Queen Alia Airport announces US$ 750 million investment in redevelopment
The Low Cost Airlines World MENA 2009 concluded today with Queen Alia International Airport (QAIA), part of the Airport International Group, Jordan announcing that it will be investing US$ 750 million in redevelopment of the airport and build state-of-the-art 86000 square meter passenger terminal.
Mr. Curtis GRAD, CEO, Airport International Group – QAIA said: “We expect Phase I of this terminal to be ready by early 2012. It will have a capacity to handle 9 million passengers. The Phase II will be able to handle additional 12 million passengers. We are looking at inbound traffic from Abu Dhabi, Al Ain, Dubai and Sharjah and other parts of GCC markets to link up with QAIA and benefit from it. There are already six Low Cost Carriers (LCCs) that have a total of 80 arrivals and departures a week to Amman, Jordan. These are Air Arabia, Jazeera Airways, Bahrain Air, Sama Airlines, Nas Air and Fly Dubai.”
During the year, QAIA has witnessed 15% increase in flight volumes, 10% increase in passengers during summer peak and 4% increase in passenger numbers till date. QAIA said that there is a strong link with the UAE considering that Invest AD, an investment company based in Abu Dhabi hold 38% of its equity, followed by Kuwait’s Noor Financial Investments which owns 24% equity.
In his presentation Tim Coombs, Managing Director, Aviation Economics Ltd mentioned that the barriers to start LCC will remain low considering that an airline operating 5 A320 aircraft can be set up with capital of just US$10million. “The LCC model is well understood, easily copied and globally transferable today. And Hedge Funds / Private Equity industry has surplus funds of US$150 billion. It is easy to start LCC even today,” he said.
He said that the development of 17 open-skies bilateral agreements between a number of Arab Civil Aviation Commission (ACAC) Middle Eastern member states such as Bahrain, Jordan, Lebanon, Oman, Qatar, Syria and United Arab Emirates is an important step for LCCs further success in the region.
Mr. Sherif Attia, CEO, Air Cairo said that the year 2008 was very encouraging compared to the previous year. “The increase in number of flights was up by 17%, passenger load was up by 21%, and while Egyptian carriers reaped higher business (19.7%), the foreign carriers also had a good time with business up by 16.2%.”
Shashank Nigam, Founder & CEO, SimpliFlying, said that: “Social Media (Facebook, Twitter, YouTube etc) will be the next driving force for LCCs. If Dell can sell US$ 3 million worth of products in a short span of time why can’t LCCs take advantage of social media? It is entirely possible to clear distressed inventory on Twitter or Facebook.”
On the first day, in his inaugural session Mr. Adel Ali, Chief Executive Officer (CEO), Air Arabia, the proponent of LCCs made a strong pitch for Low Cost Airports. Capturing the audience’s imagination in his uncanny knack, he said: “This region needs many more low cost airports or secondary airports on the lines of Al Ain Airport. These airports will result in low cost fares to customers.”
He also observed that the cost of infrastructure [airport and related services] ought to be reviewed periodically. “Airports charge airlines on the basis of historical data on costs and operations. This is a big hindrance for the growth of LCCs in the region,” he said.
‘Connectivity Evangelist’ Air AsiaX CEO Mr. Azran Osman-Rani made a successful pitch to the audience for the need of ‘Low Cost, Long Haul’. Air AsiaX confirmed its maiden plans to fly in to Abu Dhabi, marking its first foray into the Middle East. Mr. Azran also confirmed that the airline has ordered 10 A350 aircrafts recently. He said: “Today LCCs agree that there is great potential for ‘connectivity’. The challenge is how to market connectivity as unique selling proposition to customers.” He also propagated the huge potential of ‘social media’ in LCC marketing. “Face Book, Twitter, You Tube etc are great platforms through which LCCs can have low cost marketing efforts.”
Mr. Stefan Pichler, CEO, Jazeera Airways who has been into the job barely four months said he was very confident about the region’s potential. “The worst seems to be over and I can fairly say that second half of 2009 will be much better than the first half for Jazeera Airways. We are reassessing the India sector considering that there is artificial over capacity on that sector at the moment. However, we will continue with our multi-hub strategy.”
Mr. Kevin Steele, Chief Commercial Officer, Sama Airlines, said that Kerala (India) -Saudi Arabia is the largest point-to-point market in the region and Egypt-Saudi Arabia is the largest intra-Middle East point-to-point market. “My question to any LCC is: Where will you put your investments?”
Maher Koubaa, VP, Middle East and Africa, Sabre Airline Solutions presented its survey findings. He said: “Beyond oil prices, customer loyalty and retention, revenue and yield and, network planning and scheduling are the most frequently identified as issues that have an impact on airline from a cost and operations standpoint.”
Mr. Walter Prenzler, CEO, Nas Air said that there are three LCCs in Saudi Arabia and there are opportunities for new players. “Apart from the strong home market, Saudi Arabia has geographical location advantage, coupled with huge young local population that has restricted public transportation. In addition, LCCs can leverage religious traffic (Hajj – Umrah) and the labor traffic.
Mr. Steve Knackstedt, Director Airline Business Group, Hahn Air Lines said that “Approximately 60% of airline sales are still taking place through global distribution systems (GDS). Web-based bookings are increasing but it is still a miniscule part of overall ticket sales and it will continue to be like this.”
Event organizer Mr. Matthew Wallhead, General Manager Terrapinn (Dubai) Ltd expressed his gratitude to all the spokespersons, attendees, media, sponsors, partners and colleagues who made this event a grand success.