The International Air Transport Association (IATA) has called for liberalization of the Middle East market, including new freedoms for airlines to price services and more readily access capital at a time when the industry group claims excessive regulation has stunted the growth of vital players, especially in Saudi Arabia. “Who cares who owns an airline, if it is safe and provides efficient service?” said Hussein Dabbas, IATA’s regional vice president for the Middle East and North Africa (MENA), speaking last week at a seminar in Dubai organized by Embraer. “Ownership rules deny access to global capital and the ability to merge or consolidate across borders.”
The Middle East’s intra-regional market is growing. According to flight schedule portal OAG, routes have grown 50 percent in the past decade, and average aircraft seating capacity has fallen from a high of around 180 in 2004 to around 155 last year.
Still, “long-haul growth is much faster than intra-regional,” said Dabbas.
While governments plan to spend $100 billion on expanding regional airport infrastructure, the IATA official suggested that capacity increases do not align with demand, and military restrictions limit the use of airspace, preventing a “single-sky” air traffic management.
IATA projections show that in the period from 2011 to 2015, the MENA region will see average annual international passenger growth of 7.9 percent, compared with a global increase of 5.8 percent, and international freight growth of 5.7 percent (4.7 percent worldwide). IATA expects that by 2015 the United Arab Emirates will lead the region in freight, carrying 2.7 million metric tons, and place second in passenger carriage, posting a 10.2-percent increase in passenger traffic to 82.3 million, ranking it seventh globally.
“Ten years of boundless optimism,” as Dabbas called them, have made the Middle East one of the world’s “most dynamic aviation regions.” In 2000, Middle East carriers carried 4.2 percent of total international passenger traffic and 4.4 percent of freight; by 2012, the figures had risen to 11.9 percent and 13.1 percent, respectively. Today, air transport supports 2.7 million jobs and $129 billion of MENA’s GDP. Yet IATA expects 2012 airline profits in the region to fall to $400 million, out of a global total of $3 billion, from $1 billion last year.