Aviation Business by ITP Business Publishing

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THE MAGAZINE FOR AVIATION EXECUTIVES IN THE MIDDLE EAST | MAY 2009

Brand your airline Make small changes to big eﬀect

BUSINESS Ask the expert ‘Learn from the banking sector’

SITUATIONS Is the Middle East the last place left to ﬁnd a job in aviation?

INDIA’S INDIA ’S FINANCIAL FUTURE | PUSH FOR PREMIUM | FLYDUBAI GOES LIVE | THE AIRPORT SHOW

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CONTENTS

MAY 2009 VOLUME 08 ISSUE 05

04 REGIONAL NEWS Jazeera spots new business openings. Europe holds untapped opportunity, says Emirates Airline. Bahrain Air makes its entry into Abu Dhabi. Emirates Airline offers its staff unpaid leave. Air France-KLM ups its GCC capacity. Lufthansa says legacy carriers should not hold the monopoly on flights to European destinations. Royal Jet opens its C-check facility. Palm Aviation justifies revenue growth.

20 INTERNATIONAL NEWS Air France becomes first airline to trial mobile phone-based boarding passes. Turkish Airlines’ entices ex-pats with stop-over campaign. Aventure Aviation named exporter of the year. Cathay Pacific’s business continues to suffer at the hands of the economic climate. Swine flu outbreak spells trouble for airline share prices. Etihad develops Australia link. Commercial interest in Lagos continues to grow.

30 ASK THE EXPERT Usman Ahmed, IBA’s group analyst, asks ‘when it comes to aircraft, how many is too many?’ and urges airlines to learn from the banking sector’s mistakes.

46 MOVERS & SHAKERS UAE nationals join Emirates Airline’s senior management team. Etihad appoints a new country manager. www.arabiansupplychain.com

NEWS ANALYSIS A new trend has emerged in the region during the last few months, which has seen airlines pushing their premium seats to make up for the revenue shortfall. But are there enough customers to ﬁll the corporate cabins? Overcapacity is also an issue in India and this month’s international news analysis takes a closer look at the ﬁnancial future of India’s airlines.

AIRPORT FOCUS Dubai Airports is making passenger comfort a priority. ADAC wows with its new Terminal 3. Major suppliers reveal the products they will feature at the Airport Show this month, plus we ﬁnd out what the event’s speakers have to say. Airport security issues are placed under the spotlight, including the latest products and industry news, views and comments. May 2009

04 A rundown of the latest happenings in the Middle East aviation sector

Cowen: says healthy proﬁts and new destinations places Jazeera Airways ahead of start-up carrier ﬂydubai

Jazeera spots opportunities during economic downturn New business and leisure destinations will tap into current consumer trends, says CEO GROWTH PLANS

Budget carrier, Jazeera Airways will launch six new destinations over the coming year despite the financial crisis. The routes will be a mix of business and leisure destinations including Hurghada, Egypt, Antalya, Turkey, Aleppo, Syria, Esfahan and Shiraz, Iran and Larnaca in Cyprus. Speaking to Aviation Business, Jazeera Airways CEO Andrew Cowen, said the airline’s healthy profit figures for 2008 had provided the motivation needed to move the business forward. “Although the industry is softening, we see that as an opportunity to invest because naturally our low-cost model fits into the idea of travelling on a budget. “When you have an economic downturn that has a certain number of impacts and one of those is that people will holiday closer to home to keep their costs down. With our new destinations we are trying to tap into current consumer trends,” Cowen said. He added that Jazeera was focusing on establishing itself as a strong corporate product and said that its premium cabin and the flexible packages on offer in economy class were proving popular with companies and business travellers alike. “Many corporate companies have cut their travel costs and our premium cabin offers fares up to 75% cheaper than the May 2009

legacy carriers. In the current climate, this type of saving to a corporate company is important as their revenues have taken a big hit.” Cowen went on to explain that the airline has created a flexible fare offering. “We are also aware that a lot of companies will now only fly economy, so business travellers can choose a ‘fully flexible’ package which is often not available with a low-cost airline, this means you can change your flight time very easily and it is proving popular,” he added. Commenting on the topic of fare prices, Cowen said he was surprised that airlines, particularly start-up carrier flydubai, were not more aggressive with their pricing strategies. “They [flydubai] seem a little expensive and all low-cost airlines offer oneway packages so you could ask ‘what is the news?’” Cowen explained. Beirut and Amman will be the first routes served by low-cost carrier, flydubai. The daily services will begin from June 1 and June 2 respectively and fares for both routes, including all taxes, are from US$68 one way from Dubai. Speaking to journalists at a media gathering to mark the airline’s launch, flydubai chairman HH Sheikh Ahmed bin Saeed Al Maktoum said that offering a one way service was more flexible for the customer. “Usually there is an expiry date of one week

for return tickets, but with flydubai there is no limit as to when the traveller can return to Dubai. “We want to offer the lowest fares possible with the greatest flexibility,” he added. Customers were able to book flights via the airline’s website from April 7 and flydubai CEO Ghaith Al Ghaith cited the online booking system as necessary to keeping fare prices low. Extra charges are made to passengers travelling with hold luggage, which will be charged at $11 for the first bag and $27 for the second. The budget carrier will receive a total of four aircraft this year, with the first two being delivered in May. All routes will be operated by NextGeneration Boeing 737-800. More routes will be announced over the next two months, but all are expected to be within 4.5 hours flying time from flydubai’s home-base in Terminal 2 at Dubai International Airport. Commenting on the launch of flydubai, Cowen said that Jazeera Airways had not altered its business plan in response to flydubai’s route and fare announcements as both carriers serve a different market. “Flydubai pitches to worker traffic, while our premium cabin separates us from an airline like flydubai as we do not just attract the price-sensitive traveller,” Cowen added. www.arabiansupplychain.com

REGIONAL NEWS

BA ups GCC summer schedule by 35%

Paolo De Renzis: Sees commercial opportunities in Saudia Arabia for BA

EXPANSION

British Airways’ summer schedule will see 66 flights operate from eight GCC markets to accommodate the anticipated rise in demand, said the airline’s commercial manager Middle East Paolo De Renzis. The new schedule is a 35% increase on last year.

The UK-based carrier recently announced it expected to post over US$200 million losses for the period April 1 2008-March 31 2009, but said it sees the Middle East as an area of business growth for the airline. De Renzis, said: “The Middle East continues to show

robust growth and remains an important market for British Airways. “It’s no secret the aviation industry is in the worst trading environment it has ever faced and several carriers have folded already this year, following the 30-plus airlines that went bust in 2008. “However, while not immune from the tightening market conditions brought about by falling passenger numbers, we believe we are well positioned to navigate any turbulence,” he added. During the past year BA has dropped its Dubai – London fare by 40%, but said it did not foresee further cuts in ticket prices. The airline also confirmed it will resume its Saudi Arabia service from May 31. The service was originally scheduled to begin in March, but was suspended due to delays at its two new stations, Jeddah and Riyadh.

Despite the schedule increase, the airline confirmed that it had cut capacity in Far East markets due to a drop in passenger demand. “We have seen a fall in the number of passengers flying from Japan in particular,” De Renzis said, “and have redeployed aircraft onto our India and Saudi Arabia routes. “We see many commercial opportunities for us in this market,” De Renzis added. The airline will operate five weekly flights from both Jeddah and Riyadh. De Renzis went on to say that the airline is planning to increase its winter schedule for the Middle East region and added that BA’s muchpublicised merger with Spanish airline, Iberia was expected to take place in 2010. According to a BBC report, BA boss Willie Walsh has said the proposed merger would benefit both airlines in the current economic environment.

Europe holds untapped opportunity: Emirates MARKETS

The market slow down has created opportunities for Emirates Airline to research new routes and the carrier has cited the South of France as an area of opportunity. Speaking to Aviation Business, Emirates Airline senior vice president Europe Nabil Sultan said that because some markets had held strong during the economic crisis the airline’s 2010 strategy included looking at potential secondary markets. “We anticipate demand in offline markets where we have a following but, as yet, haven’t been able to go there in a big way. “Six months ago we had a spillage of traffic and we couldn’t concentrate on secondary markets, but now we have May 2009

that ability because the market has slowed down,” Sultan said. Sultan revealed that the Dubai-based airline is look-

ing deeper into European route opportunities. “We are looking to places where we can be more ver-

Nabil Sultan: Emirates plans to cash in on potential demand from Europe

satile. The South of France is one area – just look at the catchment area – Italy is just 1.5 hours away from Nice. Flying to Nice opens up a whole lot of opportunities,” Sultan said. Sultan added that Eastern European destinations are also of interest to the airline, including Belgrade, Kazakstan and Almaty. Commenting on the business travel sector, Sultan confirmed that Emirates had seen a drop in passenger numbers, but pointed out that by offering good deals in the leisure market, the drop could be compensated for. He added that flying the Airbus A380 on the London route had proved to be “a magnet” for passengers. www.arabiansupplychain.com

REGIONAL NEWS

Bahrain Air launches nine weekly ﬂights to Abu Dhabi ROUTES

Low-cost airline, Bahrain Air has begun operating fl ights to Abu Dhabi. The airline will initially operate nine flights per week to the UAE capital.

Bahrain Air will announce four new destinations this year

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Speaking to Aviation Business at an event to mark the inaugural flight from Abu Dhabi International Airport, Bahrain Air managing director Ibrahim Abdulla Al Hamer, said: “Flying to the capital of the UAE is an important new development, and it will prove a popular destination of interest for leisure and business travellers.” Despite the current rebranding exercise that rival airline Gulf Air has recently begun, Al Hamer explained that Bahrain Air plans to maintain its low-cost model. “We do try to offer a better price, but this is related to our low-cost service. “Gulf Air is a very well established airline, so there is no point in trying to compete,” Al Hamer explained.

“We plan to stay low-cost, although it is worth noting that our premium class remains consistently busy.” Al Hamer revealed that the airline has plans to operate services to four new destinations in 2009, including Yemen and Riyadh. As a low-cost model the airline’s managing director said that he did not see the launch of Dubai-based carrier, flydubai as a threat to Bahrain Air’s market share. “The difference with Bahrain Air is that we fly direct to most of our destinations for the same price as other airlines that fly with a stop-over.” The Abu Dhabi route will be served by Airbus A319 and A320 aircraft and Bahrain Air will take delivery of a new A319 next month.

Emirates oﬀers staﬀ unpaid leave ECONOMY

Emirates Airline has offered its cabin crew staff unpaid leave to carry it through the current economic turmoil. Unpaid leave is being offered to all Emirates’ cabin crew staff for a minimum of one month, up to a maximum of six months, starting from May 2009, should they wish to take it. An Emirates spokesperson, said: “After a careful review of our operational requirements, we have decided to offer our cabin crew staff the opportunity to apply for unpaid leave on a purely voluntary basis, starting from May 2009.” The airline said the decision had been taken due to “a sharp drop in cabin crew attrition” and confirmed that unpaid leave would be granted to individuals depending on seniority levels.

May 2009

REGIONAL NEWS

Air France-KLM ups GCC capacity CAPACITY

Air France-KLM has increased its capacity on Gulf and Iran routes by 4% for its summer schedule. In a move that mirrors the Gulf expansion strategies of several other European carriers including Lufthansa/ SWISS and British Airways, the airline group is switching aircraft from weakening North American routes to the Gulf, one of the only regions showing the most “stability” in terms of air travel growth, according to Air FranceKLM commercial director for the Gulf, Iran and Pakistan, Bas Gerressen. “If you look at the results from other parts of the world, there is a big decline and the only region that is performing well is Africa and the Middle East so everyone is putting more aircraft in the Middle East,” he told Aviation Business. “However, with all airlines putting more capacity in this region, which isn’t immune to the economic crisis, this could prove challenging.” For summer 2009, Air France-KLM will operate 75

flights out of 10 stations in the Gulf region – a 4% increase in weekly flights compared to its 2008 summer schedule. The number of flights out of Muscat will increase from five to six weekly, operated with a short stop in Abu Dhabi, while frequencies from Kuwait will move from five to daily and from Tehran, from four to five weekly. The Bahrain service will run daily, three of which will operate via Kuwait instead of Abu Dhabi. In the UAE, Saudi Arabia and Qatar, the summer schedule is the same as 2008 with 28 flights in total running out of Dubai and Abu Dhabi, 17 flights out of Dammam, Riyadh and Jeddah and five flights weekly out of Doha. However, Abu Dhabi will become a fully non-stop KLM operation with six fl ights per week. Air France-KLM’s capacity hike is more conservative than that of fellow European carrier British Airways, which has announced a 35% yearon-year capacity increase for its summer schedule, includ-

Bas Gerressen: Fare drop will make it diﬃcult to match 2008 revenue results

ing the reinstatement of flights from Riyadh and Jeddah to London Heathrow. Gerressen said he believed that in accordance with IATA predictions for 2009, capacity would outstrip demand in the Gulf region this year and that one market in particular that would notice the onslaught of extra seats would be Saudi Arabia given BA’s return to this market as well as a presence from Lufthansa,

bmi, Austrian and its own Air France flights from Riyadh and Jeddah to Paris and its KLM flight from Dammam to Amsterdam. “There is an overcapacity compared to demand, which is still growing year on year,” he said. “There is a definite decrease in passenger traffic [out of the Gulf region], particularly Dubai, however, up until February, on all our routes, we had an incline in load factors.” Gerressen also stressed that “budget-wise, we are not really slowing down”. “We still hope to get a good revenue in 2009, however, the prices [of air tickets] will decrease so we will have to work harder and sell more tickets,” he said. “It will be tough for Dubai routes but for the entire region we expect to reach the same level of revenues as last year, with positive results from Oman, Iran, Abu Dhabi, Bahrain and Qatar in particular.” Gerressen also revealed that Air France’s new premium economy product would be rolled out on aircraft serving GCC routes within a year.

