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Sun 19 Aug 2018 04:05 PM

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Gulf traffic not our main priority: Royal Jordanian CEO

Markets in the Levant, as well as Europe and the US are where the airline will make money, says CEO Stefan Pichler

Gulf traffic not our main priority: Royal Jordanian CEO
“Our core market is in the Levant, including Iraq and Iran," said Royal Jordanian CEO Stefan Pichler.

In its push for “sustainable profits”, Royal Jordanian airlines won’t focus on filling seats with GCC travellers, the airline’s chief has said, but on travellers from countries in the Northern Middle East and further afield.

“We’re not chasing traffic from the GCC, but from the Levant, and wider including Eastern Europe,” Royal Jordanian CEO Stefan Pichler told Arabian Business.

“Our core market is in the Levant, including Iraq and Iran. Some destinations such as Damascus are suspended temporarily, which I hope reopens soon, but this is the market that we want to connect with our home market, Europe and the US. That’s where you can make money,” he said.

Appointed in May 2016, the CEO of Jordan’s national carrier announced a wide-ranging five year turnaround plan last year aimed at stemming annual losses which since 2011 had cost it an estimated $197 million (JD 140 million).

Royal Jordanian CEO Stefan Pichler

The first half of 2017 saw the airline post a loss of $37.1 million, more than its entire loss in 2016, before aggressive marketing of lower fares and charging for baggage allowances and inflight amenities - similar to a low cost carrier - helped reverse losses in the second half of the year and produce an annual profit of $386,000.

In the first half of 2018, the airline has halved losses year on year. “That period [2017] was very dire,” said Pichler. “This year we hope to post an annual profit [again].”

As Royal Jordanian’s revival plan pushes it north and west of the Middle East, it will have to pull back on capacity to the Middle East, said Pichler.

“Our turnaround plan is not driven by market share of leadership but by sustainable profitability and cash flows. At the end of our five year plan our cumulative average growth rate will be 3.5% per year which is nothing. But it will refocus the airline,” he said.

“Of course you have less capacity flying to the GCC, but here there is very tough competition. It’s also not a natural home market for us either. So while we’ll have some exposure to the GCC, in Dubai and Abu Dhabi, our growth will not come from this part of the world,” he added.

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