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Al-Ahram Weekly 11 - 17 May 2000 Issue No. 481 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 11 - 17 May 2000 Issue No. 481
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Culture Books Features Interview Travel Living Sports Profile People Time Out Chronicles Cartoons Letters When the sky is the limit
By Aziza Sami
EgyptAir is finally allowing private airlines to fly on regular domestic routes. The decision, announced by minister of transport Ibrahim El-Demiri this week, for the first time allows private companies to compete with EgyptAir on the Cairo-Taba and Cairo-Assiut routes.
The move, which according to El-Demiri was contingent on EgyptAir's "approval," signals a shift in the position of the long standing state monopoly whose hostility, insiders say, was responsible for the closure, five years ago, of private airlines such as Zaas.
Is the move, though, just an isolated incident, or is it actually part of a longer term strategy to reform the business environment prior to an eventual breaking-up and privatisation of the airline?
Last October's decision to place EgyptAir and the Civil Aviation Authority under the jurisdiction of the Ministry of Transport represented an obvious attempt to make the two entities more economically viable. And the Civil Aviation Authority, according to its chairman, is already planning the partial privatisation of airport services .
The moves towards a more liberal aviation policy, though, continue to remain at odds with official declarations. The publication in Al-Ahram Weekly of an interview with a senior World Bank official who said that the International Finance Corporation is interested in funding EgyptAir's privatisation elicited a virulent official response. EgyptAir will not be privatised, ran the banner headlines.
In reality the issue at stake was not whether the national airline should or should not be privatised, or even the timing of any privatisation. What is significant is that any suggestion that EgyptAir loosen its grip on the aviation sector remains taboo. That the national company is already collaborating on cargo and charter activities with several private companies does not alter this fact, since the collaboration serves, if anything, to tighten EgyptAir's hegemony, and give it leverage over its potential, private competitors.
CairoAir, established three years ago by Ibrahim Kamel, who has successfully entered the airplane manufacturing business, appeared set to make inroads in the national carriers' monopoly. CairoAir overcame initial set-up difficulties only to be swallowed within the management structure of EgyptAir, resulting in the bizarre situation in which a private company is effectively administered by a public sector monopoly whose managerial practices have come under sharp criticism.
So far, the operations of private airlines have been restricted to chartered domestic flights and off-the-beaten-track international destinations not offered by EgyptAir. Yet the national carrier, which willingly admits that it is unable to fulfill its existing quotas, is actively seeking to expand its international routes.
At a time when mergers between international airlines are becoming increasingly common, surely it would be wise for EgyptAir to deal with private companies on a more equal footing. Operational partnerships between it and these companies could be formulated to avoid any overlap in flights, especially to major international destinations.
In a country that is vying to become a major tourist destination and trade hub, the benefits an efficient and streamlined aviation sector bring to the economy cannot be overestimated.
Egypt, as a signatory to WTO agreements on the liberalisation of trade in services, will in any case ultimately face a free sky situation in which the rivalry will not be between competitors -- public and private -- in the domestic market, but between international carriers. Free sky accords with Arab countries are due to be implemented by 2002, and steps to liberalise air transport between COMESA members will begin in earnest in October. In the meantime, the UK has already proposed a free skies accord with Egypt.
One obvious step to prepare for this opening of the sector would be to reinforce the strengths of the local industry by allowing Egypt's private companies to move more freely in domestic and international markets. When EgyptAir was established in the mid-thirties, it was a prime instance of successful entrepreneurship. It is a heritage that the company would do well to embrace today.
