Arab Carriers See Traffic Recovery Three To Five Years Out
DOHA, Qatar—Arab airlines may not see passenger traffic numbers restored to pre-pandemic levels until 2027, the organization representing carriers in the region cautioned Thursday.
In a state of the industry speech at the Arab Air Carriers’ Association (AACO) AGM in Doha, Secretary General Abdul Wahab Teffaha said the recovery could take between three and five years depending on how the world adapts to the “new normal.”
In its annual report, AACO lays out two recovery scenarios for Arab airlines. The first assumes an economic recovery, better government support, steady COVID-19 inoculation rates in major population centers and more harmonious travel restrictions. In this scenario passenger numbers could be restored in 2024.
In a second, more pessimistic scenario, which factors in risks such as a new COVID-19 spike, a slowdown in the economic recovery, a delay in inoculations, and governments reinstating travel restrictions, it could take until 2027 to restore traffic to 2019 levels.
“The recovery trend of global traffic is better than that of Arab airlines due to the recovery of domestic demand in major travel markets, mainly China and the United States,” the report notes.
The region, which depends heavily on travel and tourism, saw the market sector’s contribution in GDP drop from 14.4% to 5.4%. The number of jobs supported by travel and tourism also dropped by 18.5% to 272 million in 2021 compared with 334 million in 2020.
AACO member airlines’ passenger traffic measured in RPKs and seat capacity measured in ASKs declined by 72% and 63.5% respectively in 2020 compared to 2019. In the first half of 2021, despite the decrease in COVID-19 cases and easing of border restrictions in some countries, AACO members’ passenger traffic dropped by 80% compared to the same period in 2019, reflecting weak passenger demand on international routes where travel health requirements remain.
IATA estimates that Arab carriers will post a collective loss of $6.8 billion this year and another loss of $4.6 billion in 2022.
Not all airlines in the region are losing money, however. LCC Air Arabia announced its third-quarter (Q3) results Nov. 10 and posted a AED209 million ($152 million) net profit for the three months ending Sept. 30, an increase of 575% compared to the same period last year. The company’s Q3 2021 turnover increased by 174% to AED804 million, compared to AED 294 million in Q3 2020.
Air Arabia served over 1.9 million passengers in the third quarter from its five hubs across the UAE, Morocco and Egypt—an increase of 190% on the same quarter last year. The average seat load factor was 70%.