Aviation sector across ME needs radical reform

DUBAI — The aviation infrastructure system across the Middle East must deregulate and become more competitive if it is to serve a rapidly growing base of customers. The aviation systems of the region simply do not offer the competitive pricing and service of their European and Asian counterparts, according to a new study by management consultants Booz Allen Hamilton.

By Lucia Dore (Senior Correspondent)

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Published: Mon 11 Sep 2006, 9:46 AM

Last updated: Sat 4 Apr 2015, 4:19 PM

The study argues that the Middle East economies are growing at such an impressive rate that they are in danger of leaving behind their regional aviation systems. And although some parts of the region such as Dubai have begun to reform their aviation markets through deregulation and increased commercialisation, more can still be done, they argue.

"Airports in the Middle East do not fully exploit the economic potential of the non aeronautical business. For example, Middle Eastern airports average revenues per passenger as well as non-aeronautical revenues per passenger are still significantly below European benchmarks," said senior vice president in Booz Allen Hamilton's Dusseldorf office, Jurgen Ringbeck.

The problems are not insurmountable, but the need for a solution is as important as ever. Tourism to the Middle East has nearly tripled since 1995, with 35 million arrivals in 2005. The necessity for local aviation services that adequately give customers service that is at the level of European and Asian markets, is central to continued growth of the region as a whole.

Many Middle East countries have met increased travel demand with enormous investments in airport expansion. And many Middle East governments have invested heavily in physical ground capacity, with the UAE leading the way. These considerable investments in airport expansion are designed to meet a planned capacity of the region in 2012 of nearly 320 million passengers.

"However, the region will likely fall short of such growth," said vice president of Booz Allen Hamilton's Beirut office, Fadi Majdalani "Even if it meets its expected growth rate of about seven per cent a year, this is simply too high of a number to meet."

Several suggestions are put forward to combat these deficiencies and create an aviation system infrastructure that can serve a rapidly growing base of customers.

"Middle Eastern nations need a strategic perspective for a sustainable, innovative, deregulated and regionally coordinated Middle East aviation system," said project manager in Booz Allen Hamilton's Dubai office, Ahmed Galal Ismail. "We believe that aviation reform is the correct path to take, but the slow rate of liberalisation is a hurdle to sustainable reform, at least in the short term."

The framework laid down to radically improve air transport services and capabilities includes developing strong local private airline carriers; improving service quality; lowering customer prices; expanding service offerings; improving safety and security and reducing subsidies and public investments.

Booz Allen Hamilton believes that the benefits of an open and unfettered aviation market that follows these directives will mean increased customer usage and more economic activity for an already booming marketplace. They argue that, "to succeed, the Middle East region needs a clear vision and a commitment to deregulation and fair competition."

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