The Middle East’s aviation sector appears to be finally putting the Covid-19 crisis behind it, with carriers around the region reporting healthy profits and surging passenger numbers for the opening months of this year.
A recent spate of positive news was led by FlyDubai, which said on May 8 that passenger numbers in the first quarter of 2022 had more than doubled year-on-year. The carrier said it had carried 2.35 million passengers from January to March this year, an increase of 114% compared to the same period in 2021.
The airline did not give any indications of its financial performance, but it had already moved into positive territory last year, with a $229 million profit recorded in 2021 after a loss of $194 million the year before.
Others have also been reporting good numbers this year. A day after FlyDubai’s update, Turkish Airlines said it had made a net profit of $161 million in the first quarter, on revenues of $3.1 billion – some 10% higher than the first quarter of 2019 before the Covid-19 pandemic struck.
The airline carried a total of 12.7 million passengers, with a load factor (the proportion of seats that are filled) of 83.6% on its domestic routes and 68.6% on international services.
Other UAE carriers are also reporting healthy levels of business. On May 11, Sharjah-based low-cost carrier Air Arabia reported a net profit of AED 291 million ($79 million) for the first quarter – up from just AED 34 million in the same period last year. Revenues were also up 97% year-on-year to AED 1.12 billion.
It carried 2.4 million passengers during the quarter, up from 1.3 million a year earlier, and its load factor was at 79%, up from 75% the year before.
Regional giant Emirates has also given an upbeat review of the current climate. Chief executive Sheikh Ahmed bin Saeed Al Maktoum said this week that he expected his airline to turn a profit in the current financial year, which began in April. That should allow it to start repaying some $4 billion in aid it received from the Dubai government during the pandemic.
Speaking at the Arabian Travel Market trade show in Dubai, he said that “As of next year, we will be paying all that money” back to the government.
In its most recently published set of results, Emirates had reported a loss of around $6 billion for the year to the end of March 2021.
Challenges still abound
However, despite the rising passenger demand, airlines still need to keep a sharp eye on costs – not least because oil prices have spiked upwards this year, following Russia’s invasion of Ukraine.
Turkish Airlines boasted that it had reduced its total spending by 2% in Q1 2022, compared to the same period of 2019.
Announcing his group’s results, Air Arabia’s chairman Sheikh Abdullah Bin Mohammad Al-Thani welcomed the more benign trading environment but also pointed to “rigid cost control” and said “In addition to the lasting impact of Covid-19 on global aviation, the industry continues to face geo-political challenges, higher oil prices and uncertainty towards full economic recovery.”
Other challenges abound, including delays to the delivery of new planes. Emirates has said it may have to wait until 2025 to receive the Boeing 787 Dreamliners it has ordered, due to the suspension of deliveries by the U.S. plane maker. The airline’s first Airbus A350 are due to be handed over in August 2024, a year later than planned.
In April, the High Court in London refused a request by Qatar Airways to force Airbus to keep to an agreement to deliver A321neo aircraft. The two sides are involved in a bitter dispute over Qatar’s allegations of safety flaws with the Airbus A350, which Airbus denies.
More investment is being poured into the industry though, with Middle East governments often keen to use aviation as a tool to help diversify and expand their economies. This is clearly being seen in Saudi Arabia, where a new international airline is being planned. Transport minister Saleh Al-Jasser told the Future Aviation Forum in Riyadh this week that his government aimed to attract $100 billion in investment to the aviation sector by the end of the decade.