Lufthansa ﬁghts back against legacy carriers Thierry Antinori says the German airline is committed to the UAE

May 2009

DESTINATIONS

Lufthansa is fighting to maintain its market share in the Middle East by increasing its European flights. As part of its summer schedule, the German airline will fly a non-stop route between Saudi Arabia and Frankfurt, and operate a daily flight between Muscat, Oman and Frankfurt. There will also be additional flights from Dubai to Munich. Lufthansa German Airlines executive vice president marketing Thierry Antinori, said he did not welcome the region’s legacy carriers increasing flights to Europe as the

airline saw the Middle East as a key area of growth in 2009. “We are committed to the region and particularly the UAE. “Over the last few months the market has dropped around 20% for all airlines, but we are making more revenue out of the UAE this year compared to 2008,” Antinori said. “Passengers flying with Lufthansa from the Middle East to Germany rose 6% in 2008,” he added. Currently, the airline flies to 14 destinations in the Middle East region. Two new A340s will serve the Middle East routes, along with redeployed aircraft from

its economy-hit North America routes and from September, the Lufthansa Business Jet will be used on the Frankfurt to Bahrain and Frankfurt to Dammam, Saudi Arabia routes for the first time. “We have no plans to cut Business Jets’ premium service. It is working well and according to our expectations,” Antinori said. When asked if the airline would be lowering fares, Antinori revealed that the airline would change its network schedule ahead of cutting prices. He added that some 50 new aircraft will be introduced into Lufthansa’s fleet by 2013. www.arabiansupplychain.com

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10 A rundown of the latest MRO sector news

Royal Jet opens C-check facility Maintenance business will counteract proﬁt losses for private jet operator. NEW BUSINESS

Royal Jet has opened a C-check facility (heavy maintenance check) at its base in Abu Dhabi. Speaking to Aviation Business, Royal Jet vice president technical Ahmed Al Mammari revealed that the facility will be used to service aircraft belonging to third party operators. “Royal Jet now has the facilities and expertise to carry out maintenance at this advanced level for the very first

time. This is something no competitor of Royal Jet is able to do,” said Al Mammari. He explained that in the current economic climate it was cost-effective for a company to set up a maintenance facility nearby and it improved the turnaround time of aircraft. Once the facility is complete Royal Jet plans to offer maintenance services to rival those offered by other maintenance companies in the region.

“We are only maintaining Royal Jet aircraft for now,” Al Mammari explained. “But by the end of 2010 the facility will be finished and we can extend our services and challenge other maintenance companies.” He added that the firm had opened the MRO business in case its charter business should suffer from the effects of the economic crisis, but stressed that the two divisions would not conflict.

“We will make up our profit loss brought on by the downturn in the market through extending our FBO services and we will continue with chartering aircraft and hope to own 19 aircraft by 2012.” Royal Jet anticipates it will service some 200 to 250 aircraft per month and expects to launch its third party maintenance service from October 2010. Royal Jet does not expect to see a ROI until after five years.

Airbus improves its reach for spare parts AGREEMENT

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May 2009

Tasc aviation, a subsidiary of Airbus, has entered into a spare parts consignment agreement with AAR Parts Trading Inc. The agreement is expected to improve the availability of Airbus spare parts to operators across the Middle East. The agreement is good news for Emirates Airline following its meeting with Airbus in March to report technical issues the airline had experienced with its new A380. Emirates currently flies its A380 daily to London Heathrow and has recently placed the aircraft on its Sydney and Auckland routes. In addition, from June 1 the carrier will fly the super jumbo on its Bangkok route. Speaking to Aviation Business last month, an Emirates spokesperson explained that the airline had identified various technical issues during op-

Operators will be able to get hold of Airbus parts more easily

erations, but pointed out that many problems are expected with new aircraft and particularly one that uses many new technologies. In response, Airbus had pledged to increase its stock of spares at A380 locations, as well as response teams and technical support. Under the spares agreement, AAR will position certain critical parts, OEM accessories, rotables and other goods within tasc aviation premises in Dubai where the Airbus subsidiary will be able to propose various spares solutions to Airbus operators including loan, exchange, outright sale and pooling. www.arabiansupplychain.com

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12 A rundown of the latest happenings in the private aviation sector

Palm Aviation’s aggressive growth projections will rely on business from new markets.

“We have made this our niche” EXPANSION

Palm Aviation’s ambitious revenue growth will be achieved by sourcing business from Africa and the CIS, the company’s executive vice president told Aviation Business. The Dubai-based flight support company has projected revenue growth of 35% per year for the next five years. Palm Aviation executive vice president Mohammad Saideh said the firm had

spotted a new market for the jet sector. “No one has noticed the potential in Africa and the CIS. Our competitors in that region are sourcing out work to us – what does that tell you?” Saideh explained that the company had focused on making it easier for people to fly over Africa, the CIS and the Middle East. “This business is problematic, but we have made this our niche,” he said.

Saideh added that the company had plans to set up an office in Uzbekistan to handle the amount of enquiries received from the CIS market. However, the executive VP added that Palm Aviation was not restricting itself to these regions alone. “We have identified a huge spike in business in China and India too. We are in talks with who I can only describe as the ‘Warren Buffet of India’ to

enable us to build our business there later in the year.” On the topic of further expansion plans, Saideh revealed that Palm Aviation will increase its airport supervision from 10 to 18 airports in Africa by the end of the year and in the UK and Europe it will continue to have a physical presence. “We also have plans with some big players from the States,” Saideh added.

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There is currently a strong demand for private jet travel from High Net Worth Individuals (HNWIs), yet business jet companies are not working with partners that have access to these clients according to Quintessentially managing director Middle East Debbie Duncan-Studart. And she should know, Quintessentially is an exclusive members-only company that offers a wide range of luxury-related products and services including travel, to the elite. “Our members are asking for private jets, but first of all, the prices are uncompetitive in this region and even though our members have the money, they still want value for money and service,” she said.

“Private jet companies here are not proactive at all. If they came to us we would definitely deal with them more.” Duncan-Studart said the current economic slowdown had not impacted the Quintessentially Group at all. “Our members will always have money,” she said. “In fact, the recession has benefited us because hotels were snooty before, but now they want to know what they can offer our members.”

Business jet co mpanies are missing the op portunity to build up their client lists

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PRIVATE JET NEWS

Avcon expands its ﬂeet INTERNATIONAL

Austrian-based business jet operator Avcon Jet will open offices in Moscow and Cannes this year following the opening of its new branch office in Budapest, Hungary recently. In addition, the operator will take delivery of five more aircraft during the next four months, expanding its fleet to 18 aircraft. Despite the financial crisis Avcon Jet CEO Alexander Vagacs said: “The time is right to invest in both – establishing of a global sales force as well as the fleet.”

New Gulfstream for Elite REGIONAL

Elite Jets has taken delivery of its second Gulfstream G450. Elite Jets president and CEO Ammar Balkar said the modified aircraft would be used to serve international routes and destinations.

May 2009

Middle East is target for ABJ The conversion market has beneﬁted from the economic slow down

TREND

BAE Systems said the Middle East is a hotbed of opportunity for the jet reconfiguration market and said it has seen an increase in enquiries for its Avro Business Jet (ABJ) According to BAE Systems consultant David Dorman the past 18 months has been a key period of growth for the company’s regional aircraft division. “While there are some indications, notably from the USA, of a backlash against

corporate aircraft, the market in other parts of the world, notably the Middle East is holding up well. “One trend we have seen is the growing market for cost effective but high quality conversions of pre-owned regional jets for the corporate and private aviation market. “BAE Systems is certainly seeing this with our own ABJ,” Dorman added. He explained that consumer trends have altered due to

the economic downturn and customers will now consider the purchase of a used aircraft that is a fraction of the price to that of a new similar-sized business jet, but stressed that the decision does not mean compromising on quality. “The interior can be tailored to exact requirements, an area of growing importance in a design-conscious market,” Dorman explained. BAE Systems expects to sell five to six reconfigured aircraft a year. “Other aircraft will be for lease only, although the ABJ market is predominantly a selling market,” Dorman added. The BAE Systems’ consultant also revealed that the company plans to partner with other conversion centres and a specialist offering to the business jet market is likely to be developed over the coming months.

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16 A rundown of the latest Middle East air cargo news

Credit storm continues to batter Boeing Plane manufacturer is facing “unprecedented challenges”, says CEO. FIGURES

US manufacturer Boeing has released poor fi rst-quarter figures as a result of the economic crisis, which has caused a downturn in both demand for passenger and cargo, and made it harder for fi rms to win the fi nance needed to buy planes. The figures showed that profits halved in comparison to the same period a year earlier, with operating earnings in the Commercial Air-

planes segment falling by 58%. Changes to production schedules for its popular 777 marque, cancellations for the 787 type and a negative order book in the first quarter have combined to produce a set of results that has little in the way of encouragement. Although the manufacturing giant still has an order backlog of US$339 billion, slowing delivery schedules make it harder to tap into this revenue. Furthermore, budget

considerations at the US Department of Defence are also hurting the firm, and Boeing is facing unpopularity at home via its decision to lay off technical staff in January. “The expanded global economic downturn is presenting unprecedented challenges in our commercial airplane markets,” said Boeing chairman president and CEO Jim McNerney. “We believe we are better positioned than most compa-

nies to withstand the ongoing pressures of this economy and we are not hesitating to take necessary actions to preserve our financial strength and maintain our ability to invest and grow for the long term. “Performance across the overwhelming majority of our programmes remains solid, and we are making progress towards our milestones on the 787 model and other important programmes,” McNerney added.

Gulf airlines show interest in Nigeria RJ pays heavy price for fuel CAPACITY UP

The importance of Nigeria as a destination for the GCC’s biggest carriers was highlighted as Qatar Airways opted to upgrade aircraft and add daily services to the country’s economic capital, Lagos. The move, which will increase cargo capacity to the destination, follows Saudi Airlines Cargo’s decision to appoint a GSA in Lagos, with Emirates SkyCargo and Etihad Crystal Cargo also expanding their services in the country. Africa generally has received close attention from

GCC operators recently; Crystal Cargo signed an interline deal that allows it access to seven West African countries at the end of March, and Emirates will add energy-rich Angola to its network at the beginning of August. The upgrade means that Qatar Airways cargo will now have 40% more capacity due to the use of A340-600 jets rather than A330-200s, in addition to the extra two flights per week. “Qatar Airways will continue to make inroads into this dynamic continent,” said Qatar Airways CEO Akbar Al Baker.

