Subscribe Free
in Air Transport / Features

Nile Air shrugging off Egyptian woes

Posted 10 October 2016 · Add Comment

Nile Air chief executive Ahmed Aly talks to Martin Rivers about another year of impressive growth for the Egyptian carrier.

Egypt’s Nile Air is shrugging off difficulties in its home market and pressing on with a rapid expansion programme that has already seen its fleet triple in size over the past two years.
The privately-owned carrier has added five international destinations from its Cairo base so far in 2016: Istanbul Sabiha Gokcen in Turkey, Al Ain in the United Arab Emirates (UAE), Basra in Iraq, and Jizan and Abha in Saudi Arabia.
It has also entered the domestic Egyptian market by launching flights from Cairo to Hurghada and Sharm-el Sheikh, as well as connecting the latter resort with Riyadh and Tabuk in Saudi Arabia. Together with frequency hikes across the existing network, the airline’s capacity is up by 72% over the past six months alone.
“Our plan is stable year-on-year growth,” chief executive Ahmed Aly said.
“We see that the Egyptian market requires more capacity. We’ve seen significant demand growth in certain regions – the Middle East and Africa in particular – while the European market has remained fairly stable. It’s not as strong as the Middle East region, but we are positive about seeing a pickup from 2017.”
Nile Air’s decision to launch services to Sharm el-Sheikh is particularly striking given the Red Sea resort’s tainted reputation following the bombing of Metrojet Flight 9268 by Daesh last October.
The Russian charter flight was destroyed shortly after take-off from Sharm el-Sheikh in the worst aviation-related terror attack since 9/11, casting a cloud over Egyptian airport security and prompting an immediate exodus of European holidaymakers.
“The Red Sea resorts, irrespective of the soft demand of the last few months, are still strategically important markets,” Aly stressed.
“Historically, the majority of tourism to Egypt has been to the Red Sea resorts – the likes of Sharm el-Sheikh, Hurghada, Dahab, Marsa Alam – and we certainly see that the demand is still there. The Egyptian market is a very resilient one. We believe that, once the restrictions from various European countries are removed, the rebound will be very strong and quick. And we expect that to happen by the end of this year.”
Russia closed all air corridors to Egypt in the aftermath of Flight 9268, but now says that measures taken by the security services may justify a resumption of flights this year. Germany lifted its own ban on Sharm el-Sheikh flights in May, albeit while retaining a host of related travel advisories. The UK still advises against “all but essential travel by air to or from Sharm el-Sheikh”.
While Egypt’s tourism sector is reeling from the European pull-out – nationwide visitor numbers fell by 51.7% year-on-year in May – Aly sees ample opportunities to develop new inbound markets for the Red Sea resorts.
“The underlying foundations of these markets are strong,” he reiterated. “We’ll be looking at attracting the local [Egyptian] market, and international tourism from the Gulf ... and expatriates.”
Cairo provides a further bulwark against the tourism downturn, with overall seating capacity to and from Egypt’s capital remaining largely unchanged over the past 12 months. Its resilience is partly down to the high proportion of business travellers that pass through the airport, while traffic is also propped up by Visiting Friends and Relatives (VFR) and outbound religious travel.
“It’s about targeting the right segments – not being dependent on one particular traffic type or one particular destination,” Aly said.
“In Saudi Arabia, we’ve got the religious Hajj and Umrah traffic; we’ve got the VFR traffic, in terms of the large Egyptian community living out there; we’ve got the strong inbound tourism from the Gulf region; we’ve got the corporate agreements with the oil companies and with universities in Saudi Arabia and Egypt; and we’ve also got the government traffic.”
The airline’s international network focuses heavily on Saudi Arabia, with 14 routes currently operated to ten points in the kingdom: Abha, Jeddah, Jizan, Al Jawf, Hofuf, Gassim, Riyadh, Tabuk, Ta’if and Yanbu. Outbound services depart from Cairo, Alexandria and Sharm el-Sheikh.
Although bilateral restrictions have clipped its wings at times – Riyadh is only connected with Sharm el-Sheikh, for example – Nile Air has proven adept at catalysing growth in secondary and tertiary markets.
Aly cited two examples: Gassim, about 400km north of Riyadh; and Yanbu, about 200km west of Medina. “We initially launched [these destinations] as three-per-week services. Today they’re operated as triple daily,” he beamed. “Yanbu and Gassim have actually become markets in their own rights. They’re not reliant on … Riyadh or Medina. They are actually strong population and business centres in their own right.”
The remainder of Nile Air’s overseas network comprises Baghdad and Basra in Iraq; Al Ain in the UAE emirate of Abu Dhabi; Istanbul in Turkey; Port Sudan in Sudan; and Kuwait.
Some of the more niche services that lack direct competition have taken time to mature. Cairo-Port Sudan, launched in June 2015, is one route still in the development stage. Its load factors were initially disappointing, but have since crept above 70% thanks to a succession of interline agreements with European operators.
Another route launched last summer, Cairo-Baghdad, has gone from strength to strength – in part due to a tightening of Turkish visa restrictions that is pushing Iraqi holidaymakers to Egypt. With inbound tourism now dominating the twice weekly connection, Nile Air has begun deploying its larger 204-seat Airbus A321 to the Iraqi capital.
That stretched unit is also being used for flights from Cairo to Jeddah, Kuwait and “anywhere we’ve got significant spill with the A320s”.
“Our A321 is configured with 25% more seats than our current A320s, with a cost that isn’t too significant an increase,” Aly noted. “It's a great aircraft that gives us a competitive advantage on high-demand trunk routes.”
The airline’s fleet – currently five A320s and one A321 – should grow to ten aircraft over the next two years. Airbus is due to deliver a pair of ordered A321s in 2018, by which time Aly "conservatively" expects to have leased two additional A320-family units. A planned flotation in mid-2017 will help fund the expansion, with listings on both the Cairo and London markets being targeted.
The smallest members of the A320 family – the A318 and A319 – are not considered suitable for Nile Air’s expanding operation. But still-smaller regional aircraft may have a role to play in its long-term future.
“As we reach critical mass on the A320s we could start to explore different options,” Aly affirmed. "There are unique opportunities with regional aircraft, be it jets or turboprops. If you look at Sudan, Saudi Arabia, Jordan, there are plenty of tertiary airports which may not sustain a larger-capacity aircraft, but could potentially work with a smaller capacity aircraft between 50-90 seats.
“However, we are wary of adding too much complexity from a financial, technical, operational perspective at this stage."
Preferring, for now, to scale up the Airbus fleet, Nile Air is casting its gaze far and wide for mid-size route opportunities. Studies are under way for destinations in “Europe, North Africa, East Africa and the Middle East,” Aly affirmed.
While branching out to Europe would pose challenges in the current climate, Nile Air is determined to serve the mainland “in the foreseeable future”. This could include either primary markets like London and Paris or lesser-known cities that lack existing connections with Egypt.
“How fast we expand is very much dependent on changes in the market and market growth,” Aly said, acknowledging continued uncertainty in Egypt.
“We’re not an airline who’s going to put pre-determined figures to our expansion. But we’ve got a very clear strategic plan covering the next five to ten years; a very clear commercial focus on how we expand. And we'll take it as comes."

