Peace in the Middle East is the factor which will make or break the events of 1996. A lasting peace accord between Israel and its Arab neighbours could produce the boom the aviation players have been waiting for, but failure on the part of the politicians could put pressure on carriers, many of which are still struggling to recover from the Gulf war.
Israel and Jordan have yet to sign a bilateral, but El Al and Royal Jordanian have declared their intentions to begin regional services upon its completion, beginning with reciprocal services between Amman and Tel Aviv.
With Israel and Qatar drawing closer together following the signing of a large natural gas contract, it seemed likely that an air service agreement would soon follow. Talks were held, but no agreement has been reached yet.
Peace negotiations with Syria and Lebanon could provide the largest stumbling blocks to open skies in the area, but another large market, Iraq, still remains subject to world embargoes.
One supplier in the Middle East stresses the importance of Syria and Iraq and believes the interest generated so far by Israel, Jordan and Qatar is a promising sign. 'As the relations within the Middle East begin to normalise there will clearly be the potential to increase activities, and for the movement of people for business and leisure to grow,' he says.
Iata regional director, Khalid Mahdi, agrees that Syria plays a crucial role. 'The area is on the brink of solving its problems but it is not yet solved,' he says. To add to the political problems, the whole area is experiencing an economic recession, which Mahdi stresses includes the wealthier states such as Saudi Arabia.
However, there is cautious optimism for the year ahead. Emirates continues to perform well and startup Qatar Airways expected to show a small profit in its first year. Startups in Iran are working to penetrate the Muslim nations in the former Soviet Union, but Iran's economy is suffering high inflation and unemployment.
One certain winner in the event of lasting peace is El Al, whose stop-start privatisation is due in 1996 with the sale of a 51 per cent stake. As well as starting new routes, the Israeli carrier will be able to cut costs once airspace restrictions over its Arab neighbours are lifted.
African carriers face many uncertainties, but three issues are sharply in focus in 1996. African states must allow flag carriers to sink or swim on their own financial merits. Neighbouring countries must cooperate on joint airline ventures to reduce the burden on governments. Finally, carriers must achieve financial stability before attempting to enter the private sector.
Many African governments are now being forced by the financial institutions to focus on more pressing economic and social issues. The national airline has become an extra that must go, and private investors are expected to pick up when governments withdraw, as has happened in Zambia.
Cooperation with neighbouring countries is one way of maintaining air transport links while easing the financial burden, and in 1995 Alliance became the continent's second multi-national carrier. Four African airlines have approached SAA for varying forms of assistance, says its chief executive Mike Myburgh, but he favours the Alliance route in which SAA has linked with the Ugandan and Tanzanian governments. Talks are already underway for expansion of Alliance or possibly for a similar operation among some west African carriers.
Sassy N'Diyae, Iata's regional director for Africa, says carriers will be forced to adopt this approach or die. Of Iata's 32 African members, N'Diyae estimates 16 will survive beyond 2000. 'Half will be gone in four years unless they restructure in a different type of arrangement along the lines of Alliance and Air Afrique,' he says. 'The state cannot afford them any longer.'
The privatisation of Kenya Airways is moving forward with KLM's purchase of a 26 per cent stake. At any given time several African carriers talk of privatisation - Air Zimbabwe and Ghana Airways have had consultants in during the past year, Air Tanzania has talked about local investors taking a stake, and the South African government has called for the sale of 25 per cent of SAA.
While in favour of privatisation, N'Diyae warns that it is not a panacea and says that a carrier's own house must be in order first. Myburgh says there is not much time left for African carriers to achieve this, predicting a world economic downturn in 1998-9.
Liberalisation is still a sensitive issue within Africa, with most airlines wanting to keep the rest of the world out until they are more stable. Little has happened thus far on the reaffirmation of the Yamoussoukro Declaration in which open skies between the African regions was agreed. However N'Diyae believes this year may see some African countries opening their skies to their neighbours.
Individual carriers still face difficulties arising from their political situations. Western countries may impose sanctions on Nigeria, while Angola is still trying to recover from years of civil war and Libya continues to face an embargo.
Source: Airline Business