Qatar Airways ups its load capacity on Lagos route

May 2009

HEDGING

Royal Jordanian has just gone live with the next-generation Cargospot freight management solution, and is also revamping its cargo facilities at its Queen Alia International Airport hub in Amman but the Jordanian flag-carrier has paid a heavy toll for last year’s fluctuating fuel price. The airline’s fuel hedging policy has led to unrealised losses of about US$65.9 million after it hedged 30% of its fuel for 2008 and 2009 at an average price of about $105 a barrel. As a result, Royal Jordanian saw a net loss after tax of $33 million, after a fuel bill costing $410 million was taken into account. However, operating revenues rose by 29% against 2007, with passenger numbers rising by 14.1%. Royal Jordanian president and CEO Samer Majali also

Majali hopes for encouraging passenger numbers over the summer

outlined that the carrier had had a tough first quarter, with events in Gaza hurting passenger figures. However, he added that numbers were expected to rise in the summer months. “RJ will improve air and ground services, enhance connectivity, and modernise the information systems in the human resources, cargo, procurement and maintenance departments,” said Majali. www.arabiansupplychain.com

CARGO NEWS

Cathay holds strong in GCC Lufthansa expands into West Africa MARKET

Hong Kong-based cargo giant Cathay Pacific has announced a series of measures to help combat the downturn, with turnover in the fi rst quarter of 2009 22.4% lower than in the same period last year. Significantly, however, freighter schedules to Middle East end destinations remain unchanged. Cathay will remove overall cargo capacity by 11% by reducing its weekly freighter frequencies to 84, from 124 during its 2008 high. The company has also decided to mothball two more B747-400BCFs, bringing the total to five, while also wet leasing one BCF to subsidiary Air Hong Kong. A new set of cuts mean that a large selection of key passenger destinations will also suffer from downgrades or reduced frequencies. Dubai is one of the locations that will

be downgraded; the emirate will now be serviced by a A330 instead of a 747. However, the news for other Middle Eastern destinations points towards the resilience of the aviation sector in this region. The airlineâ&#x20AC;&#x2122;s Bahrain/Riyadh service will be given three more fl ights, making it a daily frequency from August onwards. â&#x20AC;&#x153;We anticipate a very challenging year in 2009 and a toxic combination of low fares, a big drop in premium travel, weak cargo loads, poor yields and a negative currency impact,â&#x20AC;? said Cathay CEO Tony Tyler.

The Middle East and India are the only regions where Cathay PaciďŹ c has elected not to cut freighter

An interline deal with Astral Aviation will boost Lufthansaâ&#x20AC;&#x2122;s footprint in West Africa

DESTINATIONS

Lufthansa Cargo has signed an interline deal with Kenyan freight carrier Astral Aviation, which will allow the German operator access to seven new African destinations via Nairobi. The contact comes shortly after Etihad Crystal Cargo finalised a similar arrangement with Astral, which provides services to Bujumbura (Burundi), Dar Es Salaam, Mwanza, Zanzibar (all Tanzania), Juba (Sudan) and Kigali and Entebbe (both Uganda). Lufthansa MD-11 freighters will fly to Nairobi, where

Astral will then forward freight onto other destinations. Astral, which has been operating since 2001, has a fleet of DC-9, Fokker 27 freighters, An-12 and Cessna Caravan aircraft. Jade Cargo International, the Lufthansa Cargo and Shenzhen Airlines joint venture is also concentrating on Africa. Twice-weekly flights from Shanghai using a B747400ERF are routed through Shenzhen to Chennai and then via Sharjah to Lagos. The move comes as several Gulf airlines have added resources to the African continent.

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May 2009

CARGO NEWS

SIA concentrates on Sharjah Logistics Park will open this year: ADAC HUB

Singapore Airlines (SIA) Cargo has opened a dedicated cargo office at Sharjah Airport Freight Centre in conjunction with its long-term GSA, SNTTA Cargo. As one of the world’s largest cargo carriers, SIA Cargo’s move is a huge boost for Sharjah as it emerges as one of the Middle East’s leading cargo hubs. “We shifted all our UAE freighter services to Sharjah as part of a plan to build a strong regional cargo hub. Through this new office, we can strengthen our regional presence through dedicated staff capable of responding to all situations from close quarters,” said SIA Cargo regional vice president West Africa and Asia Lee Kong Yang. The Asian giant operates 84 B747-400 freighter flights a month from Sharjah, link-

ing it to destinations all over the world. “The new office of SNTTA Cargo and Singapore Airlines at Sharjah Airport Freight Centre is part of our long term strategy to invest in infrastructure to provide all-round support to Singapore Airlines Cargo in developing this hub,” said SNTTA Cargo general manager Mohin Jassal. The office will oversee charter operations, import/export cargo handling, customer service, reservations and coordination with airport stakeholders. SIA Cargo has shifted its UAE freighter services over to Sharjah airport

Logistics Park is oversubscribed for 2009

FIGURES

Tenants will move into the new Logistics Park at Abu Dhabi International Airport this year, the ADAC has confirmed. The first phase of development is currently underway, and the development of phase two is expected to begin at the start of 2011. The full project is due for completion by 2015. Speaking at an industry event recently, ADAC chairman HE Khalifa Al Mazrouei said the park was being devel-

oped in phases to ensure there was enough space to allow existing investors to grow. “Through its establishment, the ADAC aims to help stimulate economic growth and create opportunities for local companies and international organisations to access the UAE market and the extended Gulf region.” Al Mazrouei added that the airport company had received enquiries for more facilities than it had planned to deliver this year.

New logistics portal available across GCC Dnata’s Calogi head Patrick Murray explains the beneﬁts of a new cargo community system. FACE 2 FACE

What is Calogi? Calogi is a self service webbased portal designed to serve the information processing needs of the local GCC supply chain community. What are its beneﬁts? It has saved the Dubai forwarding community an estimated US$1 million since July 2008 and it aims to simplify the air cargo business and allow local supply chain

May 2009

stakeholders to interact with each other. Can the system be used with existing ones? Yes, Calogi is able to interface with airlines’ systems using IATA standard messages and with the Dnata GHA system using a standard interface. Calogi has a messaging product called ‘c-switch’ which provides a one stop shop for all messaging needs; has Cargo-IMP, EDIFACT and XML conversion capabilities and seamlessly links customs, airlines, agents and other supply chain stakeholders.

How much does it cost to implement the systems? For a small subscription fee, up to three users will be able to access the service. There is a transaction fee, but the fact that the terminal receives information electronically means that any cost savings incurred at the terminals can be passed on to the agents in the form of documentation and handling discounts. When will the user start to see a ROI? Companies that change to Calogi will find a very quick return on investment. The more they use the portal, the more money they will save. Already the forwarding community in Dubai has saved an estimated US$1 million since July 2008 in documentation

and handling discounts provided by Dubai’s 7 FreightGate facilities. Add to this the time and money saved in not having to call or visit the counters in person and this easily equates to further savings. In addition, the Calogi system is also more environmentally friendly because it does not rely on paper.

READER’S COMMENT FROM “It is commendable what DNATA is trying to achieve here but after reading its plan for expansion, will the overall reach within the UAE – especially for GSAs operating outside Dubai – beneﬁt from the service? The GSA module should be up and running before Calogi expands into the GCC countries.” www.arabiansupplychain.com

INTERNATIONAL NEWS

CANADA: Airline shares plummeted at the end of April as the swine flu outbreak spread from Mexico to Canada and the US. At one point British Airways shares were down 8%. Shares for Australia’s Qantas and Hong Kong’s Cathay Pacific also fell sharply. Tourism shares were also markedly lower with the BBC reporting a decline of 7.9%. Analysts said if the outbreak worsens it could potentially derail economic recovery efforts.

FRANCE: Air France has become the first airline to trial mobile phone-based boarding passes using nearfield communications (NFC) technology. As part of a six-month pilot scheme, passengers can simply swipe their phone over a reader after checking in, and the system will load an electronic boarding pass onto the device, as well as crediting any loyalty programme bonuses. The Pass and Fly system, has been developed in a partnership between Nice Cote d’Azur airport and Air France with suppliers Amadeus and IER.

BA’s share price dropped 8% due to the swine ﬂu outbreak

TEXAS: According to new data released by the FAA, Dallas Fort Worth International Airport had the second highest number of bird strikes compared to other US airports in 2008. Last year 211 birds hit jets or contacted planes taxing across runways. In 2007 the number spiked at 267. Interest in bird strike incidents has increased significantly since the downing of a US Airways jet into the Hudson River in January.

An Air Canada aircraft made an unscheduled landing in Hawaii

HAWAII: An Air Canada flight from Australia to Canada made an unscheduled landing in Hawaii on April 24, 2009 after some passengers and crew suffered minor injuries when the plane hit turbulence. According to Reuters, the Boeing 777 aircraft, en route from Sydney to Vancouver, was carrying 256 passengers and 17 crew when it hit a rough patch of air an hour east of Honolulu.

NIGERIA: As commercial interest in Lagos increases, Bloomberg has reported that Nigeria’s Chanchangi Airlines is to build a US$150-million maintenance hangar at the Nnamdi Azikiwe International Airport in Abuja. The airline’s managing director told reporters that the hangar will service aircraft from Nigeria and outside the country. A new hangar will be built at Nnamdi Azikiwe International Airport

MEXICO: Aeromexico, Mexico’s largest domestic airline has commissioned Aviareps as its GSA on a total of seven markets – the UK, Benelux, Scandinavia, Poland, Hungary, the Czech Republic, Venezuala and Australia. As its representative, Aviareps will take on responsibility for Aeromexico’s sales, marketing and reservation activities in these markets. May 2009

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INTERNATIONAL NEWS

UKRAINE: Ukraine International will operate flights from Dubai/Kiev for the first time this summer. The service will begin on May 10 and frequencies will increase to four times weekly. “During the last two years we stopped operations on this route from May to September but now we will operate all year round, with less frequency in the summer,” explained Wajahat Kazi, sales and station manager for Khalid Al Nasrallah Tourism, the GSA for Ukraine International Airlines. Kazi also revealed the airline would start flying from Abu Dhabi to Kiev twice weekly from September 25.

Tiana Hardin says the company’s location beneﬁts business

GEORGIA: Aircraft parts supplier Aventure Aviation has been named exporter of the year for both Georgia and the Southeast US by the Small Business Administration. The winner is chosen according to the total number of export deals completed in 2008, sales figures, customer service quality and marketing approach. The company’s international sales manager Tiana Hardin said that location had benefited Aventure’s export strategy. “Being close to Atlanta’s international airport definitely helps from a logistics point of view when servicing our overseas customers.” The company is located in Peachtree City.

HONG KONG: Cathay Paciﬁc’s business continued to suffer at the hands of the economic climate. April saw the airline announce major cost-cutting measures in an attempt to claw back some of its massive 2008/09 profit losses. Many passenger flight reductions were announced including downgrading to an Airbus A330 from a Boeing 747 on its Mumbai/Dubai route. The airline also followed in the footsteps of Emirates Airline and offered its 17,000 workforce worldwide unpaid leave up to one month. INDIA: ARINC has opened two new sales and service

Ex-pats can buy a stopover package from Turkish Airlines

TURKEY: Turkish Airlines is targeting the UAE’s European ex-pat community this summer by offering flights that include a stopover in Istanbul. The carrier, which flies twice daily from Dubai and four times weekly from Abu Dhabi, is working with hotel partners in Istanbul to create the stopover packages that Turkish Airlines Abu Dhabi manager Ayshe Misirli Mirza said would target British, German, Spanish, Italian and Scandinavian ex-pats living in the UAE. “They can fly to Istanbul and stay for four or five days and then continue to their home country,” she said.

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offices in Mumbai and New Delhi. The move has been made ahead of an expected contract-win for ARINC in India and the Philippines. In addition, the communications company has opened a new station in Panama to boost its GlobaLink high frequency data link coverage. The station enhances its signal coverage in the Caribbean and along the Pacific coast of Central and South America.

AUSTRALIA: Etihad Airways has teamed up with Tourism New South Wales as part of a joint marketing campaign to develop the Abu Dhabi-based airline’s links with Australia. It is hoped the campaign will build on air links between Europe and Australia to increase the number of tourists and business travellers flying to Sydney. Etihad Airways CEO James Hogan and New South Wales premier Nathan Rees signed the deal in Abu Dhabi last month. May 2009

NEWS ANALYSIS

Airlines push to make up for revenue shortfall But as the demand softens, will carriers ﬁll their corporate cabins?

