Mideast airlines 'struggling to fill seats' - analyst

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THINK TWICE: Analysts says business and leisure travellers are thinking twice about booking flights amid the global credit crunch. (Getty Images)

Middle East airlines are struggling to fill seats as travellers hit with the credit crunch look to save cash by not flying, an industry analyst claimed on Wednesday.

When speaking to Arabian Business, Bill McKnight, associate director of consulting firm AT Kearney, said business and leisure travellers were thinking twice before booking flights.

“When you fly an aeroplane these days it’s a lot easier to get a seat near departure time than it was a couple of months ago,” he said.

“On the leisure side, there are people all over the globe concerned about losing their jobs. They are simply being smart and conservative and holding back discretionary expenditure, including travel, until they see how long this downturn is going to last.”

Travel agents in this region recently revealed advanced bookings for airline tickets were down 50 percent compared to the same period last year.

McKnight added he would be surprised if any airline around the globe generates a profit this year.

His comments come one week after Maurice Flannigan, executive vice chairman of Emirates Airline, said he expected the carrier to be one of the world’s few to register a small profit.

Last month, the International Air Transport Association forecast a $900m loss for Middle East airlines in 2009.

According to McKnight, carriers in this region will be hardest hit by the drop in demand for business and first class tickets.

“Major airlines tend to make most of their money from premium cabins and there is not a lot you can do to enhance the number of people travelling in these seats,” he said.

“Even if these business travellers have to make the trip or not, just offering a lower price or tickets [that can be bought] with a combination of miles and price is not going to make someone take a business trip.”

To stimulate demand, airlines such as Etihad Airways and Emirates have recently announced cut-price fares and holiday packages to various destinations. Meanwhile, Qatar Airways is removing first class lounges on four A340-600s from this September to make way for more economy seats.

McKnight said the struggle to fill seats would continue this year as airlines with huge aircraft orders continue to increase capacity across their fleets.

“There were clearly too many aeroplanes already ordered by the airlines in this region before the financial downturn which makes the situation now even worse. The over capacity existing today and in the coming years is very dramatic in this region.”

He added no turnaround or pick up in demand is expected until at least 2010.

“I don’t think any industry analyst is predicting this to turn around in 2009,” McKnight said. “People will want to be more certain [and financially secure] until they start spending money again for travel. Flights are a pretty easy discretionary expense to postpone, so the airlines are hard hit.”

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READERS' COMMENTS

amman
Posted by bob barker, Dubai on Wednesday 29 April 2009 at 14:36 UAE time


oh yea, nearly forgot. i went to amman last month and THAT roundtrip flight were also full.

What is he talking about?
Posted by bob barker, Dubai on Wednesday 29 April 2009 at 13:41 UAE time


this guy is an idiot. what is he talking about? i went to cairo and back on a full plane 3 weeks ago via emirates. on top of that emirates called me the day before asking me if i could change my departure time as they had over booked. i'm flying to damascus tomorrow via emirates in the afternoon and a friend of mine is flying early morning. i bought my ticket 2 weeks ago at an extremely low rate and my friend bought his almost double my ticket earlier this week.

for your organisation's sake and this country's sake, try and limit your articles that are based on 'industry analysts' or 'industry experts' who clearly havent been travelling and who are stuck in the office doing paperwork and crunching numbers.

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