Mideast carriers urged to improve efficiency

Middle East carriers need to improve fuel efficiency and expand commercial freedoms to meet the rising challenges facing the industry, the International Air Transport Association (IATA) has said.

While European and US carriers have scaled back plans, Middle East airlines – buoyed by soaring oil prices – have largely avoided the turmoil hitting the industry.

But IATA director general and chief executive Giovanni Bisignani warned: “The oil price is falling but what we save in fuel we lose in revenue. This industry will lose $5.2 billion this year. Even the Middle East is not immune.”

Speaking at the AGM of the Arab Air Carriers Association, he said the combined profit of airlines based in the region would fall from £300 million in 2007 to $200 million this year.

And while traffic from the region’s carriers grew 18.1 per cent in 2007, in August this year growth dropped to just 4.3 per cent.

“Only a handful of carriers will be profitable while the majority bleed red ink,” said Giovanni. “The region’s fleet is set to double to 1,300 aircraft over the next decade. As we enter a period of global economic uncertainty, the challenge of matching capacity to demand will be difficult.”