The Secretary General of the Arab Air Carriers Organization says travel barriers and regional unrest continue to hamper his industry. But rising passenger numbers, lower oil prices, and expansion into international markets give him cause for cheer.
By Dina Al-Wakeel
Even though regional air passenger traffic grew by 9.7 percent to 172 million in 2014, the Secretary General of the Arab Air Carriers Organization Abdul Wahab Teffaha, said the region still faced serious security issues which were preventing many airlines from reaching their full potential. Until these are resolved, he believes reducing travel barriers between countries and improving market access are just some of the ways a better future can be secured for his sector.
How do you see the aviation industry in the Arab world today?
It’s a paradox between success in the air and, unfortunately, some failures on the ground in some Arab countries. What is interesting about aviation is that it has proven to be a catalyst for growth. The critical mass of population in the Arab countries does not correspond with the size of the aviation market. I believe the potential is there. Egypt, Algeria, Saudi Arabia, Yemen, Syria, Iraq, these are countries where you have the critical mass of population. In terms of contribution to the global travel market, the travel market in the region does not correspond with that concentration of population. It’s not necessarily due to political and security issues. I think it has something to do with the current regulatory regime in the Arab world whereby you still find restrictions in terms of market access and ease of travel. Of course there are things that have been done by all of these countries, but there is still more room for improvement.
What types of travel restrictions are we talking about and how can these countries improve the aviation industry?
Market access for airlines, visa restrictions, and of course some of these countries are facing some very serious security problems and that will suppress the potential. If these were relaxed then we will be able to achieve at least a portion of the Arab market’s potential. Arab markets can produce up to 500 million passengers. Now they are producing less than 250 million. I’m talking about something similar to Europe with Schengen. They actually energized the travel market to make it equal to the population, and they succeeded. Given the size and expanse of the Arab region, which is three times the size of Europe, air travel is essential for Arab countries. Unfortunately, some people connect visas with security. I don’t. Security can be maintained with relaxation of visas. It wasn’t the Schengen visa that was the culprit in the recent terrorist attacks, but they were carried out by people from the same nationality where they committed the terrorist acts.
How big an impact do you see terrorism having on the airline industry and tourism in general in the region?
It has an impact, not only in the region but everywhere. Look at 9/11. It was one of the biggest catastrophes for aviation ever. Now terrorism unfortunately is the clear and present danger and fear of terrorism and trying to restrict everything is going to play right into the hand of terrorism. In some parts of the Arab world, it is already having an impact. In Tunisia and Egypt there’s definitely an impact and it’s very unfortunate. I hope it’s not there to continue. Let’s look at the full half of the glass; people like to travel and they will continue to travel. They will not be intimidated into staying home. Terrorism is a threat and we need to do everything to try and preempt terrorist attacks. But living in fear is not an option.
The Arab air transport market grew by 9.7 percent in 2014, reaching 172 million passengers. How was 2015 and what are your expectations for the future?
In 2015 it was about 8 percent and it might have reached around 180 plus million. You have the impact of what happened in Egypt and Tunisia, while the Syrian market is almost neutralized. The violence in Iraq is also neutralizing a large potential of the market. In Libya you had 4.1 million passengers in 2014, which was brought to a fraction of that.
What can aviation companies do to encourage more traveling?
A large number of the Arab airlines are growing their international presence because they have invested in the opportunities instead of being fearful of crises. If you look at the last 20 years of the Arab world’s history, with every crisis, these airlines were investing heavily in their growth potential. That investment paid off when the other airlines were shying off from growing. They were able to get their brand recognized, they were able to get passenger loyalty, and this is part of their success. They are making money because of that.
Safety is our number one priority. Our safety record actually improved during the last few years.
What impact is the low price of oil having on the industry?
There is the positive impact of reducing the costs for airlines. But of course that will be balanced out ultimately because of competition. Airlines will compete, and with bigger margins they will be able to address market demand more flexibly through the reduction of prices. On the other hand, it’s a mixed issue. For some Arab economies the investment in development is going to be less with lower revenues. For other Arab economies the disposable income will be bigger because of lesser fuel costs and therefore the ability to travel will be greater. We can’t know the current year or the next, I think the impact of the prices will continue as is for the medium-term, then we will see a certain impact on the economic development and the GDP creation. For the airlines I think the global presence of many of the Arab airlines is creating a cushion for that kind of impact.
Jordan of course will benefit from the fuel reduction because it’s a non-oil producing country and the cost of fuel for the national airline was very high. But the surrounding instability—Syria, Iraq, Palestine—is not going to help a lot in order to maximize the potential that exists in the market.
Should Jordan reduce its airport fees and taxes to encourage more airlines to come?
Absolutely. Taxes and tourism do not go together. In Jordan, in terms of airport taxes and user charges, they are relatively high.