* required field

Post a comment

Other Stories
Advertisement
Latest News

Gulf Air hosts Dubai travel trade representatives

Gulf Air recently hosted key travel trade industry representatives in Dubai at an event that showcased the airline's latest developments and customer-focused initiatives while thanking guests for their longstanding support.

Mohammed Bin Rashid Space Centre joins Sentinel Asia initiative

Mohammed Bin Rashid Space (MBRSC) has joined Sentinel Asia, an international initiative among space agencies, disaster management agencies, and international agencies for applying remote sensing and Web-GIS technologies to

Re-delivery of Boeing B777-200LR after VVIP completion

A wide body A340-200 has successfully been returned to service after an extensive Maintenance input at AMAC Aerospace, Basel, Switzerland.

Emirates Group Security to host Global Aviation Security Symposium in Dubai

Emirates Group Security, the multi-faceted organisation that develops and implements security measures and strategies across the Emirates network, will be bringing together leading global experts in aviation security for a three

Boeing and Dassault Systèmes announce extended partnership

Boeing and Dassault Systèmes have extended their partnership. Boeing will expand its deployment of Dassault Systèmes' products across its commercial aviation, space and defense programs to include the Dassault Systèmes

BA extends NDC with Dubai's TPConnects

British Airways has extended its New Distribution Capability (NDC) with Dubai-headquartered TPConnects, one of the region's first IATA Certified Travel Aggregators and IT Providers.

Aviation Africa SK18418
See us at
DAS BT1105161117Aviation Africa BT18418DASAS BT3006161117Global Aerospace BT28218Aviation Show 267291117RMIT BT1631817AIME BT1204240118DIAC BT1105121117Commercial Aircraft Financing BT2017