Egyptair liftsof af ter Covid

Despitetensionsover theGrandEthiopian RenaissanceDam, Egyptairisstill collaboratingwith EthiopianAirlines, andisrevivingits valuableRussian tourismmarket

By NELLYFUALDES

The Covid-19pandemic wasa litmus test for the world’s airlines, showing how nimble they could be.Ethiopian Airlines quickly reacted to the crisis, converting passenger planes tofreight tobecomeAfrica’s humanitarianhub for thetransportationofmedical equipmentand vaccines. Unlike its Ethiopiancounterpart, Egyptair, which flew nine millionpassengersin 2022, hasnotmanaged to establishitselfas aninternational hub, despiteits size and geographicaladvantages. Transit traffic accounts for only 25%ofCairo InternationalAirport’s traffic, compared with 70%at Bole Airportin Addis Ababa, accordingto data compiled by traveldatafirm OAG. “ThemainassetofEgyptair? The pyramids,” says Jean Adadevi,consultantat Lufthansa Systems

But22 million airtravellerslanded inEgyptin2022,which is higherthan thepre-pandemic levels(20.8 million in 2019).Theincrease was even registered before the returnoftheChinese clientele. Egypt is among20 destinationstowhichChina reopened group travelon February 20.

Egyptair relaunched its routes to Guangzhou, Beijingand Hangzhou inMarch, restoringits pre-Covid levelofgeographicalcoverage andfrequency. “Wehavealready received verypositivefeedback onbooking volumes,” says YehiaZakaria,Egyptair’sgroup chairman andCEO.“Egyptis a strongproduct.”

Zakaria wasappointedin early2022asheadofEgyptair Maintenance &Engineering,just10 monthsbeforebeingpromotedto thegroup’s topposition.

Egyptair,whichturned 90 in May 2022,istheonlyAfricancarrier aside from EthiopianAirlinesto have more than100 aircraft at its disposal. At thetimeof goingto press, theairlineowns 74planes, both BoeingandAirbus,including thefirstAirbusA321neoinAfrica, and leases around29furtherplanes.

Whatmaybesurprising, however, isthatwhile Cairo and AddisAbabaareatloggerheads overthe Grand Ethiopian RenaissanceDam,theirtwo nationalairlinesare collaborating.Thetwostatecompanies are members oftheStarAlliance, alongside theLufthansa group, United(US)andAirChina.They have also co -signedmoreadvanced code-sharingagreements for certainroutes.

Partnershiphelps...

“Thispartnership beganin2010 toenablethetwocompanies to strengthentheirpresenceinAfrica, theMiddle East,LatinAmericaand Europe,” says Zakaria.

Theagreementbetweenboth carriersismainly forthe Addis Ababa-Cairoroute,inadditionto whatZakaria describesas“white spots”inAfrica,or destinations that EthiopianAirlinesoperates flightstoandandEgyptair does not.TheseincludeBujumbura, Ndola, Lome,andHargeisa.

“Wealso keptKigaliinthe contractafter openingourdirect routefromCairo,togiveour customers moreoptionsand flexibility,” says theEgyptairCEO, who describestheagreementas an “ongoing process”.São Paulo via AddisAbaba wasaddedin November2022

TheagreementallowsEthiopian Airlinestoofferitscustomers tripstosomeoftheEuropean andMiddle Eastern destinations thatEgyptairflies to,including Amsterdam,Athens,Budapest, IstanbulandAman.

Thecooperation existson aneed-to-knowbasis: even Egyptair ’s senior executives and commercialpartnerssaythey arenot awareofit.Travelsearch engines, includingthoseofthe twocompanies,offer possibilities otherthanthose resultingfrom thepartnershipbetweenEgyptair and EthiopianAirlines. “Alliances do notalwaysbenefitbothparties Theycan evenendupcostingone ofthepartners dearly iftheyare toounbalanced,”saysasource familiarwiththematter.

