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Tue 13 Feb 2007 09:58 PM

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Budget airlines break down barriers

Governments should step aside and let budget airlines bring the Middle East closer together.

The rapidly developing the budget airline industry in the Middle East has the potential to bring countries closer together in a way that years of government talks have failed to achieve.

GCC member states speak endlessly about customs union, merged financial markets, a single currency, a common foreign policy and many other common goals.

But these goals are typically a means to an end, not an end in themselves.

The primary roles of governments are to serve and protect their citizens. A single currency might benefit citizens if the GCC acts as an open market that trades freely with the rest of the world.

But if freedom doesn't come first, a single currency will not compensate for it.

The experience of the USA and Europe is that the more governments are able to break down barriers and deliver an open skies policy, the more economic and social benefit the budget airlines are able to deliver.

The UK experience is among the most dramatic, but is far from unique in experiencing far-reaching benefits from a deregulated aviation industry.

Only 12 years ago, the UK was almost exclusively served by large carriers: British Airways shared trans-Atlantic passengers with US airlines. European routes were controlled by national airlines.

The airlines operated as cartels, trading landing slots and protecting national interests.

All that changed in 1995 with the launch of EasyJet. The no-frills airline used leased aircraft and unpopular provincial airports in order to dramatically reduce prices for passengers flying on short haul flights within the UK and later to Europe.

Ryan Air, which had been founded a decade earlier in Ireland, embraced the EasyJet model immediately in the nineties, and the two embarked on a land grab for European routes.

The effect was extraordinary. Small airports across Europe, many of them little more than cow sheds with a runway, suddenly became drivers of economic growth for towns and cities. A budget airline agreeing to fly to an airport created micro-booms worth millions to the surrounding area.

Tourists arrived, house prices increased, retail businesses grew, and restaurants appeared.

In contrast to the pre-budget airline days, when airports charged vast fees for landing rights, EasyJet and its contemporaries were suddenly being offered financial incentives to fly to little-known cities.

The move towards European integration was happening throughout this period of growth for discount airlines. But governments were divided on how best to achieve it.

Some European countries converted to the Euro currency, some didn't. Some threw up protectionist barriers to defend domestic industries, others opened up. Some officials fought for the rewriting of a European constitution, others rejected a more federal approach.

Meanwhile, the public demolished borders between nations by travelling for business and pleasure in their millions. Air travel in Britain has increased fivefold over the past 30 years. Half the population now flies abroad more than twice per year.

The simplicity with which people grabbed a foreign currency at the airport as they landed made monetary union arguments seem pointless to them. The protection of the French farming industry hardly mattered to people who could stock up on cheap wine with a quick trip from Birmingham to Burgundy.

The next ten years should see this overwhelmingly positive phenomenon drive economic and social improvement across the GCC, and hopefully beyond it to Lebanon and Syria, and even Palestine, Iraq and Iran.

Imagine long weekends in Beirut, a short ski break in Iran, perhaps eventually a short school history trip to Babylon, all on flights costing less than a weekly supermarket shop.

The economic benefits are certain, but imagine also the steady growth in trust and security between nations whose citizens visit each other as often as they visit their dentists.

If all Middle East governments hold their nerves and offer open skies, the benefits will flow. If government-owned airlines are protected, and visa controls make it inconvenient to travel freely, the region will continue to stagnate.

Regional government negotiators in the Middle East have had decades to thrash out agreements that bring nations closer together. It is time for them to step back and let entrepreneurial airlines have their turn.

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Calis 12 years ago

If only

Bill Almen 12 years ago

Whilst budget airlines give a cheap service they also give a budget no frills service! Dont expect free drinks, in flight entertainment etc. The airport book shops and food malls will enjoy the boom in custom though .....