Turbulence is denting any hopes of a speedy recovery of air transport and the aviation industry, Amirah Ibrahim reports As uncertainty shook the region following the fall of Egyptian president Hosni Mubarak and the start of a revolt in Libya, airlines operating to Egyptian airports in March halted 50 per cent of their normal operation. Egypt's Civil Aviation Authority figures show that 15 Arab and Western airlines suspended their entire operations to Cairo International Airport and five other main tourist airports. This included a complete cut of traffic to Sharm El-Sheikh and Hurghada airports, which basically rely on charter flights operated from Italy, Russia and Spain. "All operating airlines reduced frequencies by 60 per cent and more," Hassan Rashed, chairman of Cairo International, said. "We expect a drastic drop of revenues for the second half of the fiscal year 2010-2011," Rashed added without specifying losses. According to the International Air Transport Association (IATA), Middle East airlines saw demand growth fall from 12 per cent in January to 8.4 per cent in February due to the unrest. Observing that industry fundamentals were good, IATA Director-General and CEO Giovanni Bisignani referred to Egypt and Tunisia, whose unrest was spreading across the Middle East and North Africa, making the first quarter of 2011 "very difficult". Higher fuel bills as a consequence of the unrest added to airline troubles. Oil prices have risen 19 per cent since 11 March. "For every dollar increase in the price of a barrel of oil, the industry must recover an additional $1.6 billion in added costs," Bisignani said. Rising oil prices have made fuel account for 29 per cent of average operating costs. The IATA warned that political unrest in Bahrain, Yemen and Syria was expected to impact regional markets in March. Europe's carriers recorded 7.4 per cent growth compared to February 2010, which was slower than the 7.9 per cent reported in January. It reflected the impact of fall-off in trans-Mediterranean traffic to North Africa due to the unrest in the region. Although life is slowly returning to normal in Egypt, the further spread of protests in Libya, Syria, Yemen and possibly other Arab countries, have forced airlines to rethink plans for the summer tourist season. For the first time ever the national carrier EgyptAir has split its summer schedule in two: from 27 March to the end of June and from 1 July to October. Hussein Massoud, chairman of EgyptAir Holding Company, said that the carrier's loses have reached LE700 million. Two-thirds of the fleet has been grounded since 29 January. "We had to cut our operation by 65 per cent, merging some routes and reducing frequencies to many destinations," Massoud said. The unrest also affected fleet delivery. During the crisis, the carrier took delivery of a new Boeing 777- 300ER, the fifth of six contracted planes. "We have to take delivery of the last one because we contracted the six aircraft through an operational hiring contract. "On the other hand, negotiations with Airbus to postpone the delivery of four A330-300s aircraft have proved successful. The manufacturers agreed to hold it for six months, although we believe we will ask for an additional 12-month extension," added Massoud who did not appear overly optimistic on an early recovery of the business. "The decision to lease some of the planes is being studied at present, but we will not offer the newest planes because it would damage our chances of an early recovery." EgyptAir led the cutbacks with a capacity reduction of 51 per cent. "Airlines removed 776, or 32 per cent of flights to or from Cairo between 11 January and 11 March," according to specialist aviation data firm Innovata. "The number of available seats fell 28 per cent, bringing the distance-adjusted capacity down by nearly 30 per cent. EgyptAir alone accounted for 85,000 of the 110,000 weekly seats taken off Cairo runs between 11 January and 11 March." EgyptAir has a 55 per cent market share in Egypt, transporting nine million passengers in 2010. The carrier officially announced it would delay the launch of eight new routes that had been planned for this summer: Toronto, Washington Dulles, Iraq's Suleimanya, Baghdad and Arbeil, Saudi Arabia's Abha, Abidjan and Kigali. "I don't think we can begin these flights before 2012," Massoud said. As part of a contingency plan to deal with the crisis, the airline also decided to suspend seven routes -- three to the Far East -- Kuala Lumpur, Tokyo and Osaka; two in Africa -- Juba and Lusaka; and two in Europe -- Lisbon and Dusseldorf. This cuts the carrier's network from 72 destinations to 65 at a time of fierce competition by regional airlines which have stormed Middle East air transport in an attempt to capture the market. The airline, however, revealed plans this week to resume the omra season, which has been delayed for six weeks. "We will operate 10 flights daily to Saudi Arabia's airports in Al-Madinah and Jeddah and hope the Omra season will help make up for our losses," Massoud told a press conference on Tuesday. "We offer 506,422 seats of capacity over 2,600 flights to Saudi Arabia, 2,127 to Jeddah and 473 to Madinah. We will also maintain last year's costs of Omra tickets. There will be no increase in the price." The omra season extends till the end of Ramadan, close to mid-September. In an upbeat forecast, the German travel association DRV said tourists in early March were returning quickly to Egypt and Tunisia. Both countries are popular destinations for Germans, who spend more money on holidays abroad than any other nationality. Long term, analysts say airlines may benefit from an investment boom which many are predicting in North Africa once the region stabilises, but the timing is anything but clear. "We hope by the end of the year the situation will improve, but because it is not an aviation crisis, we cannot make accurate predictions," Massoud said. "When stability returns, we can start working on recovering from the crisis. Until then, we can do nothing but wait and watch."
