Martin Craigs, CEO of the Pacific Asia Travel Association (PATA) delivered an address at a recent PATA event in Kuala Lumpur.
Following is a summation:
At best, the aviation industry is a complex and often money-losing endeavor. It is also subject to the effects of external events, which can challenge airlines in ways that make ânormalâ almost indefinable. Such has been the lot of Egyptair since early 2011.
While most of the political unrest has been focused on Cairo, Egypt's high profile in the news cycle as a flashpoint has hurt the entire nation, which is heavily dependent on tourism. In 2011, the number of visitors dropped by nearly one-third, with an equal decline in income from the sector.
A hard year, needing a workable response
Spring 2011 saw not only Egyptair, but all other carriers as well, operating on improvised and reduced schedules that made travel inconvenient and discouraged all but the most intrepid travelers.
All of this came at a time when Cairo's Airport was in the midst of a significant upgrade, which added a third runway and saw the opening of Terminal 3 - a modern, efficient facility that vastly improved the passenger experience. Both Egypt and its national carrier, Egyptair, were forced to quickly recalculate and adapt.
The airport decided to proceed with the modernization of Terminal 2 despite the drop in traffic. Those in charge of the process opted to take a long-term view and decided that the renovation was necessary and would greatly benefit the whole airport in ways that would transcend and outlast current difficulties. As a result, T2 is now in the process of being upgraded and will reopen in November 2013 with its capacity doubled - from 3.5 to 7 million passengers per year. Once completed, CAI will have an infrastructure that will well serve it, and the passengers using it, for years to come.
Hadj traffic unaffected
One significant factor at CAI is the Hadj traffic, which is a huge, and seasonal, aspect of the airport's operations. In 2011, there were 300,000 additional seats supplied for travel to Saudi Arabia, with that number rising to 420,000 in 2012. Eighty thousand of those travelers will be Egyptian, and the balance will transfer from other points of origin.
This extraordinary number of passengers is transported on as many as 25 additional flights per day for the duration of the Hadj, and the passengers are processed in a âseasonalâ terminal created especially to deal with their needs. Even with new facilities, the crush of passengers would overwhelm the terminal facilities, making alternative handling spaces mandatory.
A new strategy for the national carrier
The airline also had to redefine itself and refocus its marketing and sales efforts. The first initiative undertaken was to increase transfer traffic at the Cairo hub. Prior to 2011, only 3 percent of Egyptair's passengers connected at Cairo. Once the schedule was realigned to focus on connections, that number has now jumped to 26 percent, with 70 percent of the international transfer passengers headed for points in the Mideast and Africa.
The airline has also seen an increase in transfer traffic from Asia to both Europe and North Africa. Frequencies to Tokyo will go from 2 to 3 per week, and Osaka will soon gain its own nonstop flights.
Egypt is a key regional player, and needs to stay âopenâ
According to Mohamed Rahma, Egyptair's Corporate Communication Manager, the country has a dual channel for air traffic. A large majority of the touristic traffic travels by charter, flying directly to resort destinations near the Mediterranean or Red Seas. And it was here, rather than at CAI, that the full brunt of the downturn was felt. Sharm el-Sheikh, far to the south of Cairo and on the Red Sea, saw a 37percent traffic drop in 2011 as opposed to only 19 percent at CAI. Fortunately, early figures for 2012 indicate a rebound.
With 85 million inhabitants, Egypt is the most populous nation in the Arab Middle East and a key player in the regional economy. The recent uncertainty has reduced business traffic as foreign investors are adopting a âwait and seeâ attitude until the political situation stabilizes. Rahma also noted that the origin and destination traffic to Cairo has remained more or less constant, since resort visitors do not transit the hub, and transfer traffic has supplemented the origin and destination numbers.
The airline believes that, as the primary aviation link to the world, if it cuts services, it in effect shuts down the nation as a whole, and if growth is to resume, the airline needs to keep its links to the rest of the world intact and functional.
The airline has recently gotten a significant boost from the government, which has been promoting travel on Egyptair to the populace, asking that Egyptians who plan to travel use their national carrier and assist in keeping it viable as the political and social structure of the country undergo significant change.
Perspective is vital
The recent elections have generated some stability, but many questions as to the nation's future remain unresolved. Rahma takes a sanguine view of the current situation, noting that in a land with a 2000-year history, two years is ânothing.â When the rebound comes, as it surely will, both the airline and its Cairo hub will be well-equipped to deal with it.