Of take-offs and landings in 2009

Sure enough the global aviation industry in 2009 experienced one of its most turbulent journeys in history. But as the world's airlines struggled to match earlier growth rates, for the Middle East aviation sector the ride was a little less bumpy.

The region emerged as the only one to continue recording a double-digit growth in air passenger traffic through the year, according to the trade aviation body, International Air Transport Association, or Iata.

As per the latest (November 2009) statistics released by Iata, Middle Eastern carriers saw demand grow 14.3 per cent (compared to 18.2 per cent in September), the highest among the world regions.

The region's carriers, meanwhile, continued to add capacity, increasing 15.3 per cent in October this year and outpacing the growth in demand.

Having said that, the region's airlines still suffered a $1.2 billion (Dh4.4bn) loss in 2009, on low yields, declining premium traffic and the overall impact of financial crisis. However, the region's carriers will see losses shrinking to $300 million in 2010, Iata said earlier this month while releasing forecast for 2010, even as the world airlines' losses become larger.

For 2009, Iata maintained its forecast of a $11bn net loss for world airlines. "We are ending an Annus Horribilis that brings to a close the 10 challenging years of an aviation Decennis Horribilis. Between 2000 and 2009, airlines lost $49.1bn, which is an average of $5bn per year," said Giovanni Bisignani, Iata's Director-General and Chief Executive Officer.

New airline launches

The Middle East saw the launch of four airlines in 2009 – all in UAE. The biggest of all launches was Dubai's own low-cost carrier, flydubai, in June.

Flydubai: The airline, which was set up by Dubai Government and founded in March 2008 by Sheikh Ahmed bin Saeed Al Maktoum, Chairman of Emirates Airline and Group, took off on June 1 making its first flight to Beirut, Lebanon, followed by Amman, Jordan, the following day.

In six months' time, the airline has come a long way and recently launched its 10th destination to Kathmandu, Nepal, with effect from December 15, 2009. The carrier also launched flights to Baku, the capital of Azerbaijan, the in November, indicating that the airline has been on a rapid expansion plan.

The other operational routes in flydubai's growing network include Beirut-Lebanon, Amman-Jordan, Damascus and Aleppo-Syria, Alexandria-Egypt, Djibouti-Africa, Doha-Qatar, and Khartoum-Sudan.

The carrier, which competes with Sharjah's Air Arabia and Kuwait's Jazeera Airways, started operations with two Boeing 737-800 aircraft (and orders for another 48). Flydubai took delivery of its sixth aircraft in a little over six months on December 10. The aircraft is the sixth one to be delivered on schedule and is part of the historic $4bn order for 50 aircraft that the airline placed with Boeing at the Farnborough Airshow in July 2008.

Flydubai has also stated plans to concentrate on 12 undisclosed "popular, high demand destinations" in the six GCC nations, before expanding to other markets, with an aim to capitalise on more than two billion people living within five hours flight time from Dubai, serving 70 destinations by 2014.

And with the launch of flydubai, Dubai International Airport's Terminal 2, where the low-cost carrier launched operations from, also underwent a major refurbishment exercise, extending check-in and boarding facilities, revitalising the interior and exterior décor, plus offering more dining choices, to offer customers an enhanced travelling experience.

Currently serving more than 25 scheduled airlines, the extended facility was aimed at increasing capacity from three to around five million passengers a year.

Paul Griffiths, CEO of Dubai Airports, said: "The makeover has given a fantastic boost to the facility, a new lease of life and a freshness that's sure to give us a thumbs-up in terms of customer satisfaction and comfort."

Wataniya Airways: With Dubai as its launch destination, the Kuwait-based "premium" positioned airline started its twice-daily service to Dubai International airport on January 24, from Kuwait's new Royal Terminal. The airline has an aircraft configuration of 26 First Class seats and 96 Premium Economy seats.

Born as a part of the Kuwait Government's liberalisation of aviation services in 2005, for Wataniya Airways, an initial public offering ( IPO) in 2006 laid the solid financial foundations for the planning and creation of the airline.

The airline today operates Airbus A320 aircraft from Kuwait to eight major destinations in the Gulf and the Middle East.

A year into the operations, the airline saw its cargo operations taking off on November 1, by offering the same premium service product to its cargo clients that is already enjoyed by its passenger base. The airline said its aim is to match and exceed the service levels of its regional competitors.

Finlay McArthur, Network Cargo Manager, said: "In order to maximise the cargo opportunities on our A320 fleet, it is essential that we match the type of cargo carried to the service levels we offer."

