Business
Middle East airline CEOs adjust operations amid conflict in the region
November 01, 2023 | 08:22 PM
In a gathering of airline executives during the 56th annual meeting of the Arab Air Carriers Organisation, which was hosted in Saudi Arabia this year, the discussion delved into the complexities faced by airlines when operating in the vicinity of conflicts in the region, but specifically the scale of the conflict in Gaza, and the worsening humanitarian crisis. The dialogue shed light on the challenges that airlines, including Royal Jordanian and Royal Air Maroc, are currently grappling with.Samer al-Majali, the chief executive of Royal Jordanian, explained the currently operational hurdles his airline is having to confront. "We are the closest country now to this recent event and we're quite negatively affected by all that's going on," he said."Flying westbound is difficult at the moment, even though the airspace is open, but we can't fly due to security considerations. The north is also an issue. Jordan is quite hemmed in. Most of our flights have to go south, down to the Red Sea, across the Sinai and then north into Egypt and then up to Europe. It's quite a big dog-leg, costing us much more in terms of fuel. Fuel prices have gone up because of the crisis. And we've seen a major drop in tourism. Jordan relies very heavily on tourism and we’ve seen major reservations drop."The surge in fuel prices due to the crisis, coupled with a noticeable decline in international tourism, has exacerbated the situation.As al-Majali mentioned, security considerations amid the situation have forced a shift in flight paths, predominantly southward, tracing a circuitous route down to the Red Sea, across the Sinai Peninsula, through Egypt, and finally northwards to reach European destinations. This considerable detour has led to increased fuel consumption, further compounded by elevated fuel prices brought about by the ongoing conflict. Fuel remains the single largest overhead for an airline, and the industry remains inherently exposed to the volatility of fuel pricing.The impact of this challenging environment is reflected in the statistics. According to data from travel analysis firm ForwardKeys, ticket sales to Jordan have witnessed a significant decline of 49% year-on-year. Jordan's tourist hotspots, such as Petra, have historically attracted visitors, but these numbers have seen a considerable drop.Furthermore, the conflict has had wider implications on the global stage, particularly with regard to oil prices. The World Bank has warned that oil prices could reach as high as $157 per barrel in the event of a substantial disruption in crude oil supply in the Middle East.Samer al-Majali, reflecting on past regional challenges such as the Iraq wars, the Arab uprisings, the fight against ISIS in northern Syria, the Ukraine conflict, and most recently the Israel-Gaza conflict, emphasised the wealth of experience they have amassed in navigating these intricate situations. "We built up a lot of experience dealing with these issues."Meanwhile, Royal Air Maroc, based in Casablanca, suspended its flights to and from Tel Aviv's Ben Gurion Airport until the end of December, as indicated on its website. The airline faced a dual blow with the Israel-Gaza conflict following a devastating earthquake in Morocco, the most severe in over six decades.Abdelhamid Addou, the chief executive of Royal Air Maroc, highlighted that travellers tend to return more swiftly after a natural disaster than after a war or an act of terrorism. Recovering from the earthquake took a couple of weeks, but the current circumstances are expected to require a longer period for normalisation. The interruption in operations has affected connecting flights in the region, hindering the airline's core mission of connecting people. He said: "We have suffered a lot during the earthquake. We found out that globally travellers come back easier after a natural disaster than after a war or [act of] terrorism.""It took a couple of weeks to get back to normal after the earthquake, but that's not the case now with what is happening...it will take longer."Our business is to connect people and bring them together and any time there's such a crisis, we cannot do our work properly."Emirates, a major player in the Gulf, has also taken measures in response to the situation. It has suspended all flights to and from Tel Aviv, and Adel Al Redha, Emirates' Chief Operating Officer, noted that although certain segments of their network, primarily in the Far East, have been marginally impacted, much of their global network continues to operate effectively.In Saudi Arabia, Riyadh Air, the startup airline in Saudi Arabia set to commence operations in 2025, spoke of the requirement of airlines to implement a proactive strategy to tackle various disaster scenarios, from conflicts to volcanic eruptions. Chief executive, Tony Douglas, underscored the ever-present uncertainty in the airline industry and the importance of embracing it. The airline is expected to unveil a new aircraft livery at the upcoming Dubai Airshow in November, with hopes of soon placing a narrow-body aircraft order.The disruption has had a profound impact on travel to the region. Ticket sales to Egypt have declined by 26% year-on-year, while those to Jordan have plummeted by 49%, and to Lebanon by a staggering 74%, according to Forward Keys. Major airlines, including British Airways, Virgin Atlantic, Lufthansa, Eurowings, easyJet and Swiss, have suspended their flights to multiple destinations across the Middle East.The challenges faced by airlines operating in the region reflect the profound interplay between geopolitical events and the global travel industry. As they navigate these complexities, the resilience and adaptability of these carriers remain pivotal in ensuring continued connectivity by international air travel.
November 01, 2023 | 08:22 PM