Al-Ahram Weekly | Sky High | Challenging winds

The national carrier, EgyptÕs main sky player, keeps expansion plans almost unchanged while the finanacial crisis threatens world airlines to lose $4.7 billion. CEO and Chairman Captain Tawfiq Assi, speaks to Al-Ahram Weekly on crisis challenges and contingency plans

In the light of the global credit crunch, how far has the national carrier been affected with the looming recession?

Thanks to significant progress in our IT systems, we now possess a mechanism that can provide the most recent figures. Thus, when comparing figures of February 2009 to the same period in 2008, they show a marginal drop of 2 per cent in our total traffic. They also show an increase of traffic in the African market by 41 per cent, where the Libyan market strongly fed the movement. This apparently is due to travellers switching to air transport instead of road transport.

However, when excluding traffic from Libya, the movement in the African market still records an increase of 23 per cent. Such an increase despite the global recession in my opinion is to be attributed to the fact that we are benefiting from joining the biggest airline alliance in the world, Star Alliance. It has helped us in two ways: promoting our network through all 22 member airlines' networks and thus bringing more traffic to feed our operations in Africa, and providing a valuable reassessment of the African market which has become the most attractive market for all big airlines in Europe and even in the Middle East. Whereas some Arab airlines with excess capacity fleets in the Gulf region search for new markets to operate their planes in, air transport traffic in the African market has recorded growth rates that are much more than those of the Middle East, even before the financial crisis broke out.

As for the European market, we had previous predictions that the traffic would witness a considerable drop to and from Europe. Yet, the February figures show a stable rate of increase that averages around the same rate as last year. We see this as a positive indication and even an achievement for our company, particularly when considering the fact that the traffic between Europe and the Middle East has dropped by 20 per cent. Moreover, future bookings for the summer season are positive.

For the Middle East market figures show a drop by 6 per cent in our traffic whereas the movement to North America remained the same. As a whole, our traffic movement has increased in February 2009 by 8 per cent comparing to February 2008.

Our prediction for the fiscal year 2008/2009 is to achieve an increase of 4 per cent in the total traffic movement comparing to the 13 per cent increase achieved in 2007/2008. This is a positive achievement and we are satisfied with it in the light of the current crisis.

The national carrier has opened more new routes recently and it maintains the expansion plans of fleet as scheduled. How do you explain that big airlines all over the world have delayed such procedures waiting for the crisis to pass?

One of the biggest mistakes for any company will be to design its steps in the business mainly as a reaction rather than based on genuine policies and strategies. However, we are keeping the crisis in mind and adopting required procedures to avoid drastic deterioration in the business.

Since we have a chance to benefit out of a certain situation, why not? Now that those airlines which previously ordered large numbers of aircrafts have put their requests in hold, aircraft manufacturers have empty slots on production lines. Such a situation makes it easier for us to request an early delivery of ordered aircraft to boost our expansion plans when the crisis is over.

At present, we operate a fleet of 57 planes and we have five B737-800 scheduled to be delivered before the end of this year. By 2012, the fleet is planned to reach 75 small, medium and wide body aircrafts.

Comparing to the market potential, our fleet is under-capacity. In 2008, 40 million passengers travelled through Egyptian airports. 10 millions of them are charter passengers while 30 millions are regular airline passengers. Transporting 8.2 million passengers on board our fleet, we can see that our share is 30 per cent which does not satisfy our ambitions.

As for the network, at present, the company is conducting a project to re-map the international destination network with the help of foreign highly trained professional consultants. The project planning is due to take 17 weeks divided among three phases. The first phase is "quick hits" of the network where we can apply a quick change to next summer's operations. The second phase is a study of certain routes with low performance and how to make necessary modifications on arrival and departure timetables, increasing frequencies, selecting attractive days for operation. Results out of that phase should be applied on designing the 2010 winter network.

The third phase is a study of the network from scratch. It assumes the airline does not have a network and thus tends to study the movement, the flow of traffic to and from Egypt and the impact of the flow, and thus suggests a design for the whole network to be applied in the summer of 2010. The final results of the project should come with a plan to be applied for four years from 2010 to 2014.

The Egyptian authorities allowed new airlines to operate as second and third flag carriers for their countries to Cairo International, the airport long dominated by EgyptAir and also the operating base for its network. Will you welcome a new Egyptian flag carrier to operate from Cairo on your company's domestic and international network?

With long experience in the field, I do not see a possibility for such idea in the near future unless it is funded completely through foreign investments but under an Egyptian cover.

The current aviation law permits foreigners to establish new airline companies in Egypt in partnership with Egyptians provided that the national share of capital is not less than 60 per cent. In fact, the majority of investors, who come mainly from Arab countries, take the step basically with one main target in mind which is to operate their fleet on the same route we operate within their countries. If we look into having a new Egyptian flag carrier it will only be one of those airlines targeting our business and seeking to occupy our network using another name.

But if we accept the assumption that the national carrier hasa developed to the extent that it can stand a competitive atmosphere, why not accept competition on your network?

Simply, I would turn the question around. Why should I give my investments which I have worked long to develop and which have become a major source of our income as long as I haven't failed to meet the demand or the request by any passenger to get a seat?

Let me explain that EgytAir is limited in increasing its capacity in expanding its fleet, training the staff, providing all technical and IT services, as we do not receive any funding from any body. We fund our projects and even provide an annual surplus into the country's total budget.

We can not approve of unfair competition with some airlines in the region which are owned by state rulers and receive direct and indirect financial support, in violation of international air transport regulations. Some of these airlines even distribute free tickets to India to make passengers get used to flying with them. Some others tended to sell tickets under the sixths and seventh terms of Air Transport Liberation accord, also another violation because such terms are not applied by their governments.