Kingfisher Airlines: India's Kingfisher Airlines, launched its services to Dubai from Bangaluru in June this year, with plans to connect to the UAE from a number of cities in India during the course of the years, Siva Ramachandran, Kingfisher Airlines' Vice-President for Global Sales, had told Emirates Business.

He said the airline is currently evaluating options for connecting Dubai with at least three more Indian cities — Delhi, Thiruvananthapuram and Hyderabad, despite economic crisis.

"Meanwhile, we also may look to connect Thiruvananthapuram with Abu Dhabi following that," said Ramachandran.

With regards to the expansion within the Middle East, Kingfisher Airlines is weighing options for launching flights to Saudi Arabia and Kuwait soon, he said.

Meanwhile, Jet Airways, which launched operations to the UAE in 2008, with daily direct flights to Abu Dhabi in April, followed by Dubai in August, also became the first full service airline to commence operations from Sharjah to Kochi this year.

AirAsia X: October 2009 saw the launch of AirAsia X, Malaysia's long-haul, low-cost airline, making its Middle East debut with launching operations to Abu Dhabi.

The carrier, a dominant player in Southeast Asia with roots in Malaysia and international connections to Australia, China and the UK, brought forward the launch of its Abu Dhabi service, which was initially planned for late 2010-early 2011, CEO Azran Osman Rani had told the newspaper.

With the launch of its five-weekly service between Kuala Lumpur and Abu Dhabi at an inaugural fare of Dh99, the service is aimed at offering the UAE residents new opportunities to travel to Asia. Air Asia and its global budget arm, Air Asia X, fly to more than 130 destinations across China, South East Asia and Australia from its Malaysian hub. The airline said it offers fares up to 60 per cent lower than its competition.

Increased Saudi focus

Emirates takes first A380 to Saudi Arabia: Emirates recently said it would fly its Airbus A380 into Saudi Arabia, marking the first commercial A380 into the Kingdom. Emirates will serve Jeddah four times weekly with the superjumbo from February 1, 2010.

Jeddah will be the eighth destination to be added to the growing list of gateways served by the A380 which include; Sydney, Auckland, Heathrow, Bangkok, Toronto, Seoul and from December 29, Paris.

Ahmed Khoory, Emirates' Senior Vice-President Commercial Operations Gulf, Middle East and Iran, said: "The introduction of the highly acclaimed A380 on the Jeddah route is a true reflection of an increased demand for services in and out of the kingdom. This service into Jeddah will mark Emirates' first Middle Eastern A380 destination outside of Dubai, a significant milestone for both Emirates and Saudi Arabia."

Emirates, which currently operates a daily flight to Jeddah from Dubai, commenced services to Jeddah in 1989, with Jeddah as the first of three gateways that Emirates now operates to in the Kingdom, in addition to Riyadh and Dammam.

BA's re-entry into Saudi market after four years: In August, British Airways re-entered the Saudi Arabian market after a four-year hiatus, having resumed between Saudi Arabia and London. The airline was originally scheduled to resume flights between Saudi Arabia and London on March 29, 2009, but postponed it as the process of setting up two new stations in Saudi Arabia took longer than originally envisaged, the UK flagship carrier had said.

British Airways' services to Riyadh and Jeddah were suspended in March 2005 owing to poor commercial performance on its London-Saudi Arabia route.

New routes and jet deliveries

Emirates, which currently has seven A380 aircraft in its fleet, boasts the world's largest order for Airbus A380s with a further 51 double-deckers still to be delivered.

While the airline took deliveries of three A380s during the course of 2009, its total aircraft deliveries for 2009 reached 19 aircraft. Besides the three A380s, Emirates this year took delivery of 12 Boeing 777-300ERs; two 777-200LRs; and two 777-200 Freighter aircraft.

The airline saw two new route launches this year – to Durban on October 1 and Luanda on October 25. Besides, in April this year, Emirates also stopped flying its two Airbus A380 aircraft on the New York JFK route, with the two aircraft redeployed to Toronto and Bangkok, on the account capacity drops the airline suffered on the New York route.

In June, the airline allocated one of the two A380s to its thrice-weekly route to Toronto, while the second superjumbo was placed into service on one of the Emirates' twice-daily flights to Bangkok.

On the other hand, the Sharjah-based Air Arabia, meanwhile, received a total of four aircraft this year – three for its Morocco hub and one for the Sharjah hub. "We have not signed any new agreements for aircraft purchase in 2009," said the airline's spokesperson.

