Dubai: Airlines in the Gulf and Middle East will have to look beyond the Expo 2020 created regional demand boost – that’s according to a top regional aviation industry official. While the UAE and Saudi Arabia have succeeded in achieving high vaccination rates, a full return to normalcy for Middle East airlines will only happen if more international routes open up.
“Some countries are following scientific and transparent bio-safety measures, while in others, decisions are being taken with a two-minute warning,” said Abdul Wahab Teffaha, Secretary-General of Arab Air Carriers Organization (AACO).
“This makes the work of airlines extremely difficult – I see the light at the end of the tunnel, but I don’t see it very clearly.”
Demand for air travel in August (measured in revenue passenger kilometers or RPKs) was down 56 per cent compared to August 2019. This marked a slowdown from July, when demand was running at 53 per cent below July 2019 levels.
“There is improvement, but we are still far from getting back to the 2019 numbers,” said Teffaha. “When we talk about international travel, we are still way below and the reason is the (COVID-19) restrictions in place.”
When we talk about international travel, we are still way below and the reason is the (COVID-19) restrictions in place
Gulf airlines do their part well
Although Emirates and Qatar Airways – two of the region’s largest airlines – had taken huge losses due to the months-long grounding of travel, they are still doing better than most. Teffaha said that cost per available seat kilometer (CASK) – a closely followed airline metric – has been the lowest for Gulf airlines during the crisis. (CASK, as the name suggests, reflects the costs incurred by an airline to fly a single-seat one mile - the lower the number, the more profitable and efficient the airline tends to be.)
The upcoming Dubai Airshow will be a key indicator of Dubai’s handling of the COVID-19 created challenges. The show - one of the world’s largest aviation events - will take place between November 14-18 after its cancellation last year.
“I am not going to speculate about (aircraft orders), but I am sure the Dubai Air show will be a success after this disconnection in the world of aviation and the world at large,” said Teffaha.
Leasing makes sense
The aviation head agreed that airlines will go for more narrow-body aircraft as they grapple with costs and smaller travel markets. “In the next few years, the level of pressure to be more aggressive in terms of mitigating emissions will require a shift in the technology of propulsion and airframe,” said Teffaha.
“On the one hand, airlines would want to have the flexibility to deploy capacity on regional and domestic routes. But they know that on the drawing boards of the manufacturers, everybody is looking at changing the rules of the game.”
Teffaha said that it did not make sense for carriers to buy an aircraft with a lifespan of 25 years when technology is set to undergo a complete change in the next 10-15 years “My guess is going to be reliance more on leasing rather than acquisitions – it will give airlines the flexibility to respond to what happens on the technology front,” the official added.