Royal Jordanian plans to begin using its fleet of Embraer E-195s to serve Iraq as it looks to further expand its market-leading presence in the war-torn country.
Chief executive Samer Majali says wet-leased Fokker 28s will be replaced with E-195s within the next few months on services to Erbil and Sulaymaniyah in northern Iraq.
Royal Jordanian has been using South African-registered wet-leased Fokker 28s on all its Iraq services for the last three years because they have lower hull values than its own fleet of Airbus narrowbodies and Embraer regional jets. “Insurance was a very high cost for us so we chose an excellent airplane with low hull value so we can get reasonable insurance rates,” Majali explains.
But Majali adds the risk of its services to northern Iraq have become low enough to economically operate its own aircraft. Royal Jordanian also serves Baghdad in central Iraq and Basra in the south but these destinations at least for now will continue to be served with Fokker 28s.
Royal Jordanian currently operates 30 weekly flights into Iraq, which makes it by far the largest carrier serving the war-torn country. Given the high-yield passengers these services cater to Majali says a Fokker 28 is “not ideal” but he adds: “As long as the situation continues in Iraq where insurance rates are very high and nobody else is flying [into Iraq] it’s OK. To offer even a not so good service an hour and 20 minutes to Baghdad is better than taking a road for 10 hours.”
Royal Jordanian now enjoys being the only carrier offering convenient connections to Iraq from several key destinations including major cities in North America and Europe. Majali expects Royal Jordanian will face more competition on Iraqi routes if stability returns to the country but he sees Iraq continuing to be an important contributor to the carrier’s profits.
“If Iraq improves obviously our market share will reduce as Iraqi Airways picks up its own market plus as other carriers start to fly. But we think the pile will grow to 10 times the size. People will go back, there will be more business and there will be opportunities for rebuilding. Iraq is a huge country. We think the overall traffic will increase even though our market share will decrease. Plus we just don’t offer Baghad-Amman. We connect with our network and it will take longer for Iraqi Airways to have a network the size and breadth of Royal Jordanian.”
Royal Jordanian could also help Iraqi Airways, which has been struggling to return its aircraft to service and now has a limited network using wet-leased aircraft. But Majali says although Royal Jordanian helped train Iraqi Airways’ Baghdad airport personnel in 2005, it has never been asked to help the carrier strategically or financially.
“They have never asked us. If they asked us of course we would help,” he says. “We were responsible for handling at Baghdad airport for a period of a year and a half immediately after the war. So we have relationship with the Iraqis.”
He adds over the last few years Royal Jordanian has not been looking at any potential overseas investments because it was in the process of being privatised and “the government had strict requirements on what Royal Jordanian could get into during privatisation”. But with majority of the airline placed into private hands in December it now has the flexibility to potentially establish a venture in Iraq or elsewhere.
“Now we’re on the other end of privatisation we can actually do whatever we want,” Majali says. “To invest in other businesses, vertical integration; everything is open to the new board of Royal Jordanian to decide whatever it wants to do.”
Source: Airline Business
