CAIRO: The Middle East has long struggled with cutting airline costs as the rise in government taxes continues to push tickets to the ceiling. Air Arabia, the Sharjah, UAE-based budget carrier, announced on Wednesday an agreement with Egypt's tourism company, Travco Group, to launch an Egyptian housed low-cost carrier. According to a company statement, the new airline plans to serve Europe, Africa and the Middle East. It would make Egypt the company's third hub after the small airlines opened a base of operations in Casablanca, Morocco, in May, which now serves 11 destinations across Europe and North Africa. “At a time when the global aviation industry is witnessing serious challenges as a consequence of the worldwide financial crisis, we continue to move forward with our strategic expansion strategy,” said Air Arabia's chairman, Sheikh Abdullah bin Mohammed al-Thani. Although Air Arabia was the first budget carrier in the region following its October 2003 launch, it has widely been unsuccessful in garnering passengers outside the Gulf Arab states as government taxes in Egypt and much of the region push the overall ticket threw the roof. “It is hard to really have a budget travel agent here because the tickets I buy are over 50 percent taxes put on by the government. If these can be reduced somehow then this thing could be successful, but if not, I don't see anything coming of it,” said American businesswoman Mary Hamilton, who frequently travels around the region for work. In 2003, the total cost of a flight from Cairo to Beirut totaled approximately LE 1,200 ($215). Today, passengers would be lucky to find a ticket for less than LE 1,750 ($320) Air Arabia seems unconcerned, however, to the rising costs in the region and a global slowdown in travel. The first have of this year saw the company's profits increase by 21 percent to $52.6 million as compared to the same period last year. Travco officials told Bikya in a statement that with their participation, they expect the overall price to drop “dramatically” due to their connections and ability to help stimulate government action to reduce taxes. “Nothing is certain at this point, but we are looking at ways to help create less taxes on flights across the region. In the long run, this will be a good thing because it will mean people will do more traveling,” an official speaking on behalf of Travco said. They did not give their name. Currently, Air Arabia has been fighting recent competition in budget travel as Kuwait's Jazeera Airways – which has flights from Alexandria to the Gulf – and Flydubai, the sister company of Dubai's Emirates Air. According to Air Arabia company statistics, the company operates a fleet of 20 new Airbus A320 aircraft and serves 57 destinations from its hubs in the United Arab Emirates and Morocco. It confirmed an order with Airbus for the purchase of 44 A320 aircraft. “Let's wait and see what happens. I have a lot of hope at this point it will be better for competition in the region,” added Hamilton. BM
