Al-Ahram Weekly On-line 21 - 27 September 2000 Issue No. 500
Published in Cairo by AL-AHRAM established in 1875

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Up in the air

By Sherine Nasr

The Egyptian sky is being privatised. A ministerial decree issued last March transformed the Egyptian Civil Aviation Authority (ECAA) into an independent economic entity, reports Sherine Nasr. It had originally been a governmental body, affiliated with the Ministry of Transportation. The decree dictates that the ECAA budget must no longer depend on taxpayer funds. Rather, ECAA will need to maximise revenue through the efficient market use of authority assets.

"Liberalising the sector so that it will fund its own activities is now government policy," explained Mohamed Nadim, adviser to the ECAA. At present, committees have been formed to study means of implementing this decree across the individual ECAA departments. The focus is on revenue generation.

"Airports are perhaps the most significant assets," said Nadim.

Except for Cairo airport, which is already run as an independent concern, all other airports need to redirect activities in order to garner maximum economic benefit from the market. "One way of doing this would be to raise the air navigation services fees. Renting offices, cafeterias and open spaces in the airports can also be an effective means of increasing revenues," Nadim said.

However, at the moment Egyptian airports fees are already among the highest worldwide. "This factor has its negative impact on Egypt, not as a tourist destination, but as an export hub. Neighbouring countries, which connect both Africa and Asia with Europe, offer very competitive prices and services and thus have a competitive advantage," commented Yehia El-Agati, Chairman of National Aviation.

According to Nadim, however, the majority of countries set fees in accordance with aircraft weight, just as Egypt does. So, a 300-ton aeroplane, for example, is charged around LE480 while an aeroplane weighing less than 100 tons, is charged LE125. Yet, Law 119/1983 has given the Minister of Transportation the right to raise the aviation service fees. "Since then, the fees have been raised twice by 25 per cent each time," said Nadim.

In another liberalising effort, the government, three years ago, adopted the concept of BOT (build, operate and transfer). Under this scheme, a number of airports, particularly in the newly developed tourist areas, have been offered to international tenders. "This applies to the airports in Marsa Alam, Ras Sedr and Al-Alamein. Safaga airport will soon be offered to international bidding," said Nadim

Furthermore, a major policy shift took place a few months ago. National private sector airlines are now permitted to fly regular routes to destinations not covered by EgyptAir, the government-owned national carrier. Though in practical terms this decision has yet to positively alter the volume of traffic Egyptian airlines carry, it was an unprecedented step towards liberalisation of the sector. Private airlines, however, are still not allowed to use Cairo airport for regularly scheduled flights. This limitation has been a great source of controversy.

"Purely Egyptian-owned companies are denied rights freely guaranteed to foreign airlines," complained the owner of a private air company who wished to remain anonymous, in an interview with Al-Ahram Weekly.

Yet, the ECAA is unmoved by this grievance. "Cairo is not open to all foreign airliners. Only airlines that have an agreement with EgyptAir can stop at Cairo airport," Nadim explained.

He stressed that private airliners have the potential to develop some important Egyptian tourist destinations. This view is supported by a 1998 ECAA study that compared the number of tourists visiting the Sinai resort of Sharm Al-Sheikh on foreign charters versus those who came on board Egyptian private sector airlines. "Foreign airlines made 3,510 trips carrying 418,926 passengers while Egyptian airlines made a mere 970 trips with 96,370 passengers," said Nadim. The potential for growth, according to him, is enormous. Yet, he contends, "very little is done by these companies to make the best of it."

Recently, the ECAA indicated that it would extend operating licenses to more private airlines. However, the final decision was put off until the end of this year. The ECAA stated that it does not want to issue licenses to "weak" companies. Asked by the Weekly to clarify the term "weak," Nadim replied, "It takes more than money to start a successful airline. There are already many private airlines in Egypt, but the successful are very few."

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