Royal Jordanian spreads wings confidently

The Gulf tends to dominate business coverage of the Middle East, and for good reason. The region's largest companies are nearly all based in the Gulf and its oil and gas wealth obviously helps focus global attention. Dubai's bold entrepreneurial spirit also grabs headlines because of the sheer scale and excitement of its vision. However, the Gulf states are comparatively small in terms of population and it is easy to forget that the wider Middle East region contains some large countries that should have proportionately large economies. That these countries tend to be irrelevant on the economic map of the world is often due to their own political failings. It isn't too difficult to think of some big countries surrounding the Gulf that have consistently underperformed when it comes to economic growth, innovation and corporate ambition. But this is not uniformly the case and there are companies and countries outside the Gulf region that show great promise. Jordan is something of a rose among thorns and it has balanced its awkward geography with careful diplomacy and commercial savvy. Take, for example, Royal Jordanian, the national flag carrier. When most people think of a Middle Eastern airline, Emirates is the name that first springs to mind. Then Etihad, Gulf Air and Qatar. Royal Jordanian is some way down the list but the airline is enjoying dramatic growth and has more than doubled in size since 2001. Not that this success has come easily for Jordan's flag carrier. In the 1990s, the airline was burdened with hundreds of millions of dollars of debt and it took a thorough restructuring to get the carrier into smooth air again. Its problems stemmed from a failure to adapt to changes in global travel patterns. In the 1970s and early 1980s, Royal Jordanian operated a model that is not too dissimilar to what Emirates and Etihad are doing today. It used its hub in Amman to become a transit airline, carrying people east to West and vice versa through Jordan. However, as aircraft technology improved, stopovers were no longer required and it was possible to fly directly from Europe to Asia or the United States to Asia. Dubai, Abu Dhabi and Bahrain also lost their transit business at about the same time and have only got them back again through massive infrastructure investment (in terms of aircraft and airports) and changes in the global economy that have moved the axis of power from the Atlantic eastwards. The changes of the 1980s and 1990s left Royal Jordanian with a big overhead but insufficient passengers who actually wanted to visit the country – the tourist delights of the Dead Sea and Petra not withstanding. So, a change of direction was required. The airline now has a small longhaul network but a rapidly growing regional network. It sits at the heart of what the French called the Levant: Syria, Lebanon, and Palestine with Egypt, Iraq and Iran all on the doorstep. It is a challenging neighbourhood to say the least, but also one that contains more than 100 million people. Royal Jordanian is now the largest international carrier into Iraq with 25 services a week and its membership of the oneworld alliance (which includes British Airways, American Airlines, Qantas and Iberia) makes it on obvious choice for people in the Levant and surrounding countries who want to travel worldwide without awkward transfers. The big threat to Royal Jordanian, apart from the regular bouts of warfare that seem to grip its neighbourhood, are the Gulf carriers – but not the ones you are thinking of. Few people are going to fly two hours backwards to Dubai in order to transfer onto an Emirates flight to New York or Europe. Rather, the danger to Royal Jordanian comes from flydubai and other low-cost operators. It is no coincidence that flydubai's two launch routes are Beirut and Amman – it is clearly going to target the high population regions to the north of the Gulf. The experience of Europe shows that traditional airlines struggle to maintain a short-haul network in the face of competition from budget operators. Most short-haul routes run by carriers such as Air France and BA are now little more than loss leaders to allow passengers to connect to their extensive long haul networks. If budget airlines really take off in the Middle East, as they have done everywhere else in the world, then Royal Jordanian is going to have to fight to hold onto its role as a regional connector. However, I hope that the airline succeeds because the Middle East needs corporate role models across the whole region and not just in a handful of Gulf states. - The writer is a business correspondent with The Times of London