Recently in Africa/Middle East Category

My colleague Brendan Sobie recently interviewed the new chief executive of Kuwait's Jazeera Airways Stefan Pichler. The former Virgin Blue exec got a little hot under the collar about the term low-cost airline.

Unprompted, Stefan said this to Brendan:

"Everybody who runs an airline always tries to have the lowest cost possible because it's a bloody asset driven business. It's just common sense.

"If you have an asset driven business then you try to operate it with the lowest cost possible. Everyone wants the lowest cost possible but on the other hand everyone wants the highest revenue possible. So we all chase for the lowest cost and highest revenue.

"The only one difference is a new start up company has lower costs than an established legacy airline because they are start up businesses.

"So forget about all this bull shit about low-cost airlines - everyone tries to be low-cost. Everyone! It's a stupid little label. It's a stupid label for people like you (journalists)."

THAT TOLD US STEFAN!

Actually, Airline Business has long wondered about the low-cost carrier label, but not so much that we won't stop using it.

See this leader article from June 2008: What is the real thing?

Some wise words from Oman Air chief executive and industry veteran Peter Hill, who is in London for the travel exhibition extravaganza that is World Travel Market. I asked him if there was too much capacity in the Middle East airline sector right now.

"The problem is there is too much capacity everywhere," he says. "It's the toughest environment I've ever experienced. Yields are under pressure everywhere, with the exception of some niche markets." While noting the roller-coaster nature of the airline business is always high and lows,he highlights the global nature of this downturn make it one of the toughest years he's even seen. "It might even get worse [for some] this winter," he adds.

What a time then to be launching a string of new international routes? Oman Air opened London last year, has recently added Frankfurt, Munich, Paris, the Maldives, while Sri Lanka -after a few delays in the process - follows in the middle of this month. This expansion is all tied to the Omani Government's tourism ambitions and Hill appreciates the benefit of having an owner with a long-term strategy. While the group will lose money during this expansion, Hill says the aim is to grow the network now so as to establish it as sustainable airline. Within five years he expects the group to at least reach break-even. You can read more on Oman's Air strategy here

Expect to hear more about Oman Air's expansion plans over the coming weeks and check out our video below as he explains some of the benefits to growing in a downturn:

Ahead of this month's Dubai Air Show, Flight International's Max Kingsley-Jones has been out in the Middle East talking to the major Gulf carriers about how they have been riding out the economic storm. You can check out the feature here and also watch short video interviews with Tim Clark at Emirates, James Hogan at Etihad and Akbar Al-Baker at Qatar Airways. Click here to read the article and see the videos.

The article is part of a wide-ranging special report on the Middle East aerospace sector published by Flight International, while you can also read the recent Airline Business stories on how the Middle East airline sector continues to grow and interviews with the new chief executives at Egyptair, Gulf Air and Royal Jordanian.

They weren't quite punching the air in celebration, but the wide grins on the faces of Etihad Airways head James Hogan and his CFO James Rigney said it all in London yesterday.

This fast-moving, fast-growing, new wave (their words) carrier has won the support of the US, the UK, France and Germany to help finance their new aircraft deliveries.

From left to right at the Etihad dinner: James Rigney, Etihad's CFO; Lester Wynne-Jones, CEO, HSBC Abu Dhabi & Al Ain; James Hogan, Etihad CEO; Dr Matthias Neugebauer, senior vice-president LBBW; and Nigel Addison Smith, finance director of the ECGD.

VIDEO: James Hogan on Etihad's big finance dash

The ins and outs of the story are well explained by the Australian's Steve Creedy here, but the bottom line for Hogan and Rigney is that their business plan has been validated at the highest level and been found to be gold-plated.

The message is that this move proves Etihad is not a state-subsidised carrier, but a valid business with a robust corporate governance framework and a balance sheet that can withstand the closest scrutiny.

Hogan and his finance team have been grilled in Washington by the US Ex-Im bank and more recently by Europe's Export Credit Bodies as to why their airline should obtain their guarantees for loans that will finance a lot of Boeing and Airbus airliners.

And they got the green light, which hasn't always been the case for every carrier from the region of late.

The ability to raise such serious cash in a market that is supposed to be tight is tremendously significant for Etihad.

And it will mean the airline's borrowing for these aircraft will quite simply be cheaper than if it went purely to the commercial market.

Hogan held a dinner at London's glitzy Dorchester Hotel to celebrate the announcement of the deal.

Long-standing African Airlines Association (AFRAA) secretary general Christian Folly-Kossi is to step down when his current term comes to an end in November.

