Low-cost airlines pose no threat to flag carriers - Emirates24|7

Low-cost airlines pose no threat to flag carriers

Mohamed El Abbady says Egyptair expects its fleet to increase to 70 from the current 52 in 2010. (IMRAN KHALID) 

The global financial meltdown will change people’s travel habits as they look for cheaper alternatives to their previous destinations, according to a senior airline executive.

But traffic between the UAE and Egypt will not be affected because of the close ties between the two countries, said Mohamed El Abbady, Egyptair’s District Manager, Dubai and Northern Emirates. He said the new generation of budget airlines would not present a challenge to established national flag-carriers such as Egyptair.

 

There have been complaints about Egyptair continuing to increase fares despite the fall in world oil prices.

Ticket prices are not based solely on oil prices. Operating costs include fixed and changeable elements. The former include the salaries of pilots, stewards, technicians and other staff while the changeable items include handling, landing charges, catering, services and fuel. It is true that fuel represents 33 per cent of operating costs. But what happened was that airlines estimated this item at about $40 a barrel and when oil prices went up to $120 per barrel most companies increased the fuel fee included in the ticket to make up part of the rise in operating costs. However, Egyptair has not pushed this item up and ticket prices remain as they were. Any ticket price cut might have been delayed because costs are linked to contracts signed previously when oil prices were high. But given the fall in the price of oil I expect cuts in ticket prices soon.

Some complain that Egyptair has reduced luggage allowance from 60kg to 40kg. Do you think the airline will lose its competitive edge?

Compared to the 20kg allowed by other airlines Egyptair is still the best. We preferred to do this instead of increasing the price of tickets or fuel fees. The hold of an airliner can accommodate only a limited amount of luggage and the larger allowance used to lead to the loss of some luggage, especially on the Dubai-Alexandria flights. Since the enforcement of the new regulation no luggage has been lost. A passenger has to pay for extra luggage.

The UAE market is highly competitive. In addition to the low-cost carrier Air Arabia this year will see the launch of flydubai. Does this represent a challenge for you?

Budget airlines exist in Germany and the UK but they have not affected the business of the major carriers in those countries. Low-cost companies use small aircraft and do not offer meals. In the light of this I do not see a future for these companies in the Middle East. They are not suitable for businesspeople or families. It is true they offer competitive fares but prices are sometimes the same or even higher than those of national carriers.

Is Egyptair planning to increase its fleet, and what is the current size?

Egyptair has 52 aircraft, which is expected to increase to 70 in 2010.

Most countries apply an open skies policy. Why does Egypt insist on keeping the skies half open, for example the quota system imposed on Emirates airline at Cairo airport?

The situation regarding Emirates flights to Cairo is linked to an agreement signed by the two countries and has nothing to do with the open skies policy.

What effect is the economic crisis having on the travel industry? Will travel between the UAE and Egypt be affected?

The destinations that people choose will change as they look for closer and cheaper places. For example, people who used to travel to the United States will travel to Europe and those who used to travel to Europe will travel to Arab countries. In addition many Asian countries have started to attract travellers from all over. But because of the large Egyptian labour force in the UAE and the many UAE investments and projects in Egypt I do not think there will be a change in the volumes of travel between the two countries. On the contrary, there might be a rise as a result of the increasing commercial ties between the two countries. We have two daily flights to Dubai from Cairo as well as seven from Sharjah to Cairo. This is in addition to the Alexandria route.

How many special offers and promotions do you have each year?

We announce our offers according to an annual plan. In addition we have offers that are ready to be announced in case of an emergency. In general we announce between three and four offers each season. Of course we announce our offers when demand falls.

You have worked in Arab and non-Arab countries. What is distinctive about the Dubai market?

There are many challenges in the UAE market in general and Dubai in particular, not only for airlines but also for all economic sectors. This is due to the openness of the market and the large number of nationalities. This presents a great opportunity for success and growth.

  

PROFILE: Mohamed El Abbady, District Manager, Dubai and Northern Emirates, Egyptair

Mohamed Al Abbady graduated from the economics faculty at Ain Shams University in Cairo in 1986 and joined Egyptair three years later. He managed the airline’s office in New York from 2000 to 2004. He ran the carrier’s marketing programmes from 2004 to 2005 and the pricing department from 2005 to 2006. Between 2006 and 2008 he managed Egyptair’s office covering Japan and South Korea.

 

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