...butcompetitionisstillkey

InOctober2020,Egyptairsigned amemorandumofunderstanding with Accraforthecreationof Ghana’s nationalcarrier –under thenoseof EthiopianAirlines, whichcovetedthe deal.Egyptair waseventuallyditchedbyAccra in favourof AshantiAirlines. Meanwhile, ithasbeentryingto buildits ownAfricannetwork.

“Wehaverecentlylaunchednew destinationsinAfrica,namely Kinshasa,DoualaandMoroni,” says Zakaria. “Other routes will be operatedinthefuture, depending ontheir economicviability.”

Egyptair,whose logo features the ancient falcon-headed godHorus, demonstratesacertainknow-how intermsof realpolitik. In 2022,the companywas able toadaptto anew

geopolitical reality: the Russian aggressioninUkraine

AlthoughEgyptcondemned the offensive in the two UN votes of MarchandOctober2022, Egyptair increased itsservices toRussia, a key grain suppliertothe North Africannation. Last December, it doubled itsflightstoMoscow from seven to 14a week

To Russia,withlove

Egyptisalsopreparingtointensify directconnectionsbetweenRussia andthe RedSea resortsofSharm El-SheikhandHurghada,capitalisingonthegrowingglobaltravel restrictionsonRussiannationals. Thelattermakeuponethelargest singletouristgroupstoEgypt.

The restorationofdirect links between EgyptandRussiabreathes new life intoEgyptiantourism, which was abysmally impacted by the2015bombingof aRussian plane over centralSinai,and later the repercussionsof Covid-19.

Metrojetflight9268,achartered AirbusA321,tookofffromSharm

SinceDecember2022,Cairohas doubleditsflightstoMoscow

El-SheikhinNovember2015, onlyto explodeshortlyafterin theair.Theattack,which leftall 224passengersandcrew members dead, wasclaimed by theterrorist groupIslamicState.However, anEgyptiancourtruled in2020 thatthecrash wasnotanactof terrorismandthatthere were no grounds forcompensation.

Fewerthan50,000airpassengerstravelled fromRussiatoEgypt in2018. Accordingto OAG, this hadrisento 667,000in2022,and 715,000in2021.

Howmuch does Egyptaircost theEgyptianstate?Thisquestion ishardtoanswer,giventhehidden subsidies involved instate- owned airlines. But, even beforethe Covid crisis,the losses were increasingly colossal: €105m($113m)in2015, €251min2016, €1.1bnin2019, and €164min2020,according toch-aviation.2018istheonly yearinwhichwhenthecompany bucked thetrend, recording €164mprofit.

“The eventsoftheArabSpring, which devastatedthe regionin 2011, madeactivityinEgypt unstable, particularlyaffecting theairline.In2018,amorestable politicaland economicenvironmentimprovedour results,” commentsZakaria.

Dynamicstructures

Adadevi,theconsultantat Lufthansa Systems,says that “2018 wasa year of economicboom whichbenefitedglobaltourism,in Egyptaselsewhere.”

To securea $3bn loanthrough theIMF’s Extended Credit Facility, which was greenlit on December16, Egypt needs toproduceanannual report and a quarterly follow-upon paymentsin the budgetarysector, whichincludes public companies suchasEgyptair.

EgyptairCEO Zakariasays: “After Covid-19, ourstrategy isto focus on restructuringthe network,modernisingthefleet and improvingourservices to achieve better results;and this was reflected duringthepastfinancial year.” He adds that turnover for the 2021-2022 financial yearstoodatE£42.4bn (around$1.37bn).

Accordingto Adadevi, despite itscapabilities anditsstatusasthe secondairlineonthe continent, Egyptair isnot as dynamic as Ethiopian Airlines: “On the one hand, there is a company [Ethiopian Airlines] that hasalways known how to renew itself, is verysensitive tocosts, andstrives to do the maximum by itself, fromtraining totechnique On the other[hand], [Egyptair’s] structure [is]heavier, [its]organisationchart depends on politics, and [it]is veryslow totake a decision,asseen by its relatively slow digitaltransformation.”