AACO: Arab carriers recover but outlook is hazy

Arab carriers will recover to pre-pandemic traffic levels in 2024 but not without concerns over the impact to the industry of the conflict in Israel and Gaza, the issue was raised at the AACO general meeting taking place in Riyadh.

The meeting was significant on the airline leadership level too, with the announcement just days prior to the meeting that long-serving head of Qatar Airways, Akbar Al Baker, a stalwart of AACO and a member of its executive committee, was stepping down as Group CEO of the carrier after 27 years.

In his State of the Industry presentation, Abdul Wahab Teffaha, Secretary General of AACO, said passenger numbers for Arab carriers are expected to reach 300 million in 2023, 91.7% of the 2019 level, making the region the fastest to recover globally. “We expect next year to exceed the level we have achieved in 2019,” he noted.

However, the industry is facing “substantial challenges” with fuel prices rising by 12.6% over 2019. These are “coupled with the geopolitical tensions, particularly as a result of the war in Ukraine and the war that is currently taking place in our region,” said Teffaha.

IATA Director General Willie Walsh told AACO delegates that “despite the good news of the continuing recovery, there are concerns on the horizon over the impact of political instability and wars.”

The conflict in Israel and Gaza has caused significant operational disruption to carriers, especially those adjacent to the war zone, but it is too early to assess the financial impact, said Teffaha, speaking at the closing press conference.

“Jordan and Lebanon, and to an extent Egypt, as countries adjacent to the conflict zone are the most impacted,” said Teffaha. The immediate impact has seen flights to the conflict region suspended and there is significant re-routing to avoid the region too.

When it comes to the industry’s “duty of gradually removing the environmental footprint of air transport in the next few decades”, Teffaha said that AACO supported a “global solution” under the umbrella of ICAO and encouraged governments not to follow the example of Europe and create regional solutions such as the Emissions Trading Scheme.

He added governments should “do their share in the basket of measures for reaching aviation’s environmental targets especially in optimising air traffic management, investing in infrastructure improvements, developing supportive policies, and easing certification processes of technologies and cleaner energy.”

On the issue of passenger-rights legislation, Walsh said IATA is working with AACO as several of the region’s governments are looking at passenger rights regulations. “We want to make sure that they [governments] understand the potential pitfalls of even the most best-intentioned regulatory efforts in this area,” said Walsh.

“In the region we have been very active with Saudi Arabia, Morocco, and Oman on this topic. These countries are at various stages of developing or updating their own regulations - with Saudi Arabia having recently published its regulation,” said Walsh.

“Our key message is to understand the mistakes made by Europe and insist on proportionality which is clearly not the case under EU 261 [the reference number of the European regulation],” said Walsh. “After all, why should airlines compensate passengers for failures that are not of their own making?”

Walsh also commented on IATA’s fight against moves by the Dutch government to reduce the annual number of slots at Amsterdam Schiphol Airport.

He said the Arab region adheres to global slot guidelines, and that IATA is working with the General Authority of Civil Aviation in Saudi Arabia on how slots are managed in the Kingdom. “I am optimistic that we can arrive at a way forward that continues to respect the benefits of the World Slot Guidelines,” said Walsh.

In other news at AACO, the organisation announced the signing of two MOUs with SITA at the event, with both related to strategic priorities set out by AACO: sustainability and digital transformation.

The first is to deliver the Sustainability Management Solution, which will enable airlines to optimise and manage their cost of environmental sustainability and deliver to their customers accurate and credible sustainability-related information about their travels.

The second AACO/SITA initiative is the Travel Digital Identity solution a tool for creating seamless and efficient travel journeys for passengers through airlines, airports, and border control agencies.  Both are being piloted by three AACO member airlines and will be available to any organisation.

Beirut-based AACO, which represents 36 Arab airlines in the Middle East and North Africa, announced at the AGM that flyadeal has joined the organisation. This low-cost airline, which began operating in 2017, is a sister company to Saudia and one of the fastest growing carriers in the Kingdom.

As the Riyadh event closed, AACO announced that its 57th annual meeting will be hosted by Royal Jordanian in the Dead Sea in November 2024.