Transport Association (IATA) show sales for premium tickets plummeted 21.1% in February and the industry body estimated that with fewer passengers, revenue from first and business class travel probably fell at least 25% in January, “wreaking significant damage to network airline yields and profitability.” IATA said the Middle East was the only region where capacity grew, up 10.8% in January, mostly because of deliveries of new planes, but wrote “it remains a severe challenge to fill these seats in this recessionary environment.” However, regional carriers believe the ‘recessionary environment’ has opened up a gap in the market. Jazeera Airways CEO Andrew Cowen, told Aviation Business: “Corporate clients have had their travel budgets cut and are turning to low-cost airlines for a cheaper option. They don’t necessarily want lie-flat beds, but they do want extra leg-room, a decent meal and some form of inflight entertainment. “Unlike other budget carriers we are able to offer them our premium seats,” Cowen explained. Even airlines that predominantly fly low-income worker traffic have included premium-class cabins on aircraft. Bahrain Air managing director Ibrahim Abdulla Al Hamer recently announced the lowcost carrier’s entry into the UAE capital and pointed out that the airline’s Airbus A319 and A320 aircraft would include 12 premium seats. “These [seats] are not business [class], but between business and economy,” explained Al Hamer “and we expect these to remain consistently busy.” In addition, Bahrain’s national carrier, Gulf Air has leased four Boeing 777s from Indian airline, Jet Airways as it believes the aircraft’s premium offerings will appeal to the Middle East traveller.

May 2009

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arriers confronted by last year’s rocketing fuel prices and increased security costs have been searching for ways to recoup lost revenue by charging extra for premium seats. Even low-cost airlines are tapping into the market by pushing their premium cabin space to corporate clients who now have to travel on a shoestring. But critics have warned airlines that they may struggle to fill their premium seats, even in a region synonymous with luxury air travel. The latest figures from the International Air

NEWS ANALYSIS

From September the Lufthansa Business Jet will be used on the Frankfurt to Bahrain and Frankfurt to Dammam, Saudi Arabia routes for the ﬁrst time

“We don’t want to be seen as a low-cost carrier,” said Gulf Air CEO Bjorn Naf “but a premium gold network carrier, that offers value but not excess.” Commercial carriers also cite the premium sector as a largely unexplored commercial opportunity in the region. British Airways’ summer schedule will see 66 flights operate from eight GCC markets to accommodate the anticipated rise in demand and the Middle East’s business and premium sector is of particular importance to the UK-based carrier. The airline will resume its Saudi Arabia service from May 31, a route that the airline hopes will become popular with corporate passengers. BA’s commercial manager Middle East Paolo De Renzis, said: “The airline sees a lot of commercial opportunity in Saudi Arabia. Business travel is a priority in this region and it is a key market for selling premium seats.” In response to what it sees as a market need, the airline is relaunching its firstclass cabin in September this year. “The cabin will offer a new look and modern features,” De Renzis added. Lufthansa is also fighting to maintain its market share in the Middle East by increasing its European flights, and from September the Lufthansa Business Jet will be used on the Frankfurt to Bahrain and Frankfurt to Dammam, Saudi Arabia routes for the first time. “We have no plans to cut Business Jets’ premium service. It is working well and according to our expectations,” said Lufthansa German Airlines executive vice president marketing Thierry Antinori.

IN ASIA, PREMIUM TRAVEL NUMBERS FELL THE MOST, WITH 23.4% FEWER HIGHEND PASSENGERS

23.4% SOURCE: IATA

In addition, Air France has confirmed that its new premium economy product will be rolled out on aircraft serving GCC routes within a year and Air France-KLM commercial director for the Gulf, Iran and Pakistan, Bas Gerressen, has revealed that the new Air France A380, which will be delivered at the end of 2009, could be deployed on the Dubai route. “It’s one destination under consideration,” he said. But just as the world’s largest carriers spot the commercial opportunities of premium travel, Qatar Airways confirmed on April 9 it will remove first class facilities on four A340-600 aircraft to accommodate more economy seats. In a statement, the Doha-based airline said that first class lounges on the planes will be removed to make way for 40 economy seats from this September. Qatar Airways CEO Akbar Al

Passengers preferred to relax in our premium seats during their ﬂight Qatar Airways CEO Akbar Al Baker www.arabiansupplychain.com

Baker said the decision to remove the lounges was taken following low interest in the service. “We found the usage of the lounges was low,” he said. “The lounges provide passengers with a chance to sit and relax together on comfortable sofas during the flight in the ambient surroundings of a cocktail bar.” However, Al Baker did identify that although the lounges were not utilised as much as the airline had expected “passengers preferred to relax in our premium seats during their flight.” The eight first class and 42 business class seats will not be affected by the changes, the airline said. But industry analysts remain unconvinced that premium cabins - whether they belong to low-cost or commercial airlines will fly full during the credit crunch. Oliver Wyman aviation consultant Niko Herrmann observed that many airlines are actively responding to the dramatic slump in premium demand by expanding premium economy or similar offerings. “It’s clear to all that the premium segment has been hit the hardest, in both short and long haul. They [airlines] are not blue-eyed about this, but they are also not shouting out loud to everyone how much pain they feel,” Herrman said. However, on the long-haul segment Herrman points out that demand for premium seats is obviously not expected to disappear forever resulting in a justifiable market spend. “Airlines are not yet stopping seat upgrade programmes and other initiatives - because no matter how full the front is, it defines the perception of your product to a very large degree, and if your product is less competitive you will suffer even more in the current environment.” For short-haul travel Herrmann explained that consumer trends could mean a shift in product proposition. “Given the cuts in travel expenses, more and more people have started to realise that it is actually perfectly fine to travel 1-2 hours in economy or even in a train if commuting within Europe. “Therefore Middle East airports that offer a generic lounge for all passengers to use start to make business sense, and airlines might decide to start expanding the all-economy configurations they are using already on some domestic routes to more [short] routes in a regional context,” Herrmann added. May 2009

NEWS ANALYSIS

India’s airlines face uncertain ﬁnancial future Overcapacity could encourage banks to avoid investment opportunities.

s the Indian government is now preparing to relax its rules on foreign ownership of airlines, there is growing concern for airlines as to how they will gain access to capital at a time of falling yields, lack of investors, and battered balance sheets. At a recent air finance conference, delegates wanted to hear two things; how are the airlines performing and will they be able to secure finance for new deliveries? The event was the fourth annual Indian and Asian Air Finance Conference held in New Delhi in March and as India’s cash starved airlines expected to lose up to US$2 billion in 2008/2009 they welcomed a government move allowing foreign investors to inject funds into the country’s domestic carriers.

ORDER BACKLOG The low-cost model has proved particularly successful in India as many low-income workers regularly travel between India and the Middle East, but industry analysts and bankers alike are cautious of the government’s proposal as India’s major operators currently hold an order backlog in excess of 450 aircraft for delivery over the next two years. IBA Group commercial director Owen Geach explained that established airlines such as Air India will almost certainly reMay 2009

ceive funding from international banks and as the airline has pleaded for more cash it is likely to get a loan from the Indian government. But for others the road ahead looks less certain. “Private airlines, in particular, are finding it tougher and tougher to raise cash,” Geach said, “and with significant overcapacity as airlines grew so quickly to gain market share, they are now deferring aircraft orders and halting ambitious expansion plans.”

AGGRESSIVE PLAYERS But, Geach added, Air India still has problems. “The airline has undergone a transformation over the past two years, flying new aircraft and improving its inflight services, but the changes were long overdue and now the airline is surrounded by aggressive new players in the market,” he said. Jet Airways - although established 16 years ago – began its Middle East operations just 14 months ago, linking Kuwait and Bahrain with major Indian cities. It also operates flights to Doha, Qatar and Muscat and started routes to Abu Dhabi and Dubai in the summer of 2008. Like all airlines it has been hit by overcapacity problems and in response leased four of its Boeing 777s to Gulf Air, but the www.arabiansupplychain.com

NEWS ANALYSIS TROUBLE FOR KINGFISHER

We are also considering providing ﬂights to destinations in the Far East Jet Airways senior general manager ME Joseph Abraham

carrier’s senior general manager Middle East Joseph Abraham said the market continues to be successful despite the economic slow down. “Our primary market from the Middle East lies with people who work here and are visiting home for their holiday,” explained Abraham. “Whatever happens, economic or otherwise, we have the support of expatriates who still have to go home,” he added.

Despite Abraham’s words of confidence, the Mumbaibased airline is going through a period of consolidation and has scrapped any further Middle East expansion plans, but Abraham admitted this was only a temporary measure. ““Maybe in the near future we can return to our original plan and we are also considering providing connections to destinations in the Far East, such as Manila,” he added.

For Kingfisher Airlines, the future is not quite as rosy. With a large order book of some 100 deliveries, only 17 will be delivered between 2009 and 2010. Amidst aircraft repossessions and reports of late payments on loans and leases, Kingfisher has taken a deferral option on the majority of its deliveries from Airbus, including A380s, A320s and A330s. All network expansion plans are on hold and just recently the airline announced it had put off its plans to fly to Dubai until June or July. In addition, Geach commented that the airline had very little to fall back on in terms of assets. “An interesting fact is that out of the 82 aircraft currently in Kingfisher’s fleet only two are owned by the airline, the overwhelming majority are leased from a diverse range of 30 lessors and banks,” Geach explained.

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Airlines established on a low-cost model appear to be weathering the storm somewhat more successfully. IndiGo has allowed for aggressive expansion, demonstrated by an order book of 77 A320 family aircraft, scheduled for delivery between 2009 and 2012. “Historically IndiGo has been able to negotiate a higher than acquisition cost value when securing sale/leasebacks on some of the existing fleet which has helped its cash flow,” Geach said. But IBA’s commercial director warned that going forward it is much less likely that lessors will do A320 sale/leasebacks at

such high loan to value. “Has this been factored into Indigo’s growth plans or can we expect to see attempts to sell slots or defer deliveries?” he added. However, at present, despite IndiGo’s load factors for 2009 being down 5% compared to 2008, the airline carried over 4.7 million passengers last year, an increase of 46% in one year.

MARKET SHARE In February 2009, rival airline SpiceJet was reported as having 12% of the domestic market compared to IndiGo at 13%. The budget carrier has nine Boeing B737-800s on order and Geach explained that due to its share in the domestic market it would be likely to take on most of these aircraft. “In comparison to more established airlines like Air India, SpiceJet occupies a siginificant share of the domestic market, with passenger traffic up nearly three quarters of a million at around 4.1 million in 2008.” However, as the airline is in its infancy – it was set up in 2005 – the carrier is yet to make a profit and Geach warned that this is likely to cause cash flow problems in the near future. “It [SpiceJet] may have to defer aircraft deliveries,” he said. Spicejet is also reportedly in talks to merge with its smaller rival GoAir. Experts are not sure how the consolidation or merger will work as SpiceJet is publicly owned while GoAir is privately owned. “Whatever the outcome may be, the main aim is to actively seek out measures to cut costs and ride safely through this financial storm,” Geach added.

Air India will have to ﬁght to maintain its market share as aggressive new airlines emerge

108 International Drive © Peachtree City, Georgia 30269 © USA www.aventureaviation.com © 770-632-7930 © rfq@aventureaviation.com May 2009

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BOEING CAPITAL INTERVIEW

Whittingham: good marketing is about being internationally accepted

WHAT’S IN A NAME? As the struggle continues for carriers to maintain their market share, how important is brand positioning to airlines in the region?

n a region where the airline industry there is a published fare price. This is a has grown at an unprecedented rate, fairly new trend in the region.” advertising has not been a priority to For London-based digital and branding the Middle East’s leading carriers; un- agency Start Creative, an airline’s success til now that is. The first sign that airlines depends on how it positions itself in the had to alter their approach to attracting market. The company’s co-founder and excustomers was when a tactical pricing war ecutive creative director Darren Whittingbroke out last year. ham says, “compared to Emirates Airline, A few months ago, Dubai-based car- carriers such as Etihad Airways and Gulf rier Emirates, began offering ‘special Air for example are still viewed as localfares’, while airlines such as BA and ised operators, whereas Emirates is seen as Virgin, keen to attract passengers a global airline because it has become flying to Europe, slashed ticket internationally accepted.” prices by up to 40%. But up unStart’s founding client was Virtil 2003, airlines operating in the gin Atlantic, a brand name synonyregion did not find it necessary mous with entrepreneurial thinkto even mention fare prices on ing and most importantly, consumadvertisements. It was low-cost er trust. But Start Creative director carrier Air Arabia that broke the of strategy Duncan Daines points mould, recognising that the cost of out that for airlines in the Middle a flight was actually quite imEast the topic of marketing portant to a customer. “We can be more convoluted felt that what mattered to than for their Eurothe customer was knowpean counter-parts. ing how much they paid “Airlines are not true to fly,” explains Air privately owned enArabia CEO Adel Ali. tities and they have “Conventional carria responsibility to ers in this region never the country and thought of doing this, the economy.” Daines: at the end of the day it is but now for every big ad This is cerall about getting bums on seats from every big airline tainly the case for May 2009

an airline such as Gulf Air. Bahrain’s flag carrier is currently undergoing a rebrand and not for the first time. “Before I joined Start I worked on a campaign with Gulf Air,” says Daines. “It changed from being an airline for the GCC states to being an airline just for Bahrain and it needed to be repositioned in the market.” Working alongside its CEO James Hogan - who now heads up Etihad Airways - Daines identified a clear brand strategy for the airline using aspects of its history to move the airline forward. “It was a basic brand strategy, simply saying ‘welcome to my home’. It reflected how people were treated onboard as well as how they were made to feel when they arrived in the region. But we had to be careful not to make it so Arabian that it wasn’t relevant to the international traveller and vice versa,” Daines points out. The challenge for regional airlines then is how can they successfully take their brand overseas? “A regional airline’s needs, in terms of marketing requirements, are similar to that of a global European carrier’s,” says Daines. “At the end of the day it is all about getting bums on seats at an optimal price.” A model that is yet to be explored by the region’s larger carriers is the concept of premium/economy travel, similar to that of Virgin’s. “It would work well in this region as it is all about tourism and footfall,” says Whittingham. “Running a first-class cabin is quite expensive so it would be better for an airline to fly a full cabin by making tickets available at premium cabin prices.” Despite the economic downturn Daines explains that regional airlines should optimise what they have. “You should already know what your customers want, but it could need tweaking a little during these quieter times. “It is all about making small changes to big effect,” he adds.

