Officials: Politics blocking Arab airline tie-ups

Reuters, Wednesday 30 Nov 2011

‎Aviation officials say long-standing political barriers must be dismantled if Arab airline industry is to be consolidated

Political barriers must be knocked down if consolidation among ‎Arab airlines is to take place, a move that could shore up their ‎profits, expected to suffer due to "Arab Spring" protests, top ‎aviation industry officials said on Tuesday.‎

‎"It is an artificial barrier imposed by Arab governments for cross-‎border mergers and acquisitions and we are calling for removal ‎of these barriers," Abdul Wahab Teffaha, secretary-general of ‎the Arab Air Carriers Organisation (AACO), told reporters on the ‎sidelines of a regional aviation meeting.‎

He cited national ownership and control rules as the main ‎barriers.‎

Arab carriers are mainly state-owned, and governments in these ‎countries are the major investors in airports and related ‎infrastructure.‎

The Arab world is home to some of the fastest growing airlines, ‎primarily in the Gulf Arab region where Dubai's Emirates airline, ‎Qatar Airways and Abu Dhabi-owned Etihad vie for dominance.‎

‎"In this region there has not been much consolidation because it ‎is politically difficult," said Tony Tyler, IATA's director general ‎and chief executive. "Regional airlines are fighting for market ‎share ... if you break down some of the national barriers, it could ‎be quite profitable."‎

Unrest in the Middle East and North Africa, coupled with the ‎European debt crisis, is expected to crimp carriers' growth in the ‎Arab world in 2011 and possibly next year, Teffaha said.‎

In 2010, Arab airlines grew more than 17 per cent in revenue ‎passenger kilometres, a key performance yardstick. But the ‎figure is expected to drop to 7 percent in 2011, according to ‎AACO.‎

‎"It’s because of what is happening in the Middle East, the Arab ‎world," Teffaha said. "For 2012, it all depends on the situation in ‎the region and Europe. "If it deepens, it will be lesser than ‎double digit growth."‎

The political situation in the region is the "biggest worry" for Arab ‎airlines, he added. At least 25 airlines from the Arab world are ‎members of the AACO.‎

Asked about Arab League sanctions against Syria, Teffaha said ‎Arab airlines had no choice but to adhere to government ‎directives.‎

‎"We have no stand on this; it’s purely a government issue," he ‎said.‎

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