Folly-Kossi has run AFRAA since 2000 but, after serving two consecutive five-year terms, he is planning to hand over to a new secretary general at AFRAA's annual general meeting in November.

Prior to joining AFRAA, Folly-Kossi spent 21 years with pan-African carrier Air Afrique. Here he held various commercial and financial management positions before ultimately becoming special advisor to the executive chairman, with responsibility for corporate strategy as well as board and member state relations.

Folly-Kossi has also been advisor to various African governments, including special advisor to the prime minister of Togo and the Cote d'Ivoire head of state.

An AFRAA representative says the body is seeking a replacement. The position is based in Nairobi, Kenya, and the deadline for applications is 15 August.

Take a look at our most recent coverage of the African market which we ran as part of a global round-up to coincide with our Top 150 airline rankings.

Former Virgin Nigeria chief Conrad Clifford is returning to the UK to take up the role of Emirates UK and Ireland vice-president from September. He is replacing Vic Sheppard, who is retiring after 13 years with Emirates.

Clifford, 51, has just spent four years with Virgin Nigeria, but 49% shareholder Virgin Atlantic is now looking to withdraw Virgin Nigeria's group branding and its day-to-day involvement with the African carrier.

Although Virgin Nigeria was due to drop its Virgin brand from 7 July, its website remains unchanged. Back in June several new names were being considered for the rebrand, inlcuding 'Nigerian Eagle' and 'Air Nigeria'. Clifford's successor at the Nigerian carrier is Dapo Olumide.

Clifford began his aviation career as a trainee with Cathay Pacific. He then joined Virgin Atlantic, where he held roles as UK general manager - commercial, and commercial director. In 2002, he became commercial director of Menzies Aviation Group, rising to director, Asia, South Pacific and Africa. He returned to Virgin in 2005 to oversee the establishment of Virgin Nigeria.

Emirates operates 14 daily non-stop flights from the UK to Dubai. It flies from Heathrow (five times daily), London Gatwick (thrice-daily), Manchester and Birmingham (twice-daily), plus Newcastle and Glasgow (daily).

I logged on tonight to find the shocking news that Royal Jordanian chief executive Samer Majali has resigned from the carrier.

Flightglobal's David Kaminski has everything we know about the story here.

We'll drop Samer a line to find out why he's decided to call it a day from an airline he has led with great dignity and skill. Samer is one of the industry's good men - a real gentleman.

I doubt this is the last we will hear of Samer. He is a high-profile airline industry CEO and recently chaired the IATA annual meeting in Kuala Lumpur.

Good luck my friend, whatever and wherever you go.

Read our cover interview with Samer last year after he'd successfully steered the carrier through privatisation and into oneworld.

.

The latest issue of Emirates public affairs journal, Open Sky, features a strong defence of the long-term health of Dubai from airline CEO Tim Clark in the wake of recent negative publicity. Dubai's fortunes have come under microscope after being hard hit by the economic downturn.

Here's a little snapshot of Clark's view on Dubai.

"If you believed the recent rash of bad press and rumour mongering on Dubai you would
be forgiven for thinking our city is all but a ghost town; tumble weeds rolling down Sheikh
Zayed Road," says Clark. "I argue that much of the recent reporting and overly negative focus on Dubai is both disproportionate and often wildly inaccurate.

"As the manager of Dubai's largest airline, Emirates, I have a self interest in defending my town, but also more insight than Germaine Greer secured from her four-hour bus ride that formed the basis of her recent anti-Dubai column in the UK."

"Dubai is a city that has confounded many pundits before. They said two Gulf Wars would ruin our tourism sector. It didn't. SARS would decimate our trade with Asia. A short-lived blip. Middle East uncertainties would make the West wary of investment. They weren't. Today's headlines are just as negative and alarming. The facts, however, are different. Dubai's economy is diversified with a focus not just on construction but professional services, trade, tourism, finance and resources. The vast majority of Dubai's construction projects continue at speed; our beaches are clean and enjoyed by residents and visitors alike; our airport is still busy and total traffic has increased slightly; and our future remains fundamentally sound.

Clark does acknowledge Dubai faces challenges; liquidity remains tight, property excesses and speculation have left some exposed, while like other major cities such as London, New York and Beijing, there have been job losses and company failures.

"But which of these great cities will be the first to show signs of emerging from this funk? I would put my money on Dubai," says Clark. "Dubai has emerged as a regional economic and development miracle over the past two decades because it is a fundamentally optimistic society that delivers on what it promises, regardless of adversity or the critics."