TOURISM IN OUTER SPACE?

Start Creative is the agency charged with the awesome task of branding Virgin Galactic, the world’s ﬁrst commercial spaceﬂight project. Start Creative co-founder and executive creative director Darren Whittingham says: “The challenge is making the aircraft relevant to airlines. “You have to focus on the commercial entity and make it more green and more economical for an airline to operate.”

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ASK THE EXPERT

Capacity cuts Question: When it comes to aircraft, how many is too many? Expert: IBA group analyst Usman Ahmed

he question of how many, is not always an easy one to answer. As simple as it may sound, it is not just a case of demand and supply. The recent events stand witness to the fact that traditional economic theories do not always work and there are additional factors that should be taken into account. We know that when demand for anything is high, supply must go up to meet that demand. Strong markets lead to bullish and more prosperous future predictions, and as a result future capacity is increased in anticipation of increased demand. The airline industry on the other hand is susceptible to other key factors; price of oil, political climate and stability of regions, economic climate and its affects on GDP and traffic growth, all are driving forces behind the airline industry. The economic boom which followed 2003 resulted in tremendous growth both in terms of airline fleet and passenger traffic. Favourable oil prices meant that airlines were less worried about operating costs and were able to offer lower fares. Previously weak and slow progressing markets emerged stronger and the lowcost fares model proved extremely successful, resulting in substantial increases in passenger numbers and load factors. However, a series of events, including the war on terror, oil prices and the credit crunch has resulted in a decline in both passenger and freight traffic, while at the same time airlines were following their expansion and network plans based on previous predictions. As a result, airlines are parking their aircraft as a result of fleet overcapacity. In fact, there are estimated to be around 1000 aircraft parked for short term and roughly 1100 for medium term, and these figures do not include aircraft which are parked for maintenance or conversion May 2009

purposes, and these figures are likely to get worse. This year overall deliveries have been reduced down to just 127, but 1430 deliveries are expected for 2010 and 1260 in 2011. To sum up the figures for the next few years, nearly 5000 aircraft will be delivered from 2009 to 2013 out of a backlog of 8500 to 2018. This alone represents the biggest challenge the industry has yet to face and these figures are only for narrowbody, regional jets, turboprops and widebody sector. Large scale parking of aircraft as old as 10 years is inevitable as new generation aircraft present better economics, but the bankruptcies that will occur as a result will add to this problem. The industry has never experienced this phenomenon. The last downturn in 2001, which lasted almost three years, was driven by only one factor; terror attacks. The scale of the recession was limited to the US. But this time it is a recession on a global scale. Arguing whether or not this will result in overcapacity and large scale parking, is akin to asking, will it rain during the monsoon season?

Manufacturers on the other hand are still optimistic and hopeful that all their orders will be financed, and appear unconcerned by the industry’s demand to cut production levels. But it should be noted that airlines able to pay cancellation fees now, may default in future due to poor cash flow. As a result manufacturers will suffer in the form of ‘white tails’, large scale cancellations and an orders deficit. Perhaps one thing we can learn from the banking sector and its collapse is to consolidate with providers, partners and customers. Manufacturers must consolidate with airlines now to cut production levels and to come to a reasonable agreement on how to handle the backlog of deliveries to avoid suffering from large scale cancellation and huge order deficits. In this fight for survival, everyone in the airline industry must play their ethical and moral role. Clearly, adopting a ‘survival of the fittest’ strategy has lead to the demise of the financial sector. Airlines, manufacturers and all related industries must realise this before it is too late to respond.

March 2009 parked aircraft analysis by market group

SOURCE: IBA

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31 BUSINESS

EDITOR’S COMMENT Make time to go to this year’s Airport Show

s the new organiser of the Airport Show, Reed Exhibitions will be hoping this year’s event is significantly busier than last. Billed as one of the largest airport construction, operations, technology and services events in the world, the 2008 event was anticipated to be a hive of activity, but sadly it only attracted just over 5000 trade visitors and by the final day you almost expected to see tumbleweed blowing across the exhibition hall. On the other hand the location of the event was of some benefit. Airport projects in the UAE are surging ahead despite the struggling economy and there are no half-measures. Take Abu Dhabi’s new Terminal 3 as a case in point. I had the pleasure of visiting the new terminal last month and it is nothing short of incredible. It separates itself from other projects in the region by focusing on quality instead

of sheer size, and although the majority of space in the terminal comprises exclusive boutique shops, the environment feels surprisingly light and airy. Once again, visitors to this year’s Airport Show can follow the progress of the ADAC’s US$6.8 billion Midfield Terminal project, which although on a much larger scale, promises the same level of quality. Not only that, but with the event taking place amongst the debris of a collapsed financial economy, the event could stir up some fiery debate and, more importantly, you may be in danger of missing out on some much-needed business opportunities if you don’t attend.

Sarah Cowell, Editor sarah.cowell@itp.com

Airports Council International director, Andreas Schimm says … “As the Middle East and Asia Paciﬁc remain the drivers and innovators of our industry, my presentation at the Airport Show will cover an analysis of the current traﬃc situation with an emphasis on these two regions. From an economic point of view, I will look at the challenges airports are facing in the current environment and present ACI’s long term forecast and a short/ medium term update. I will also present ACI’s Economics Survey results, breaking down airport revenue sources and capital investment. Finally, I will point out what the airport industry requires to

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weather the crisis and to address future challenges. On the issue of passenger growth, removing the extraordinary factors, the downward trend has not been further aggravated in February and there is hope that these figures might be the worst we will see this year. March traffic will lose the effect of Easter traffic, with Easter coming in April this year as opposed to March in 2008, yet there are indications that adjusted March traffic declines could be milder and that the first quarter of 2009 may be close to the bottom of the trough. In light of the leap year adjustment, there is cautious hope that we are currently passing the bottom of the freight downturn. However the plateau that freight is currently experiencing could well extend a bit longer, and it will be a long and rocky road to reach volumes seen in the first half 2008.”

May 2009

FACE 2 FACE

IT’S GOOD TO TALK

OnAir chief commercial oﬃcer Stephan Egli explains how the company is popularising inﬂight communications services.

OnAir currently has contracts with two Middle East carriers – Wataniya and Royal Jordanian – are there plans to work with other Middle East carriers? Middle Eastern carriers are known to be ‘cabin innovators’ and make up a large part of the OnAir customer base. OnAir also has commercial airlines agreements signed with Oman Air on its Airbus A330 to be launched in 2009 and with Qatar Airways on all its 22 single-aisle Airbus A319, A320 and A321 aircraft in the fleet as well as several new aircraft on order. OnAir is also in negotiation with a number of other major airlines and planned launches will be announced during the course of 2009. Is demand for this product stronger in the Middle East than in other regions? The majority of OnAir’s deals are in Europe and the Middle East. The Middle East is one of the regions where OnAir has launched two of its services following successful establishment of regulatory agreements. Market research commissioned by OnAir demonstrates that the majority of frequent business travellers wish to use their mobile phones or BlackBerry-type devices during flights to send and receive emails and text messages and to make and take calls. For example, 80% of passenger respondents on recent flights that offered Mobile OnAir services would like to see the service deployed on the full fleet. What does OnAir provide that other inﬂight mobile communications systems don’t? OnAir provides the inflight connectivity solution that offers the best reach and May 2009

performance for all communications tools enabling passengers to stay in touch, and airlines to innovate. Mobile OnAir services are based on the most advanced technology designed for mobile communications and it is the only provider to use Inmarsat Swift Broadband. This provides high capacity and speed. Can this system be used on any aircraft or is it limited to newer aircraft? The OnAir system can be used on Boeing or Airbus aircraft as well as business jets, as retro-fit or line-fit, short-haul or long-haul. If the installation happens on an aircraft already flying, the installation will happen during a normal servicing session. This is called retro-fit. However, if the aircraft is installed on newer aircraft it is called line-fit. What are the logistical problems for airlines setting up such a system? As a shareholder of OnAir, Airbus manages the certification of OnAir solutions with aviation authorities and it also handles line-fit installations on new aircraft, and has designed the retro-fit kit for installation of OnAir solutions. With knowledge from Airbus the logistical problems for airlines setting up such a system are very limited.

What is the cost involved for the airline and the customer? The cost of buying and installing the equipment varies from airline to airline and from aircraft to aircraft. What each airline actually pays will depend on a number of factors, such as aircraft type, the services they require, and the equipment already installed on the aircraft. Airlines recover this cost of installing and maintaining the equipment over time because they share in the revenue from the communications services on board. In addition, OnAir services open up entire new revenue streams, such as selling train tickets and special events on board for a commission. Switching on your mobile phone and receiving text messages is free. Pricing is set by the passengers’ home mobile operator and varies from operator to operator. The services are then billed to each passengers’ normal monthly mobile phone bill or deducted from the passengers’ prepaid card. What trends do you predict for inﬂight mobile communications use? With the number of launches and agreements increasing globally, and specifically in the Middle East, we predict that in a few years’ time we will speak about an age when you could not use your phone on the plane! www.arabiansupplychain.com

airport show

Under the patronage of His Highness Sheikh Ahmed Bin Saeed Al Maktoum President, Dubai Civil Aviation Authority Chairman, Dubai Airports

19-21 MA

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Programme highlights:

The outlook for airport development in Dubai

Master planning for the future

The vision for airport expansion in Abu Dhabi

Regional environmental strategies

The investment outlook for future airports

International environmental strategies

Airline perspectives on airport growth

Streamlining the passenger journey

Future management organisation for airports

Innovative approaches to security

0AUL 'RIFFITHS CEO, Dubai Airports

2UDY 6ERCELLI CEO, Abu Dhabi Airports Company (ADAC)

-USTAFA 3ANI 3ENER President and CEO, TAV Airport Holdings

*EAN -ARIE #HEVALLIER Chairman and CEO, AĂŠroports de Paris Management

Organised by

ONLINE REGISTRATION OPEN NOW WWW THEAIRPORTSHOW COM

RECRUITMENT FOCUS

SITUATIONS As the economic uncertainty continues, is the Middle East the last place left to ﬁnd a job in aviation? he job section of the International Air Transport Association’s (IATA) website displays a bleak message announcing that its ‘recruitment is temporarily frozen due to the current industry crisis’. And the trade association’s declaration does not stand alone in the aviation world. According to IATA, airlines around the world have been forced to reduce jobs and routes in order to cope with the economic situation. The main cause behind such drastic redundancy measures has been the ensuing drop in the number of passengers for the first time since 1991. Asian and North American carriers have been hit by the largest passenger decline, followed very closely by their European counterparts. www.arabiansupplychain.com

As the one beacon of light in a sea of bad news, the Middle East aviation industry remains the only region to still show positive traffic growth. While other industries in the Middle East, such as construction and banking, are also making redundancies in order to ride the economic tide, none of the region’s major airlines have announced that they will be making significant job losses so far. Does this make the Middle East the place to be for out of luck aviation professionals to find a job? UK-based recruiter Wynnwith Airline Services managing director Sara Evans, thinks so. “Our experience to date shows that the Middle East region has been the least affected with regard to the economic slow down,” she says. Evans confidently

predicts a regional growth in aviation recruitment in the medium and long term, putting recruitment agencies like hers in a strong position. “This is the perfect environment for airlines to take on experienced, skilled contract personnel via agencies like ours,” she suggests. “Not only does it help them to upsize or downsize quickly and efficiently to meet market demands and ensure costs are controlled, but they can concentrate on core business whilst recruitment specialists source the relevant skilled and experienced personnel to meet their requirements.” Indeed, if economic uncertainty teaches a business anything, it is the need to be as flexible as possible – especially where the workforce is concerned. “The indusMay 2009

