The Worldfolio sits down with Capt. Ahmed Adel, who gives his insight into the future of the airline business in Egypt and highlights its competitive advantages as an aviation hub.
Before we move onto the airline, I want to ask your opinion on the current state of the Egyptian economy and how do you expect it to flourish as you seek to achieve an above 8% growth?
When it comes to the part of the economy, this is something that is handled by the government, so I can tell you from my end of the aviation business. We are seeing good numbers in the past two quarters. The load factor has increased in the first quarter of the fiscal year. Our fiscal year starts in July, not in January in EGYPTAIR. From July until the end of October, we have seen an increase in our load factor, which is the occupancy on our aircraft for around 86-87%, which is very good.
EGYPTAIR plays the role of an arm of the Egyptian government to serve the business people who are coming into Egypt: the traveler and tourists and for the Egyptian people. We also act as a hub through Cairo airport because we are a member of Star Alliance, so our hub operation is very important for us to exercise the 6th freedom of aviation, which is getting passengers that are passing through Cairo airport, going from North America all the way to the Far East or to Africa. This is another role that we play. We are now setting ourselves to maximize on playing this role more by upgrading our services at the airports. We have a new minister of aviation that took over the ministerial portfolio by the end of 2018. His main strategies were very clear that all entities on civil aviation have to work together to reach the development that we want to reach in the next 3-5 years. So when it comes to us in EGYPTAIR, we are working closely with the airport authorities because we are looking to expand our fleet. We’ve done the first stage. We have a concrete order for 33 planes, which we receive from March 2019 until the end of 2020. We have another option of exercising 12 extra planes by the end of 2019. We exercised the option so we start getting them by the end of 2021.
Right now we are working in preparation to issue an RFP for the second stage of the development of our fleet. This first stage that I talked to you about which is 33 firm orders and 12 optional aircraft is the first of the fleet renovation. So we’re phasing out a lot of old aircraft that account for 50% of our fleet; we are then getting state-of-the-art aircraft. We have six Dreamliners B787-900. We have 12 Airbus A220-300, which was the ex-Bombardier CS300. This Airbus acquired this part of Bombardier, and they changed the brand of the aircraft. We have an option for a patch of 12 Airbus A220-300 for our regional and domestic airlines which is EGYPTAIR EXPRESS. We then have 15 Airbus A320Neo that we are receiving from the beginning of 2019 until the end of 2020, that’s the 33 firm orders. So this is the first stage of fleet renovation. Our second stage will be replacing the second patch of aircraft that are being phased out through 2021 until 2027. So we have four Airbus A330-300s that will be phased out in this period between 2021 and 2027. We have six B777-300s, which will be phased out by 2023, and then we are looking to replace them and increase the number of airplanes in our fleet.
We are working on this closely with our financial people and close partners in the manufacturing business - Boeing Company to Airbus Company, and Bombardier Company. We are going to issue a big RFP within the first half of 2019. When you issue for an RFP you don’t ask for a specific type, you ask for a range and number of seats that serve your network. At the beginning of 2019, EGYPTAIR signed with Bain &Co., which is one of the biggest consulting firms.
What is it that is exciting you the most about the future of the airline business? Is it Egypt as a country, its domestic market, and tourism umbrella? Or is it the possibility to position Egypt as the hub connecting different regions diversifying your revenue among other businesses?
It is different for us. Some of them are things that are happening in the country as we speak. There is development of new cities, airports, and roads. All this is going to affect us very positively. Also, the manpower that we have in EGYPTAIR is the biggest asset, through training and through upgrading the quality of services that we give. We are very excited about that. Seeing that right now the entity of the aviation is working, the cross-communication between the holding companies that are under the umbrella of civil aviation is very efficient; it’s on a day to day basis. We have at least every week 3-4 meetings early in the morning under the umbrella of the ministry and chaired by the minister to sit and talk about all the future plans, tactical decisions needed to take in effect to upgrade the services. We are seeing the effect of this on the airports and on our flights. So this is the exciting part. There’s a very close collaboration between the Minister of Civil Aviation and the Minister of Tourism in the field of tourism and travel. So the number of tourists is growing; this is very good news for us, as well as seeing the collaboration that is happening. The plan that the ministry of aviation is putting down now for the development of the airports is very exciting for us because when the airports are growing and expanding, this means more business for us and better service. In brief, these are the three or four fronts that we are excited about.
The other key role that you play is in the decentralization of the economy and connecting Egyptian people not only to trade money but for social reasons. How are you being able to provide a service that is needed for the Egyptian people?
As I told you, a very big part of EGYPTAIR’s role is an arm of the government. The margin of profit in legacy airlines is not that big, but it’s the ancillary business and the service that it gives to the people of the country, the visitors, and the economy that has the bigger picture and bigger role. This is where we stand right now and what we want to improve. We want to expand our fleet.
What do you consider are the key competitive advantages of Egypt as a hub versus other regional competitors?
It’s not the only aspect, there are many aspects. First, the geographical position; we can operate to most continents in the world with a narrow body aircraft that has a range of 6-8 hours. This is a very big competitive advantage because this means a better cost of operation and a higher frequency. We have two flights a day to Paris, two to London. We have sometimes reached three a day to Rome. We have 3-4 flights a day to Beirut and Jordan, so that’s a very big advantage. The second advantage is the weather. We have sun 360 days of the year; our weather is very good which means fewer delays, better operation, better service for the customer instead of being delayed in the airport, having to spend an extra night or miss a flight. So this is also a big advantage. What we’re seeing from the government’s their keenness on development: a lot of airports and developments of road. This is also an advantage that we’re excited about.