As the financial crisis pushes more airlines to cut their prices and drop some fees, the national carrier seems less worried about the impact of the crisis, offering few incentives, Amirah Ibrahim reports
The majority of airlines all over the world have announced plans to slash fuel surcharges for international flights by up to 60 per cent in hopes of drawing more passengers amid the global financial downturn. Yet, the national carrier initially came out with a "No drastic cuts policy" for the fuel surcharge and for ticket prices.
"When we make profit and our operation is at the maximum capacity we don't need to cut prices or make special offers. It is not wise to do so," stated EgyptAir Chairman and CEO Tawfiq Assi. "The case with EgyptAir is different than other international and regional airlines. While the crisis hit many airlines during the fourth quarter of the year, that period represented an increase of our travel bookings due to the religious season of Omra and Hajj. Then the New Year and Christmas followed and again we could not justify offering reduced prices with a high occupancy factor through our fleet."
But then indications of a retreat in demand appeared and made the carrier change its plans somewhat. The airline said it decided to make new promotions after taking into account the decline in fuel prices, competitive pressures and the need to boost air travel during this period of economic slowdown. "We have predicted the impact to start by January thus we had a plan to launch new promotions by the school mid year vacation which means the end of January till the end of March," Assi explained. "Promotional prices are offered for the routes on which we expect to suffer a drop in demand," he added.
The airline announced last week new prices for a number of European destinations as low as LE600 for Athens and Larnaca flights, LE800 for Istanbul, LE930 for Budapest and Moscow, LE 1200 for Barcelona, Madrid and Lisbon and LE1250 for Geneva.
"We have a considerable amount of self confidence that the impact of the world crisis on our business would not be as bad as that of many airlines which went to bankruptcy due to the crisis. Being the flag carrier of the Egyptian population which exceeds 80 million people and enjoys the advantage of operating the fleet to serve a genuine movement of passengers within the country, not just as a transit point, helped EgyptAir to avoid the serious consequences of the financial crisis."
Another important factor that helped, according to Assi, is the planned change in the type of passengers, replacing tourists with businessmen, families, civil employees and official delegates. "In the past, the carrier used to suffer whenever tourism was negatively affected for any reason. For years we worked to change that situation and we succeeded. At present most passengers are Egyptians; thus, we do not expect to suffer the same drop as the tourism business expects."
Moreover, the national carrier gains indirectly from the current financial crisis, with many small and low cost airlines expected to get out of the market, allowing more demand for bigger airlines to operate their fleets. "This is the case with XL airlines which used to transport considerable numbers of tourists to Egypt from London. Now the airline has shut down, and we know we can capture a good share of them," Assi explained.
The carrier thus has not come to adopt any exceptional procedures. No routes will be closed, no new aircraft purchasing will be postponed. "On the contrary of other Arab airlines in the region, EgyptAir is described as an "under capacity airline" comparing to the size of air travel movement, its population and thus it should capture 40-50 per cent of the total movement. This is a share and we look forward for the end of 2009 or maybe mid 2010 when we expect the crisis to end and indictors return to normal and even be positive again. Till that time, we do not see a need to launch exceptional procedures," Assi added.