RECRUITMENT FOCUS

try needs to look to employ personnel on short term contracts in these uncertain times. This gives the airline total freedom to cover for certain periods and then cut their workforce if need be when there are slow times,” agrees UK-based Aircraft Commerce Recruitment managing director Neil Engerran. In order to support airlines at this critical time, Engerran maintains that recruiters also need to offer some flexibility, together with the knowledge of exactly what is happening in the industry

at any given time to advise accurately on all situations and needs. “My ethos has always been to be totally honest and open with clients, offering total empathy and expertise to their particular situation,” he says. “It is important to help airlines and we offer no fee advice.” Certainly for overseas agencies, the recruitment potential in the Middle East’s aviation industry still appears buoyant. However, it would be wrong to suggest that the sector has been left untouched by

Ask the expert Dubai-based Executive Solutions employment agency manager for Defence and Aerospace Executive Search Simon Rogers-Bedelle, provides a regional perspective. Has the global economic slow down aﬀected the demand for the recruitment of aviation professionals in the Middle East region? The economic slow down has only really hit the large carriers directly so far. The MRO capabilities and military capabilities in the UAE especially have received generous and substantial government backing allowing steady growth and progress, even through these dire times. You are more likely to find the slimming down of non-essential staff such as in the ‘value added services’ parts of the airlines and travel management companies than in the ‘services to airline’ areas. What has been the impact of this on regional recruitment agencies such as Executive Solutions ME? A handful of agencies have gone through redundancies because they were deeply reliant on one specialist area of aviation rather than looking at the wider ranging areas that supply to the market. We as a team haven’t suffered quite as much as the construction, banking and finance industries. This is largely because the majority of our clients are government/semi government or subsidised joint ventures. Has there been a changing pattern in terms of demand for expatriate workers in the aviation industry? The answer to this question is relevant to which country you are recruiting into. Whilst there is always a demand for the localisation of the staff, there just may not be the talent pool to afford ignoring the expatriate market. What you will see is the ‘expat package’ being far more in line with the type of package you would

May 2009

expect in your home country, with the benefits being in standard of living rather than salary expectations. The intelligent companies though are certainly keen on implementing training and mentoring programmes for less skilled and experienced local workers, which can only be a positive thing for everyone in the long-term. What do you expect in terms of aviation recruitment to the Middle East in the next ﬁve to 10 years? I would say that demand will continue to grow, but the skills will become more specific. The carriers are established now, so the next focus areas will be those that supply to aerospace in general. This will be followed by MRO, manufacturing, then research and development and further education, simulation and so on. As long as you know what is happening and when, a recruiter should find this industry fruitful for many years. What advice would you oﬀer the aviation industry in these uncertain times? Patience, perseverance, respect and confidence. Most of the senior executives I have placed are used to a different business model. A phrase I will always use with them is “hurry up and wait...” Based in Dubai, Executive Solutions is a boutique search and recruitment consultancy.

the recession. Industry experts have noted that whilst the region’s aviation industry does indeed continue to show an increase in passenger traffic, this is way below the double-digit growth it had been enjoying in previous years. Furthermore, as Engerran points out, although there have been some ‘success stories’ such as the low-cost market which has seen both orders and recruitment needs going through the roof, the industry is rightfully remaining watchful. “There is a much more cautious approach in the whole way that airlines in the region are running their operations,” he says. AviationJobSearch.com, a recruitment portal for aviation professionals has also been experiencing a change in the way in which airlines advertise their positions. “The biggest change we have noticed is that clients are not willing to commit to long term advertising. They are happier looking at monthly or quarterly packages,” comments managing director of the portal Ian Partington. With the pool of potential applicants ever-widening as a result of the economic downturn, the portal has begun filtering out the hundreds of applications received. Additionally, Partington has found a shift in the types of jobs being advertised, which he believes accurately reflects the economic mood of the region. “We are finding that there is still a fairly healthy demand for aviation professionals in the Middle East, certainly compared to Europe,” he says. “But we have seen an increase in requirements for engineers as more airlines increase their maintenance, repair and overhaul (MRO) activity as opposed to invest in new planes.” Tasc Aviation head of airline strategy Vladimir Ponjevic, also believes that the recession has affected certain jobs within the aviation industry more than others. “Airlines have slowed down their expansion efforts to more realistic levels, resulting in possibly prolonged entries into new markets and new services, and even delays in aircraft deliveries,” he highlights. “This does directly impact on the recruitment of frontline staff as well as cabin crew and, to a lesser extent, flight crews. At a time of recession like this, management positions are the first ones to go, especially in those departments which are not seen as ‘core’.” Tasc has advised a wide range of the region’s leading www.arabiansupplychain.com

RECRUITMENT FOCUS

airlines including Etihad, Qatar Airways, Emirates and Turkish Airlines on all aspects of aviation management and Ponjevic believes that the recession could place them in quite a strong position when it comes to recruiting. “Because of the number of people being let go in the western part of the world, you have access to a much larger pool of professionals who are keenly looking for new placements,” he points out. “The Middle East will be one of their first focus areas and so the airlines will have a far wider and better quality candidate base to choose from.” Ponjevic’s optimistic stance could place airlines in a precarious win-win situation. “Whether it is a right time to recruit or not depends on whether the airline decides to continue expanding or slows down and plays the waiting game,” he says. While it may seem unthinkable that airlines should be actively recruiting at the moment, Ponjevic points to Etihad’s recent announcement as an example. In March of this year, Abu Dhabi’s national carrier, Etihad Airways stated that it would continue growing its workforce by 5% annually in spite of the current financial uncertainty. Neither redundancies nor recruitment freezes have a place on Etihad’s future agenda and such confidence in uncertain times is admirable. However, for other airlines in the region, the cautious approach remains prevalent. For neighbouring national airline, Emirates, some strategic recruitment changes have been essential. “The current economic climate has prompted many airlines (including ourselves) to reassess business strategy and recruitment needs for the future,” says Emirates Airlines vice president recruitment Rick Helliwell. This re-assessment has resulted in a decision to significantly reduce the number of new staff Emirates’ is employing across its business units this year and starting from May the Dubai airline will offer cabin crew up to six months unpaid leave. For those still hoping for a career with the leading airline, it is not all doom and gloom as some recruitment will continue. With Emirates due to take delivery of 18 new passenger aircraft in the coming financial year, Helliwell accepts that recruitment for operationally and commercially essential positions will take place unabated. Indeed, he is keen to emphasise that the core of Emirates’ recruitment strategy will remain the same as in the past, focusing on building a strong global employment brand and as part of its recruitment strategy, Emirates has long been committed to recruiting UAE nationals into challenging and rewarding jobs in the airline industry. “In the last seven or so years the demographics of Dubai have changed so that we can source talent and hire quality personnel both locally as well as from abroad,” says Helliwell. With the Middle East ever keen to attract its own homegrown talent into the aviation sector, could this mean a tighter squeeze on positions for expatriates? Ponjevic thinks this is unlikely. “Expatriates continue to dominate the industry due to their expertise levels,” he says. For now, at least, the future for aviation recruitment in the Middle East still appears to hold potential. How long this will last remains to be seen. “We have been fortunate not to have seen a major airline fold here, and hopefully this will not happen,” says Ponjevic.

At present, there is a much more cautious approach in the whole way that airlines in the region are running their operations

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May 2009

39 A rundown of the latest Middle East airport sector news

Customer complaints have led to Dubai International making provision of seats and comfortable resting areas a priority.

Comfort problems will be addressed: Dubai Airports SERVICES

Passenger comfort still poses a challenge at Dubai International even though the airport has recently opened its brand new Terminal 3. That is the message from Dubai Airports vice president terminal operations Majid Sultan Al Joker. “When Emirates Airline was operating from Terminal 1 it was very overcrowded. Once Emirates moved into Terminal 3, congestion eased by around 50%, but we found that passengers were still unhappy with the lack of resting areas in the airport so now we have a dedicated team looking into this,” Al Joker told Aviation Business. Dubai International handles a high number of transit passengers, resulting in travellers spending long periods of time in the airport.

A shortage of seating and resting areas result in many passengers, including children, sleeping on the terminal floor. Al Joker said the issue of passenger comfort was brought to the airport’s attention by audit company Skytrax, which researches and compiles consumer studies for airports and airlines. Skytrax currently rates Dubai International as a three-star airport, which reflects a ‘fair’ performance, but Al Joker said that through its improvements, Dubai Airports hopes to be awarded more stars. “We need to find out specifically what the passenger needs. Is it more seating, or a dedicated quiet area or even a theatre lounge? This is all being looked into at this moment.”

As part of ongoing improvements at the airport, Terminal 2 is currently being refurbished to accommodate new low-cost carrier flydubai. Al Joker said the refurbishment project would be finished by the airline’s scheduled launch date of June 2. At present Dubai Airports has not been informed of the number of passengers it will be expected to handle once flydubai launches, but Al Joker added that the terminals biggest operator, Mahan Airlines, had been moved out of Terminal 2 into Terminal 1 to avoid overcrowding. In other news, Dubai airport’s Concourse 3 will be built by Al Jaber Engineering after the joint venture company, Al Habtoor - Murray & Roberts - Takenaka withdrew from the US$2 billion project.

Abu Dhabi airport anticipates 2009 growth EXPANSION

Abu Dhabi International Airport is gearing up for a year of traffic growth as new airlines hit the tarmac and terminals are revamped. Abu Dhabi Airports Company (ADAC) claimed that even though growth is unlikely to hit the 32% mark achieved in 2008 (nine million passengers) on 2007 figures, it will beat the global average. “We expect growth to be above the IATA average [anticipated], which is around 3-4%,” ADAC VP airline marketing and aeronautical revenue Mohammed Al Bulooki told Aviation Business. He said this would be achieved due to several initiatives including the recent opening of the airport’s new US$272 million Terminal 3. www.arabiansupplychain.com

T3, which is dedicated to Etihad Airways flights, has 10 departure gates and covers a built up area of 88,000m². Its Duty Free area hosts 19 retail boutiques including Hermès, Cartier, Fendi, Salvatore Ferragamo, Rolex, Jimmy Choo,

Terminal 3 cost a total of US$272 million to build

Loewe, and Chloe and offers a “first-ofits-kind” premium retail experience said ADAC VP non-aeronautical revenue and business development Dan Cappell. “The terminal is more like a boutique hotel, particularly in the passenger lounges,” Cappell told Aviation Business. Exclusive products are placed alongside the usual destination souvenirs, while the liquor and tobacco section houses a rather uncommon sight for the Middle East, a vodka tasting bar. A revamp of T1’s retail experience and its F&B offering are anticipated, while the airport’s new Midfield Terminal is still set to open at the end of 2012 and will add enough capacity to handle the 20 million passengers per year that ADAC expects to pass through the hub by 2013. May 2009

AIRPORT NEWS

A call for airport contractors The Airport Show returns to Dubai this month bringing you face-to-face with top suppliers EVENT

Cavotec

UFIS Airport Solutions

Safegate

With more than US$44 billion worth of airport-related projects underway in the GCC, Iraq and Iran, this year’s Airport Show should be worthy of at least one day out of the office. Airport development in the larger Middle East, North Africa and Asian subcontinent is estimated to be worth more than $14 billion in planned and ongoing projects, bringing the total investment to almost $60 billion. With these massive investment figures in mind, the Airport Show 2009 should offer visitors the opportunity to strike value-added deals with suppliers of airport development and operations. Aviation Business spoke to three suppliers exhibiting at this year’s event in Airport Expo, Dubai, to find out what they will be showing on their stands.

What can visitors to the Airport Show expect to see on your stand? Specialised ground support equipment including inground fuel systems and inground utility systems. Visitors can also find out about aircraft cabling solutions and our Power Caddy product and PCAir Caddy which delivers pre-conditioned air to aircraft without using diesel or Freon gases.

What can visitors to the Airport Show expect to see on your stand? UFIS-AS is showcasing its complete portfolio UFIS®; covering the whole range of solutions from the Flight Information Processing System (FIPS) to the Resource Management System (RMS), Status Manager and the Flight Information Display System (FIDS).

