In spite of their strong growth in recent years, air carriers in the Middle East believe there is still much more room for expansion. “The Arab market is still far from maturity,” the Arab Air Carriers Organization (AACO) Director General Abdul Wahab Teffaha told delegates yesterday at the group’s annual general assembly in Doha.
According to Teffaha, the region is still only at 0.5 trips per annum per capita, while the U.S. is at around two and Europe at 1.1.
Since 2003, AACO members have doubled passenger numbers to the 160 million expected this year that reflects a 7.2% growth rate, higher than the 5.9% average global growth rate over the same period. Cargo traffic has grown by 8%, compared to 2.8% for the global average.
While the region’s airlines have seen major upgrade initiatives as far as airport infrastructure is concerned, Teffaha warns that air traffic management has not progressed at the same pace, but “it is a priority for us now.”
International Air Transport Association CEO and Director General Tony Tyler, also speaking at the Qatar meeting, points out that the Middle East is handling “a lot of capacity in a small space” and that military airspace still takes up about 50% of the total. “One key is unlocking military airspace and states must work together,” Tyler says.
However, even that will not solve all the problems. In the United Arab Emirates, the proximity of several busy airports—such as Abu Dhabi International, Al Ain International, Dubai International, Dubai World Central and Sharjah International—to one another and the need to separate arrival and departure flows to and from the various facilities is another challenge.
Teffaha argues that the Middle East is not yet at the same structural level as more mature regions. More than half (51%) of the seats in the region are offered by non-aligned legacy airlines, while that share is only 17% in Europe and 7% in the U.S. Low-cost carriers account for 11.8% of Middle East capacity, compared to up to a third in Europe and the U.S.
AACO’s Director General stresses that airlines in the Middle East should be allowed to consolidate through the lifting of ownership and control regulations, but the industry has lobbied for years to develop a more liberal regime with little success.
Teffaha criticizes the EU’s decision to go ahead with its Emissions Trading Scheme ahead of the introduction of a global market-based measure by 2020. “The EU proposal does not encourage the countries of the world to reach an agreement in 2016,” Teffaha says. He also believes that passenger rights “have become a label for a plethora of regulation that is confusing, overlapping and does not provide benefits.”