There certainly seems to be a more positive sentiment in Dubai's financial markets right now, its financial index starting June with a 24-month high.

Meanwhile, here's a link to Germaine Greer's less than impressed take on Dubai architecture from back in February.

We were saddened to learn that Jazeera Airways human resources vice-president John Turnipseed passed away over the weekend. Arrangements for his funeral and repatriation to the US are underway.

Turnipseed, who studied at Southwest Texas State University, was an HR development specialist with over 23 years' experience in the airline industry.

He became Jazeera Airways personnel chief in October last year, taking responsibility for all HR functions and the airline's cultural development in Kuwait. Prior to this, he served as chief people and culture officer at Eos Airlines.

During his career, Turnipseed also spent 11 years at US low-cost carrier Southwest Airlines, where he was responsible for all aspects of employee relations.

There is going to be a big cheer going up shortly for frequent Delta Air Lines customers to Nigeria. The US major is upgrading the route from a Boeing 767-300 to a 777-200ER. And not before time some might say, and have been saying on the Airline Business blog in recent days.

Delta has been on the receiving end of plenty of criticism about the quality of its service on this route. After reading this flurry of activity I thought it was high time to interview the carrier and find out what it thinks about its Nigerian operations.

The man is the frame is Delta's commercial manager west and east Africa Bobby Bryan. He's been responsible for the airline's operation in Nigeria for 18 months and is an experienced hand in the region having before that spent two-and-a-half years with Air France-KLM in the country.

Bryan is delighted that from 1 July, the carrier is putting 777s on the route: "These 777s are brand new with AVOD (audio video on demand) throughout the cabin and all-leather seating - it is very much a state-of-the-art aircraft."
The 777s will offer 50 business class seats and 218 seats in economy, compared to 36 and 181 respectively for the 767.
Delta has come in for a lot of stick about its service quality on the 767s and in particular about the quality of its in-flight entertainment product. "We don't think a lot of it is accurate," says Bryan, but he is open about another issue - baggage.

Bags, bags, bags
"Most of the customer service issues focus on baggage. The average Nigeria passenger travels with five bags - this was something we had not anticipated," says Bryan.
Delta launched the Atlanta-Lagos route (its first as part of the African element of its international expansion) in December 2007. "In the early days we were leaving bags behind and we did run some extra segments with 777s to bring bags over," says Bryan.

To get over this problem, Delta imposed an embargo on excess baggage (giving only the standard international bag allowances), which avoided bags behind left behind but did irritate those Nigerian traders who liked to move goods on this route.
"The 777 will enable us to go into different markets in Nigeria," says Bryan. "Those traders who want to go to the US to buy consumer goods [can now use the Delta 777 flight]. Before we were not able to carry their bags. Now we will be able to join in that market, and it is not insignificant."
In addition, Delta has worked with the Nigerian authorities to change the outbound flight from Lagos to a nighttime departure. "This means we will have connecting opportunities we didn't have before to destinations in the oil producing areas in the south [of Nigeria]. Previously people had to come the night before and then take the morning flight."
From 10 June, Delta will begin its second route to Nigeria. The service between New York's JF Kennedy Airport and Nigerian capital Abuja will tap a different market to that of Lagos. "It is not an oil and traders market it is very much government, NGOs and a students market. There has never been a direct service from Abuja to the US," says Bryan.
Delta will use an ex-Song (Delta's former low-fare brand) 757-200 with 16 business and 155 economy seats on the route. "This is a premium aircraft to open up a new route," says Bryan. The 757s feature AVOD across the cabins and are refurbished with leather seats.

Strong market
Delta is pleased with its Nigerian routes, which averages loads of over 80%. "It is a premium market not only up front but also in the back," says Bryan.
After the UK, the USA is the next biggest market in terms of traffic for Nigeria. Until Delta's arrival, the direct market had been underserved. "Our African expansion has gone very well - cities in this region are strong performers and we are serving markets that were crying out for additional service to North America," says Bryan.
"Nigeria is a country with incredible potential. Over the medium-term we expect to develop our activities there," says Bryan.
But there is more competition coming, with local carrier Arik Air planning to begin service from Lagos to New York in the third quarter.
Bryan claims Arik's arrival is no bad thing. "Competition develops the market and we would welcome Nigerian carriers to North America. The market is large enough to handle several carriers. We see them as co-developers of the market."

Dedicated aircraft
Some of the comment about Delta's operations centred on whether it dedicated aircraft to this route or not. According to Bryan: "Very few airlines allocate a specific aircraft to a specific route."

By the end of June Delta will serve nine cities in seven countries in Africa.