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Arab airline consolidation unlikely, say AACO speakers

Strong political and cultural obstacles mean the Middle East and North Africa is unlikely to experience the sort of airline consolidation seen in Europe and the USA.

That was the view of speakers at the 51st Arab Air Carriers Organisation annual general meeting in Cairo on 6 November, echoing a straw poll in which a large majority of the audience stated that significant airline mergers were unlikely.

Henrik Hololei, the European Commission’s director general for mobility and transport, says he expects more consolidation in Europe in the next 24 months, but “it will be less speedy here”, citing ownership and control regulations, the lack of a single economic market, and “deeply-rooted notions of national carriers”.

Adel Redha, chief operating officer of the region’s largest airline, Emirates, says consolidation would not take place in the next five years. “This is a part of the world where each country likes to have an airline, even if they have one aircraft,” he notes.

Mohamad El-Hout, chairman and director general of Lebanon-based Middle East Airlines, says he did not think mergers or acquisitions would happen “even if it means economic benefits for everyone”, adding: “Airlines are part of the economic vision of each government.”

He put forward the example of the Israeli attack on Lebanon in 2006, after which MEA continued to operate, as an example of a state airline being a vital economic and national asset. “You would not have seen any other carrier flying the next day,” he said.

The past 15 years has seen the absorption of European flag-carriers such as Austrian Airlines, Aer Lingus, KLM, Iberia and Swiss into groups dominated by Air France, British Airways and Lufthansa, while in the USA, American Airlines, Delta Air Lines and United Airlines have taken over rivals.

However, in the Arab world virtually every country retains a state-controlled own flag-carrier – with two in the United Arab Emirates – and there are also several large independent airlines. There is virtually no cross-border ownership.

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