What can visitors to the Airport Show expect to see on your stand? Visitors can learn more about the Safeled IQ product, the only all-in-one LED in set AFL light on the market with additional benefits such as 6mm protrusion and no negative slope.

SHOW FACTS Venue: Airport Expo Dubai Date: 19-21 May 2009 Opening hours: 10:00-18:00 daily Website: www.theairportshow.com

What areas of the aviation industry will you focus on? Airport infrastructure and ground handlers. What are the main trends you have identiﬁed in the region during the last year? Major airports have seen an increase in passengers but based on the last three months of 2008 we could see several projects being put on hold and reviewed, based on downgraded and more realistic passenger forecasts. As a result, we can say that a lot of projects will be either reduced in size or postponed which will affect contractors and suppliers of this industry. Stand number: CD7

What areas of the aviation industry will you focus on? The UFIS® portfolio is a traffic and resource planning and management system for airports, airlines and handling agents, and other service providers, offering efficiency in facility and resource management. What are the main trends you have identiﬁed in the region during the last year? The aviation, airport and related sectors are booming across the region. There are large-scale ongoing development projects presenting good business opportunities. UFISAS has a strong position in the region with references like Dubai International Airport. Stand number: CC7

What areas of the aviation industry will you focus on? Safety, energy efficiency and the environment. What are the main trends you have identiﬁed in the region during the last year? Safegate hasn’t identified any specific trends but we are continuing to develop our products in line with the aviation industry’s needs and standards. Stand number: CI1

airports are being constructed or modernised across the Middle East, Africa and India Source: MEED

Who can you meet? Dubai Airports CEO Paul Griﬃths As well as batting off questions about why a consortium of builders pulled out of a US$1.33 billion contract to build a third concourse at Dubai International Airport, Dubai Airports CEO Paul Griffiths will also be speaking about the drop in passenger figures following the impact of global economic pressures.

May 2009

ADAC CEO Rudy Vercelli As the UAE capital continues to thrive in spite of the collapsed global economy, Abu Dhabi Airports Company (ADAC) CEO Rudy Vercelli will cover the extraordinary airport development that is currently underway, as well as reeling off some impressive figures to show the airport company’s key role in developing Abu Dhabi’s economy.

SITA regional director application services Middle East & Turkey Jihad Boueri How can technology streamline the passenger journey through the airport? This is just one of the questions SITA regional director application services Jihad Boueri will attempt to answer during his presentation at the Airport Show. Boueri will also offer some ideas as to how you can improve your passenger’s travel experience.

www.arabiansupplychain.com

AIRPORT SECURITY

Biometric ID should be explored: SITA TRENDS

Five minutes with … TPS associate director Darius Aibara How can passengers be protected from terrorist attacks without turning airport terminals into fortresses? To protect public areas and buildings against terrorist attack, security issues must be at the forefront of any decisions made when constructing new airports or terminal buildings. What are the key areas to consider? The consequences of an explosion in a confined space such as an underground car park are greater than those due to the same explosion in the open air, structural damage and human injury will be much more severe and the impact on the operation of the airport will be greater. What is the solution? Avoid the need for underground parking or delivery roads or provide effective security access and egress control to these spaces, including the use of antiram barriers. What area of security is often ignored? More attention needs to be paid to the understated security issue of the arriving passenger, not just to departing passengers.

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SITA’s latest annual Airport IT Trends Survey revealed that investment in IT security remained consistent in 2008 despite rumoured budget cuts. Radio Frequency Identification (RFID) tags are expected to be used more in the areas of cargo and baggage management over the next couple of years, while the survey found that the use of biometric identification in airports is taking off in the area of employee access control. However, SITA regional vice president Middle East and Turkey Hani El Assaad pointed out that on the passenger control side, biometric ID is only used in 1% of airports worldwide and 58% have no plans to introduce it. “Robust IT security is essential in an environment where almost 49% of airports

believe that self-service could become the primary means for passenger check-in in two to five years,” he added. IT security was amongst the top four priorities identified by the survey respondents: customer service (80%), passenger processing (72%), passenger security (69%) and baggage management (55%).

IP SURVEILLANCE TECHNOLOGY Most airports in the region are moving towards IP-based surveillance, and according to Axis Communications sales manager MENA Baraa Al Akkad, intelligent cameras with built-in video analytics are beginning to play a signiﬁcant role in airport security. The latest network video cameras from Axis Communications include: Q1755 Network Camera – connects to an HDTV monitor and is suitable for use in passport control areas.

Hani El Assaad says biometric ID is only used in 1% of airports worldwide

P3343 & P3344 Fixed Dome Network Camera – features include day/night functionality and a remote zoom. Suitable as a discretionary solution.

Who is really in charge of security? Aerospace Services International consultant Billie Vincent debates the question When it comes to considering airport security design, in many cases, the national regulatory authority is lacking, ineffective, or absent. Risk assessment for many projects is often confused with threat assessment and there is often nobody willing to make a decision even if a true risk assessment is done. We then add to this the aesthetics issues. Existing systemic paradigms are difficult to change even under the best of conditions. Often the only option for an airport authority is for the security designer to

tell the airport client what they really need to do. It is often presumed by the client that the engineering design firm can also provide effective and efficient security design. This is not a valid presumption. The result is the benign neglect of security considerations in the design process. Two major airport terminal designs underway in the Middle East today have the architects responsible for incorporating security design into the design of the airport. One of these two new airports already under construction brought its security designer on board – but only after the airport design was essentially completed and construction was well under way. Still an-

other new airport engaged a security designer, but only after the architecture and engineering design work was two-thirds complete. Under these types of contracts, if there is a question regarding the amount of latitude given to the security designer, the contract money constraints will rule, the result being, a restriction on security design. Moreover, I have yet to meet an airport design firm that has an in-depth comprehensive aviation security design capability. However, many design firms mistakenly believe that they do have this capability or that security considerations are secondary to aesthetics.

May 2009

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AVIATION DATA

AVIATION FACTS & FIGURES A summary of latest industry statistics from around the world

Knowledge of passenger numbers is crucial to improving the aviation business, particularly during the current economic slowdown. Every month we bring you up-to-date industry ďŹ gures.

anuary 2009 traffic growth fell by 6% relative to January 2008, continuing the steady traffic decline of the past months. Freight results served as a grim reminder that industrial output is shrinking, with international freight

hardest hit with a 27% drop against an overall drop of 22%. The Middle East continues to be the only region registering total traffic growth. Elsewhere the picture shows no sign of immediate improvement, with Europe hardest hit.

JANUARY 2009/2008 CITY/COUNTRY

PASSENGERS (tonnes)

CARGO

% CHG

(tonnes)

YEAR-TO-DATE JANUARY 2009/2008 MOVEMENTS

% CHG

(tonnes)

PASSENGERS

% CHG

(tonnes)

CARGO

% CHG

(tonnes)

MOVEMENTS % CHG

(tonnes)

% CHG

MIDDLE EAST ABU DHABI, UAE

811,530

10.0

25,187

2.3

8049

2.8

811,530

10.0

25,187

2.3

8049

BAHRAIN

713,114

1.2

25,750

(12.6)

8757

9.2

713,114

1.2

25,750

(12.6)

8757

9.2

BEIRUT, LEBANON

306,341

9.3

5148

4.7

4585

13.6

306,341

9.3

5148

4.7

4585

13.6 2.3

DUBAI, UAE

2.8

3,300,907

6.1

130,375

(2.9)

23,435

2.3

3,300,907

6.1

130,375

(2.9)

23,435

KUWAIT

585,789

2.0

13,866

1.5

7543

1.5

585,789

2.0

13,866

1.5

7543

1.5

MUSCAT, OMAN

354,721

13.0

4523

8.4

4202

16.9

354,721

13.0

4523

8.4

4202

16.9

SHARJAH, UAE

439,685

(12.3)

22,938

(5.0)

5287

(1.0)

439,685

(12.3)

22,938

(5.0)

5287

(1.0)

ACCRA, GHANA

108,426

(5.4)

4157

(5.1)

1626

1.7

108,426

(5.4)

4157

(5.1)

1626

1.7

CAIRO, EGYPT

983,678

(8.1)

27,340

8.2

10,940

(1.1)

983,678

(8.1)

27,340

8.2

10,940

(1.1)

CAPETOWN, SA

646,142

(6.7)

*****

8081

(5.8)

646,142

(6.7)

*****

8081

(5.8)

CASABLANCA, MOROCCO

452,904

(8.7)

4374

(10.9)

5412

(11.4)

452,904

(8.7)

4374

(10.9)

5412

(11.4)

AFRICA

DAR ES SALAAM, TANZ

137,966

1.7

1430

(5.3)

4658

(11.2)

137,966

1.7

1430

(5.3)

4658

(11.2)

1,381,293

(9.1)

18,003

(22.7)

16,606

(10.8)

1,381,293

(9.1)

18,003

(22.7)

16,606

(10.8)

MARRAKECH, MOROCCO

210,265

(5.0)

174

(0.4)

2277

(16.3)

210,265

(5.0)

174

(0.4)

2277

(16.3)

SHARM EL SHEIKH, EGYPT

503,180

(20.6)

*****

4150

(15.4)

503,180

20.6

*****

4150

(15.4)

BANGKOK, THAILAND

3,282,278

(14.0)

68,026

(32.7)

21,153

(9.2)

3,282,278

(14.0)

68,026

(32.7)

21,153

(9.2)

BEIJING, CHINA

5,065,400

19.2

91,449

(23.4)

38,866

26.3

5,065,400

19.2

91,449

(23.4)

38,866

26.3

MANILA, PHILIPPINES

1,974,678

4.4

19,404

(31.4)

18,985

7.0

1,974,678

4.4

19,404

(31.4)

18,985

7.0

MUMBAI, INDIA

2,064,368

(13.1)

39,884

(9.8)

20,362

(6.6)

2,064,368

(13.1)

39,884

(9.8)

20,362

(6.6)

NEW DELHI, INDIA

1,900,953

(10.4)

31,761

(10.9)

19,368

(3.2)

1,900,953

(10.4)

31,761

(10.9)

19,368

(3.2)

SINGAPORE

3,073,677

(1.3)

119,242

(24.0)

20,691

8.1

3,073,677

(1.3)

119,242

(24.0)

20,691

8.1

SYDNEY, AUSTRALIA

2,879,918

(0.4)

*****

23,463

(4.5)

2,879,918

(0.4)

*****

23,463

(4.5)

TOKYO, JAPAN

4,825,807

(3.8)

55,664

(8.9)

28,422

(0.8)

4,825,807

(3.8)

55,664

(8.9)

28,422

(0.8)

(7.0)

JOHANNESBURG, SA

ASIA PACIFIC

EUROPE FRANKFURT, GERMANY

3,546,740

(10.4)

124,208

(23.5)

35,448

(7.0)

3,546,740

(10.4)

124,208

(23.5)

35,448

LONDON, UK

4,875,448

(2.0)

99,273

(11.9)

38,423

(2.0)

4,875,448

(2.0)

99,273

(11.9)

38,423

(2.0)

MADRID, SPAIN

3,136,737

(18.5)

24,219

(16.1)

33,185

(16.6)

3,136,737

(18.5)

24,219

16.1

33,185

(16.6)

MUNICH, GERMANY

2,170,243

(9.5)

15,310

(25.9)

29,052

(10.5)

2.170,243

(9.5)

15,310

(25.9)

29,052

(10.5)

PARIS, FRANCE

4,106,798

(6.5)

133,601

(17.6)

41,753

(6.8)

4,106,798

(6.5)

133,601

(17.6)

41,753

(6.8)

ATLANTA

6,614,038

(0.1)

40,944

(25.9)

78,181

(1.9)

6,614,038

(0.1)

40,944

(25.9)

78,181

(1.9)

CHICAGO

4,541,573

(12.4)

77,105

(28.1)

66,045

(8.9)

4,541,573

(12.4)

77,105

(28.1)

66,045

(8.9)

DALLAS FORT WORTH

4,170,227

(7.7)

59,304

(6.6)

52,136

(6.5)

4,170,227

(7.7)

59,304

(6.6)

52,136

(6.5)

LOS ANGELES

4,268,383

(11.3)

102,702

(24.3)

45,446

(18.5)

4,268,383

(11.3)

102,702

(24.3)

45,446

(18.5)

