier of Bahrain achieved outstanding results for the first half of 2019 comparing to the same period in 2018,” stated the CEO of Gulf Air, Krešimir Kučko. “With greater capacity and number of seats, it was challenging to hit greater seat load factors, however, we managed to achieve this goal. Our passengers are proving to be more loyal and we see returning customers since the launch of our new fleet products the Boeing 787-9 Dreamliner and the Airbus 320neo."

UAE’s national airline Etihad Airways emerged as the most punctual Middle Eastern carrier in the first seven months of 2019. Earlier this year, Etihad Airways reported its third consecutive annual loss despite finding cost savings of nearly half a billion dollars as it cut its workforce and fleet.

Meanwhile, the Emirates Group posted a profit of $631 million for the financial year ended March 31, 2019, down 44 per cent from last year. The group’s revenue reached $29.8 billion, an increase of 7 per cent over last year’s results. The group’s cash balance was $6 billion, down 13 per cent from last year mainly due to large investments into the business, including significant acquisitions and payment of last year’s $545 million dividend.

Sheikh Ahmed bin Saeed Al Maktoum, chairman and chief executive, Emirates Airline and Group, said: “2018-19 has been tough and our performance was not as strong as we would have liked.

Higher oil prices and the strengthened US dollar eroded our earnings, even as competition intensified in our key markets. The uptick in global airfreight demand from the previous year appears to have gone into reverse gear, and we also saw travel demand weaken, particularly in our region, impacting both dnata and Emirates.

“Every business cycle is different, and we continue to work smart and hard to tackle the challenges and take advantage of opportunities. Our goal has always been to build a profitable, sustainable, and responsible business based in Dubai, and these principles continue to guide our decisions and investments. In 2018-19, Emirates and dnata delivered our 31st consecutive year of profit, recorded growth across the business, and invested in initiatives and infrastructure that will secure our future success.”

Sheikh Ahmed said: “In 2018-19, we were steadfast with our cost discipline while expanding our business and growing revenues. By slowing the recruitment of non-operational roles, and implementing new technology systems and new work structures, we’ve improved productivity and retarded manpower cost increases.”

He concluded: “It’s hard to predict the year ahead, but both Emirates and dnata are well positioned to navigate speed bumps, as well as to compete and succeed in the global marketplace. We must continually up our game, that’s why we invest in our people, technology, and infrastructure to help us maintain our competitive edge. As a responsible business, we also invest resources towards supporting communities, conservation and environmental initiatives, as well as incubating talent and innovation that will propel our industry in the future.”

Globally, around 4.4 billion passengers flew in 2018 (an increase of 6.9 per cent over 2017), with a whopping 81.9 per cent of available seats being filled, the International Air Transport Association (Iata) World Air Transport Statistics (2019 Wats) confirms.

The Middle East accounted for 5.1 per cent market share, meaning 224.2 million passengers, which is an increase of 4 per cent over 2017. Emirates featured in the top five airlines ranked by total scheduled passenger kilometres flown, alongside American Airlines, Delta Air Lines, United Airlines and Southwest Airlines.

Alexandre de Juniac, Iata’s director general and CEO, said: “Airlines are connecting more people and places than ever before. The freedom to fly is more accessible than ever. And our world is a more prosperous place as a result. As with any human activity this comes with an environmental cost that airlines are committed to reducing. We understand that sustainability is essential to our license to spread aviation’s benefits. From 2020, we will cap net carbon emissions growth. And, by 2050, we will cut our net carbon footprint to half 2005 levels. This ambitious climate action goal needs government support. It is critical for sustainable aviation fuels, new technology and more efficient routes to deliver the greener future we are aiming for.”




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