With regards to new destinations, the budget carrier added four destinations from Sharjah – to Athens, Goa, Samara and Medinah.

Air Arabia also started operations from its second hub in Casablanca, Morocco, in 2009 and currently offers services to 12 European destinations from Casablanca.

Across the region, too, airlines such as Qatar Airways and Etihad Airways, have launched new routes and added more aircraft to their fleet.

Delay in airport launch

In February, Emirates Business learnt that Dubai's Al Maktoum International airport, coming up in Jebel Ali's Dubai World Central development, would suffer a year's delay. The airport is now expected to open for business in June-2010 as against June 2009 originally, according to Dubai Airports' Griffiths.

The airport, once ready for operations, would be equipped to handle a capacity to serve five to seven million passengers per year besides more than 600,000 tonnes of annual cargo handling capacity.

Dubai International Airport, meanwhile, continued its double-digit growth in November, for the sixth consecutive month as it recorded 12.6 per cent passenger traffic growth in November, Dubai Airports said last week.

The airport, home to the Middle East biggest airline Emirates, handled a total of 3.52 million passengers in November 2009 compared to 3.13 million during the same month last year, raising the year-to-date passenger throughput to 37.08 million – up 8.5 per cent over the first 11 months of 2008.

"We are bullish about our future prospects and expect to hit record levels of traffic this year with 40.6 million passengers and again next year with more than 46 million passengers," said Griffiths.

Dubai Airshow 2009

This year's Dubai Airshow, though was a little slow given the poor economic conditions, still managed to record orders in excess of $14bn (according to on-site order book), covering sales of civil airliners and military trainers, helicopters, aircraft engines, in-flight systems, simulators, wheels and brakes and petrol-driven helicopters, as well as contracts covering heavy maintenance agreements, crew management processes and cabin refits.

DAE Capital took final day headlines with its $40m order – one of a total $1bn series the company placed at the show – this time for wheels and carbon brakes for its planned Boeing 737 fleet. The order went to Messier-Bugatti of France.

In yet another landmark deal, US aircraft manufacturer Boeing and Abu Dhabi's Mubadala Development Company signed a wide-ranging Strategic Framework Agreement covering key areas of collaboration during the airshow.

As a part of the agreement Boeing said the company, along with Mubadala, intends to develop mutually beneficial initiatives in areas where there is strategic alignment between the two companies, including "composite manufacturing, engineering, research and development, commercial maintenance, repair and overhaul, military maintenance and sustainment, pilot training and people development".

Mubadala also launched its aerospace subsidiary, Strata Manufacturing, in November, and said its composites plant is scheduled to deliver parts to European plane manufacturer, Airbus, in 2010. Airbus tied up with Mubadala almost a year-and-a-half ago to build components for the Airbus A380.

Airfare cuts and traffic drop

On an average, most Gulf carriers (and those operating in the region) slashed airfares by about 30 per cent this year, including the likes of Emirates, Jet Airways, Air Arabia and so on, in order to boost load factors.

Earlier this year, Emirates cut fares to as many as 85 destinations. Lower fuel led the airline to revise airfares for the third time since October 2008. The airline said then it revised its fares for tickets issued in the UAE on its First, Business and Economy Class fares to 85 destinations, including cities in India, China, US, Europe, GCC, Middle East, Africa and Australia.

In October 2008, Emirates had reduced fares by between seven and 35 per cent for about 16 destinations on its India, Europe, Middle East and Far East sectors, owing to reduction in fuel prices.

Premium travel, though, was worst hit by the global economic slowdown.

According to Iata estimates average premium fares fell by more than 20 per cent year-on-year in April, with revenues from premium travel plunging by around 44 per cent in the month.

The worldwide premium travellers on international services, meanwhile, fell 22 per cent in April 2009 following a 19.2 per cent decline during the first quarter, according to Iata.

It's only towards the end of this year that the industry saw a little improvement in premium revenues, according to the report.

The industry body estimates that revenue from premium traffic was around 20 per cent lower year-on-year in October 2009, after a 27 per cent decline in September 2009, "but since revenues fell a similar amount between September and October last year, there was little underlying premium revenue improvement during this October".

The carriers that seem to be benefiting most from the mild recovery are based in the Middle East, driven by long-haul connections over Middle Eastern hubs, the Iata report stated. It added that their shares of global premium revenues and traffic bounced back in October to higher levels seen since the onset of the global financial crisis.

 

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