NORTH AMERICA

Passengers = total passengers enplaned and deplaned (transit passengers counted once). Cargo = loaded and unloaded freight & mail. Source = Airports Council International *Growth rate > 200% or < -50% due to extraordinary circumstances, i.e. war, social and political unrest, major sports events, new routes. www.arabiansupplychain.com

May 2009

AVIATION DATA

EMIRATES SKYCARGO FUEL PRICE INDEX

AIRLINE ONTIME STATISTICS & DELAY CAUSES: FEBRUARY 2009

350

Index

Air carrier delay 4.17%

Ontime 82.60%

Weather delay 0.43%

Diverted 0.17%

National aviation system delay 6.58%

Cancelled 1.25%

100 = 53.5 US cents per US gallon

Fuel Price Index The fuel index is based on the average price of aviation fuel in ﬁve key spot markets (Rotterdam, Singapore, New York, US Gulf and US West Coast)

320

27 Mar

290

279

260

13 Feb

3 Apr

246

264 6 Mar

221

230

17 April 09

10 April 09

03 April 09

Planned capacity growth for top 10 carriers between Middle East and Western Europe (OAG Data May 2009 versus May 200 2008 8)* WEEKLY CAPACITY

WEEKLY FRE FREQUENCY QUENCY

WEEKLY SEATS

WEEKLY CAPACITY

Total

Change (%)

Total

EMIRATES

782

494

160,440

ETIHAD AIRWAYS

182

-2

156

QATAR AIRWAYS

261

-1

252

200

MIDDLE EAST AIRLINES ROYAL JORDANIAN GULF AIR MAHAN AIR SAUDI ARABIAN AIRLINES

WEEKLY FRE FREQUENCY QUENCY

WEEKLY SEATS

AIRLINE ASK Million Million Change (%)

JAZEERA AIRWAYS

SOURCE: Bureau of Transportation Statistics (www.transtats.bts.gov)

Planned capacity growth for top 10 carriers between Middle East and Asia/Paciﬁc (OAG Data May 2009 versus May 200 2008 8)*

AIRLINE

IRAN AIR

Aircraft arriving late 4.79%

Security delay 0.02%

27 Mar 09

20 Mar 09

13 Mar 09

06 Mar 09

27 Feb 09

20 Feb 09

13 Feb 09

200

06 Feb 09

Change (%)

ASK Million Change (%)

AIR ARABIA

119

34,444

-1

EMIRATES

55,742

-1

ETIHAD AIRWAYS

1107

333

16,154

GULF AIR

210

200

1980

200

JAZEERA AIRWAYS

104

18,956

MAHAN AIR

144

20,228

OMAN AIR

102

108

22,856

QATAR AIRWAYS

3690

14,008

WEEKLY CAPACITY

WEEKLY FRE FREQUENCY QUENCY Change (%)

Total

306

Total

Change (%)

45,900

832

248,556

288

61,744

-7

227

51,087

5775

5676

186

29,736

411

402

90,446

-3

-5

6208

-4

235

176

55,574

WEEKLY CAPACITY

WEEKLY SEATS

AIRLINE Total

SAUDI ARABIAN AIRLINES

Change (%)

Planned capacity growth for top 10 carriers between North Africa and Middle East (OAG Data May 2009 versus May 200 2008 8)*

Planned capacity growth for top 10 carriers between North Africa and Western Europe (OAG Data May 2009 versus May 200 2008 8)*

ASK Million Change (%)

ROYAL JORDANIAN

Total

Change (%)

AIRLINE

WEEKLY FRE FREQUENCY QUENCY

ASK Million Change (%)

Total

WEEKLY SEATS

Change (%)

Total

Change (%)

AIGLE AZUR

-15

204

-6

35,716

-9

AIR ARABIA

8400

AIR ALGERIE

269

42,574

EMIRATES

-1

-18

19,348

-7

AIR FRANCE

276

41,458

ETIHAD AIRWAYS

-13

-24

6092

-15

TUNIS AIR

384

57,334

GULF AIR

6672

BRITISH AIRWAYS

10,304

JAZEERA AIRWAYS

7095

129

263

48,680

MIDDLE EAST AIRLINES

300

171

6276

152

-5

6141

-3

OMAN AIR

-19

EGYPT AIR KLM-ROYAL DUTCH AIRLINES LUFTHANSA GERMAN AIRLINES TURKISH AIRLINES AIR MALTA

-5

-4

14,891

-17

-14

1872

QATAR AIRWAYS

17,282

ROYAL JORDANIAN

9986

SAUDI ARABIAN AIRLINES

150

37,771

16,161

-36

2078

-33

*Data is for week of 11-17 May, 2009 against 12-18 May, 2008. Regions follow IATA deﬁnition. E-mail: dataservices@oag.com

May 2009

www.arabiansupplychain.com

RECRUITMENT

TO ADVERTISE HERE CONTACT: Jeremy Bladon Tel: +971 4 435 6241 Email: jeremy.bladon@itp.com

MOVERS AND SHAKERS New faces at Emirates

Axis hires Middle East manager

Despite Emirates Airline offering its staff unpaid leave, its senior management team has been beefed up with UAE nationals. Amongst a number of appointments is the promotion of Mohammed Mattar, Nabil Sultan and Adnan Kazim (pictured right) to divisional senior vice president level. The Dubai-based airline has also made some changes to its commercial operations team. Richard Vaughan (pictured left) has been promoted to divisional senior vice president, while UAE nationals Ahmed Khoory, Salem Obaidalla and Majid Al Mualla, all take senior roles in the department.

Baraa Al Akkad will handle Axis Communications’ Middle East operations. Al Akkad has more than nine years of experience in the network video market and will be responsible for building on business relations with partners and customers across the region.

Etihad appoints Pakistan manager

UAE sales manager joins Jazeera

Amer Khan has joined Etihad Airways as the airline’s country manager for Pakistan. Previously, Khan worked for American Airlines as regional manager for the Middle East and Pakistan.

Jazeera Airways has appointed a new sales manager for the UAE. Suzanne Miller joins the airline with 13 years of experience in the industry, having worked for a major international carrier and airline consultancy group across markets in Europe and Asia.

New sales director at ASM Fatima Subramanian has been appointed by Aviation Services Management as director sales and marketing (fuel). ASM said that within her role Subramanian will plan, direct, coordinate and manage the sales and marketing of all fuel related activities for the Dubai-based company.

Please email your ‘movers and shakers’ information to sarah.cowell@itp.com

The World’s number 1 recruitment The World’s number 1 recruitment site for the Aviation industry site for the Aviation industry currently currently over 2000 jobs. live has over 2000 has live Aerospace Aerospace jobs.

E: info@aviationjobsearch.com T: +44 (0) 1273 837538

May 2009

www.arabiansupplychain.com

RECRUITMENT CLASSI FIEDS

TO ADVERTISE TO ADVERTISE HERE CONTACT: HERE CONTACT: Jeremy Bladon Andrew Ellis Tel: +971Tel: 4 435 +971 6241 4 435 6337 Email: jeremy.bladon@itp.com Email: andrew.ellis@itp.com

At Emojet, we take pride in providing our customers with the highest levels of service. Our underground hydrant and refuelling are tes mony to this fact. These ensure swi and efficient refuelling of passenger and cargo aircra s. Our con nuous commitment and dedica on guarantees be er service that keep our flag of quality flying sky high.

Emirates General Petroleum Corporation (EMARAT) Manager Avia on Sales: Email: salem_binsuloom@emarat.ae Tel: +9714 4061521

Emojet Coordinator: Email: yve e_fernandes@emarat.ae Tel: +9714 4061524

P.O. Box 9400, Dubai, United Arab Emirates Switchboard: +9714 3434444 Fax: +9714 3433393 www.emarat.ae Emojet - Dubai Interna onal Airport Depot Airport Superintendant Tel: +9714 2244371 Fax: +9714 2244501

Recruitment Support to the Aviation Industry

To Advertise in this section please contact: Jeremy Bladon

Executives:

management@zenon.aero

Flightcrew:

pilots@zenon.aero

Maintenance: recruitment@zenon.aero

Direct +971 4 435 6241 Mobile +971 50 600 8114

Andrew Middleton: T: +44 (0) 1483 332000

Email jeremy.bladon@itp.com

www.zenon.aero www.arabiansupplychain.com

May 2009

01 1 02 2 03 3 04 EVENTS CALENDAR 06 07 08 09 11 12 133 14 16 17 18 119 21 22 223 24 26 27 28 29 48

EVENTS LISTING

05 10 15 20 25 30

A listing of trade shows, conferences and seminars relating to the Middle East aviation industry.

4 MAY 2009

5  8 MAY 2009

6  7 MAY 2009

Financing Aviation in the Middle East

Arabian Travel Market

Airline Purchasing Expo

The one-day conference will focus on the latest developments in the region exploring new airline launches, expansion of networks, flight training, the manufacturers’ perspective and an analysis of low-cost airline development. In additon, a financial focus will dominate the day’s topics. The growth of airlines, leasing, Islamic leasing and the financial dynamics of the regional aviation industry will all be explored.

Post-show opinion from the 2008 ATM was that its content needed a bit of a lift and it seems that the organiser agreed. New for 2009 is Careers Day, which will coincide with Consumer Day on May 8. Its aim is to provide exhibitors with the opportunity to ‘source the top level candidates for their organisations’ and is an ideal way to save hiring costs. Aside from this new feature, ATM promises to cover all aspects of the travel, hospitality and leisure sectors and the chance to catch up with your contacts.

Targeted at airline professionals, Airline Purchasing Expo focuses on providing one-to-one meetings and social networking events. It includes an exhibition as well as a conference, and is run as a dual event with the Aircraft Maintenance Outsourcing Conference for Europe. The organiser says the 2009 event will offer a more integrated approach and include breakout and workshop sessions. Speed networking sessions are also being introduced this year.

VENUE: Novotel, Abu Dhabi EMAIL: pp@miuevents.com WEBSITE: www.miuevents.com/fame-09

VENUE: Exhibition Centre, Dubai EMAIL: arabian.helpline@reedexpo.co.uk WEBSITE: www.arabiantravelmarket.com

VENUE: Olympia, London EMAIL: juliett@aviation-industry.com WEBSITE: www.aviationindustrygroup.com

18  21 MAY 2009

1 JUNE 2009

15  21 JUNE 2009

The Airport Show

Supply Chain and Transport Awards (SCATA)

Paris Air Show

The conference programme is now confi rmed for the upcoming Airport Show, which is billed as the largest event of its kind in the world. This year’s event sees the conference structure taking a different format from 2008, but as last year, the exhibition sectors are broken down into umbrella groups covering airport operations, airport build, ground support equipment, technology, security and control systems.

VENUE: Airport Expo, Dubai EMAIL: ana.mandaric@reedexpo.ae WEBSITE: www.theairportshow.com

The annual Supply Chain and Transport Awards (SCATA) return to Dubai for the third consecutive year, honouring the achievements of individuals and companies in the Middle East logistics industry. The event has traditionally attracted the biggest names in the industry and finalists will be competing in a number of different categories, including cargo operator of the year (commercial airline), air cargo hub of the year and the outstanding achievement award.

Business to business meetings sit alongside an exhibition and flight display at this year’s Paris Air Show. The flying displays will have an historical and mythical influence, while all the big names associated with the aviation industry will be exhibiting new products. The event is held every two years and in 2007 almost 2000 exhibitors were present at the show. Some 140 aircraft were on display and over 40 aircraft were used in the flying displays.

VENUE: Dubai EMAIL: Robeel.haq@itp.com WEBSITE: www.itp.net/events/scata

VENUE: Le Bourget, Paris EMAIL: exposants@salon-du-bourget.fr WEBSITE: www.paris-air-show.com

FAME for a day The Financing Aviation in the Middle East (FAME) conference has been cut down to a one-day event. Previously billed as a two-day conference, the event organiser MIU said the decision had been made based on feedback from attendees and international companies that had reduced their travel budgets. As reported in last month’s Aviation Business, MIU also took the decision to cancel its GAME conference, which was scheduled for April, due to a lack of attendance. In addition to the events listed above, it is also worth making a note in your May 2009

diaries for the Aviation Business Awards 2009. As this issue of the magazine went to press we were in the throes of finalising the award categories, of which there will be 15 in total. The awards are taking on a ‘peoplecentric’ approach for this year to give the event a personal touch. The various categories cover a mix-bag of topic areas, allowing managers and CEOs from across all sectors of aviation to either nominate or be nominated. Visit www. arabiansupplychain.com/avbawards/ for further details and to make your online nominations.