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Wed 14 Jan 2009 12:49 PM

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Mideast air traffic could rise despite turmoil – expert

Passenger fares may have to be cut during 2009 to stimulate ailing global industry.

Air passenger traffic in the Middle East could buck the global trend and show an increase this year despite the worldwide economic crisis, an industry analyst has claimed.

Niko Hermann, aviation expert at management consultancy Oliver Wyman, told Arabian Business that legacy carriers - long-haul airlines that fly to various international destinations - would be supported by the region’s robust economy.

“The Middle East will perform substantially better than the aviation industry in other parts of the world because it is, to some degree, insulated to the global economic slump,” he said.

“The downturn will clearly have an impact on demand and financing, but in the short to medium term it will do well given that demand has been impressive in recent years.

"In the Mideast, the airlines are either reasonably well capitalised, and have government support and access to funding to help them endure even a somewhat prolonged recession,” Hermann added.

But Hermann stressed legacy carriers should expect only moderate growth at best in the coming months.

He said: “The question is what will be the growth rate? It certainly won’t be the strong double-digit growth that the Middle East has seen in recent years. It might even be negative growth if the economy really goes pear-shaped."

Hermann also said legacy carriers could stimulate demand if his prediction that passenger numbers will increase fails to materialise.

“Work intelligently on reducing the cost base and rethink some of the markets that the aircraft is being deployed on. Price appropriately in the market and that, more than not, means lowering fares; Emirates has already set the way with their reductions in the past,” he added.

The outlook for low-cost carriers flying short-haul is less positive, according to Hermman. He believes budget airlines could feel the pinch in 2009. “Some of the start-ups and low-cost carriers and cargo or executive may run into trouble,” he concluded.

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