Arab gov'ts getting priorities wrong

Some governments in the Arab world put a higher priority on growing their aircraft fleets than on addressing more pressing social issues, the head of the region’s largest listed airline has said.

Air Arabia CEO Adel Ali also told Arabian Business on Tuesday that the growing levels of regional competition made it inevitable that some local low-cost carriers would go bust.

“Obviously the legacy carriers will not close down because they are owned by governments. So probably instead of building hospitals and schools, they will buy more aeroplanes, in this part of the world,” Air Arabia CEO Adel Ali told Arabian Business on Monday.

“They [local LCCs] are all busy, but not all of them are successful. They’re all carrying people, and some are doing it for good reasons – to improve business, for example - but some are doing it simply because they love to have another airline.”

Ali claimed that the increasing numbers of jets in the region – the GCC alone is responsible for 30 percent of the world’s aircraft orderbook – plus extra competition meant that some of the eight Gulf low-cost carriers (LCCs) would inevitably close.

“I hope that people look at this business not just as a marathon race to see who will have the biggest and most planes,” the Air Arabia boss commented.

“At the moment, it seems like a race to fight for statistics rather than taking care of the bottom line.”

Ali also stated that while the current high level of competition was good for consumers in the short term, it was questionable whether such low prices were in the long-term interest of passengers.

Air Arabia was the region’s first LCC when it launched six years ago. The carrier’s full-year results for 2009 showed that profits were down by 11.3 percent to $123m, still higher than had been predicted by analysts. Turnover in 2009 fell 4.5 percent to $544m.

Article Source: http://www.arabianbusiness.com/584367-arab-govts-getting-priorities-wron...