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Al-Ahram Weekly 31 August - 6 September 2000 Issue No. 497 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 31 August - 6 September 2000 Issue No. 497
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Culture Travel Living Sports Profile People Time Out Chronicles Cartoons Letters Fear of flying
By Sherine NasrFor most Egyptians air travel means EgyptAir. Ask them to name another Egyptian carrier and most would be at a loss. Yet, over the past decade many private Egyptian airlines have taken to the skies. The reason most Egyptians are unaware of these firms is that they are restricted to specified niche markets. Private airlines mostly run charter flights from Europe on routes not serviced by EgyptAir. Consequently, all private firms must use provincial airports. Cairo remains under the full dominion of EgyptAir.
"My company is a hundred per cent Egyptian. Yet, it's deprived of many rights freely given to foreign firms," said Sayed Saber, Chairman of Aircraft Maintenance Corporation (AMC), one of the biggest Egyptian private airlines. The AMC chairman is outraged by the fact that foreign carriers can fly passengers in and out of Cairo, while his firm is denied access to the nation's central hub.
"To protect the rights of one company is a joke," Saber commented.
He contends that the growing system of international corporate alliances has rendered all skies open, including Egypt. "There is nothing to protect anymore," said Saber. Yet, EgyptAir is well aware of the current industry trends and is seeking to strengthen its international ties. Currently, many foreign airlines use EgyptAir facilities.
However, the exclusive privileges EgyptAir enjoys within the marketplace are slowly beginning to shrink. A few months ago a cabinet decree was issued allowing private Egyptian companies to run regular scheduled flights. These flights, however, must service routes not controlled by EgyptAir. "I have submitted a request to fly passengers from Europe to Hurghada, Sharm El-Sheikh, Luxor, Aswan and Abu Simbel, but so far, I have received no answer," said Saber.
Theoretically, the decree appears to be a step towards deregulating the sector. Yet, it was criticised by many who believe that it will not have an immediate impact on their business. "The step can only be effective if private firms develop greater corporate infrastructure. Unfortunately, such is not the case," said Yehia El-Agati, Chairman of National Aviation.
The decree, according to El-Agati, presents a significant challenge to the national companies. Building profitable routes will be costly and take time. "To fly regularly with empty planes is to make huge losses," he said. In order to evade crippling losses an airline must rely on consistently busy routes. "But these are already occupied by EgyptAir," he commented.
Up to this moment, the private airlines had no access to the lucrative Hajj (Mecca pilgrimage route) market. Every year thousands of Egyptians make this spiritual trek, but often the religious experience is marred by transportation delays. Every year, pilgrims are stranded at airports for hours waiting for flights. The private carriers see this as a monopoly hardship that can be removed once they are allowed greater market access.
Some private companies have given up on the passenger business and shifted to cargo. Yet, the competition in this sector is stiff. "We face heavy competition from other regional companies -- especially Lebanon and Israel," said El-Agati. He explained that exorbitant landing and parking fees at Egyptian airports create unfavourable conditions. "For example, the costs for transporting 40 tons of vegetables is almost $700. The same cargo can be transported at a much lower price from competing ports," he said.
In 1997, the private airlines contributed funds, each according to the size of its own fleet, to establish the Egyptian Aviation Service (EAS). This organisation is a non-profit body, set up to provide airport services. EgyptAir sells services as a package according to plane weight. "The EAS has requested that the national authorities cut these service costs. For no clear reason, the request was referred directly to EgyptAir, which refuses to do anything," said El-Agati.
Private airlines claim they are overburdened with fees, costs and taxes. "We pay LE21 departure tax for every passenger," said AMC's Saber. Last year his company paid LE6 million to cover these costs. "Private airlines abroad are granted these facilities by their governments. This uneven playing field makes competition almost impossible." Unfortunately, rather than unite in a common front, private Egyptian airlines seem to be living on isolated islands. As yet, and despite their common interests, a unified vision has not emerged.
"To start an airline is a very costly matter. To keep it going is even costlier," said Saber. The Egyptian Civil Aviation Authority stipulates that in order for a company to begin regular flights, it must have LE100 million start-up capital. Then, it must obtain an operating certificate. "To be granted this certificate, the company must meet the criteria set by the Egyptian Civil Aviation Authority for maintenance facilities, operation facilities, storage space at airports and personnel," said Saber.
Costs in the airline industry are enormous. In daily operations, airlines must maintain a fleet of advanced aircraft. The training of highly qualified personnel is a continuous process. "Training a qualified pilot is a process that costs $100,000," said Saber. Furthermore, in order to keep staff they must be paid remuneration consistent with international standards.
In order to compete effectively the private carriers must minimise these costs. Alliance systems have proven very effective. "There are different aspects for cooperation: standardise aircraft fleets, exchange maintenance equipment and expertise. If we do so, costs will be cut by half," commented El-Agati.
