The International Air Transport Association (IATA)’s three-day Annual General Meeting in Istanbul, Turkey, ended on Tuesday with welcome news for airlines in the Middle East in terms of growth and recovery to passenger levels not seen since before the COVID-19 pandemic.
The outlook for the whole industry was positive at the gathering, which was hosted by Turkish carrier Pegasus Airlines. IATA — an association that represents around 300 airlines in 120 countries — forecasted that the global aviation industry’s profits are expected to reach $9.8 billion in 2023, more than double the $4.7 billion forecast in December, driven by pent-up demand for air travel following the pandemic.
Traffic recovering in region
Speaking on the second day of the meeting on Monday, IATA regional Vice President for Africa and the Middle East Kamil Al-Awadhi said that Middle Eastern carriers were on track for a full recovery and the airlines are expected to bounce back from pre-pandemic 2019 levels by 2024.
Awadhi said that revenue passenger-kilometers for Middle Eastern carriers stands at 88% of 2019’s figures, showing the airlines in the region have already been making strong progress.
GCC carriers will be at the forefront of the surge in passenger numbers, he said, which IATA expects to double in the region to 550 million by 2040.
Although the IATA Middle East head said that some of these airlines were increasingly turning to sustainable aviation fuel — Qatar Airways signed a deal with Shell for 3,000 tons of the fuel last week — he admitted that the industry did not yet have enough of it.
“Airlines cannot do much about it; they don’t produce SAF,” Al-Awadhi said.
Qatar Airways CEO Akbar Al Baker told Bloomberg on Saturday, the day before the meeting kicked off, that his airline will do away with first-class berths on its next-generation long-haul aircraft.
“Why should you invest in a subclass of an aeroplane that already gives you all the amenities that first class gives you?” said Al Baker. “I don’t see the necessity.”
The airline is touting its “Q-suite” business class product instead, a feature of its future Boeing 777X aircraft.
New airlines, new orders
The meeting certainly was not short of order news, with UAE carrier Emirates chief executive Tim Clark telling reporters on the sidelines of the meeting on Monday that the carrier may order more Airbus A350, Boeing 777X or 787s. He declined to give specific order numbers but said Emirates was looking at acquiring some new aircrafts.
Saudi Arabia’s new airline Riyadh Air announced it is in the process of negotiating a three-stage fleet acquisition with Airbus and Boeing to buy a significant amount of narrowbodies.
Speaking to Reuters at the event Monday, CEO Tony Douglas declined to give a size of the order but said, “It’s not going to be insignificant by any stretch of the imagination,” adding that it might not be the carrier’s last order.
When the creation of the airline was made public in March, an order for up to 72 Boeing 787s was also announced. Bloomberg reported last week that Riyadh Air was working on a deal to buy at least 150 new Boeing 737 MAX jets.
The airline will begin operations in 2025 and will be based out of Riyadh. It will provide new competition in the region to established Middle Eastern carriers Etihad, Emirates and Qatar Airways.
Speaking to reporters in Istanbul, IATA director general Willie Walsh weighed in on the issue.
“It’s going to be fascinating to see; I think you’ve really got to give credit to Saudi Arabia for the ambition they’ve expressed they are determined to generate significant revenues going forward and a significant proportion of GDP from tourism and I think given the resources that they have you’d be foolish to underestimate them delivering on that,” he said.
The former International Airlines Group boss said he always argued that given the proximity of Abu Dhabi, Dubai and Qatar, that there was only ever scope for two major aviation hubs there, despite the region having three major airlines. But he said geographically, one could make the case for Saudi Arabia to add a global hub airport alongside Qatar and Dubai, which Riyadh Air would be doing with the Saudi capital.
“What we see is the demand in the region continues to grow. It demonstrates the economic value that some governments see in aviation and the investments that they’re making because of the long-term return they’re going to get from GDP contribution from tourism,” he said.
Emirates is due to host the next IATA annual meeting in Dubai on June 2-4, 2024.