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Regional airlines set to fly high in the next decade

United Arab Emirates: Thursday, May 09 - 2013 @ 16:49

These were the findings of a new Ernst & Young industry report, the results of which were revealed, yesterday, at an industry focus seminar session entitled ‘Looking to the skies: global aviation trends 2013 – 2033’.

Authored and presented by Sunil Malhotra, Director Aviation Sector, Middle East & North Africa for Ernst & Young, the report examined the industry today, looking ahead to the opportunities and challenges facing airlines, airports and governments looking to capture increased passenger traffic while managing soaring aviation fuel costs and new government-levied fees and taxes.

“An industry with a history of resilience, the growth of the aviation business is directly linked to that of global GDP and emerging markets are the ones driving economic growth and fuelling air traffic development. The industry has grown by 53% since 2000 and will continue to grow airline traffic at 5% Revenue Passenger Kilometre (RPK) until 2023,” he said.

The report noted that Asia-Pacific will lead world traffic by 2031, with a 32% share, with global airline passenger numbers projected to grow at 4% per annum (based on ICAO forecasts), and Middle East carriers to see market share rise to 11% in 2031 from the current figure of 7%.

Year-on-year RPK growth by Middle East-based carriers is also being factored into the equation, rising from 11.4% to 15.6%, driven by long-range aircraft capability and the region’s newly developed airport hubs.

“Translating this into financial results, in the near term we will see a moderate improvement in net profits, however, looking longer term, the rising middle class in Asia- Pacific and the Middle East offers a large pool of opportunity in emerging markets, complemented by higher economic growth,” remarked Malhotra, with Ernst & Young noting that this sector will grow from 1.8 billion to 4.9 billion by 2030, creating US$56 trillion in consumer spending.

“While the opportunities are clearly there, airlines must remain focused on innovation in order to maintain competitive edge, with four key areas of focus to develop including customer insight, a realistic understanding and appreciation of people and culture, investment into comprehensive R&D, and operations and business model alignment,” he ventured.

Wrapping up the session, Malhotra summarised the reports’ key findings, listing three clear trends and three strategy directives that Ernst & Young says are crucial to future success.

“The new global aviation landscape will have seven to 10 mega-carriers occupying prime position in the market, while aggressive Middle East sector growth and low-cost carrier expansion will be a major driver for passenger traffic in the region,” he said

“With consolidation front of mind in North America and Europe, to take advantage of these opportunities, airlines everywhere must develop meaningful alliances and partnerships, with past rivals becoming new allies, and also work on their customer loyalty programmes and the social customer agenda,” he said.

A number of Gulf carriers are also joining global alliances, with others entering into strategic code shares to promote traffic flows between continents.

Held under the patronage of His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE, Ruler of Dubai and in its 20th year, ATM has grown to become the largest showcase of its kind in the region.

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Thursday, May 9- 2013 @ 16:49 UAE local time (GMT+4) Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of Mediaquest FZ LLC.

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