Egypt’s Nile Air flourishes despite downturn
The eight-year-old, privately-owned airline will add Istanbul, Turkey and Al Ain, Abu Dhabi to its network this summer
Despite two major air disasters hitting its home nation over the past year, Egypt’s Nile Air is ramping up expansion with new routes, more aircraft and even a long-term plan to enter western European markets.
The eight-year-old, privately-owned airline will add Istanbul, Turkey and Al Ain, Abu Dhabi to its network this summer, continuing a rapid growth trajectory that has defied jitters about the bombing of Metrojet Flight 9268 in October and the still-unexplained loss of EgyptAir Flight 804 in May.
Its fleet has already grown to six planes this year, including the airline’s first Airbus A321 – a stretched version of the A320 – and a specially-painted aircraft promoting Egypt’s diverse tourism attractions (pictured).
“Egypt is not just Sharm El Sheikh,” chief executive Ahmed Aly told Al Arabiya at an industry conference in Dublin this month.
“Obviously the markets to Sharm El Sheikh have been impacted by the flight restrictions imposed by the UK and Russian authorities [after Flight 9268] … But we do have Cairo, which is a very, very resilient market, and which is not reliant on any one segment. We’ve also got the likes of Hurghada and Alexandria, which have also shown growth.”
While Egyptian tourism receipts fell 46% in the first quarter of 2016 – dragged down by a collapse in traffic to the Red Sea resorts – scheduled seating capacity between Cairo and the rest of the world has remained broadly flat. That reflects the capital’s ongoing appeal to business travelers, as well as its geographical advantage as a bridging point for transfers between Africa, the Middle East and Europe.
Nile Air’s existing network from Cairo and Alexandria comprises nine points in Saudi Arabia, two in Iraq, and one each in Kuwait and Sudan. Its regional focus has allowed it to hedge tourism flows with a range of different customer types.
“The aviation market is a challenging one at best,” Aly admitted. “However, it’s about targeting the right segments – not being dependent on one particular traffic type or one particular destination.
“In Saudi Arabia, we’ve got the religious Hajj and Umrah traffic; we’ve got the VFR [Visiting Friends and Relatives] traffic, in terms of the large Egyptian community living out there; we’ve got the strong inbound tourism from the Gulf region; we’ve got the corporate agreements with the oil companies and with universities in Saudi Arabia and Egypt; and we’ve also got the government traffic.”
Even the tourism outlook is not as bleak as some have suggested. Although European visitors are giving Egypt a wide berth in the current security climate, Gulf-origin tourism continues to be a “very significant” market for Nile Air.
Aly highlighted a surge in demand for Cairo flights among Iraqi holidaymakers, who now face tougher visa restrictions in Turkey.
He also talked up the role that Egyptian and Saudi travelers can play in the Red Sea resorts, filling the void left by Europeans. Nile Air will this summer enter the domestic Egyptian market with new flights from Cairo to Sharm El Sheikh and Hurghada. It is further adding outbound services from Sharm El Sheikh to Tabuk and Riyadh – the latter becoming its tenth destination in Saudi Arabia.
Asked about possible route launches to western Europe, the chief executive said feasibility studies will be conducted once market conditions improve.
The decision by British Airways to indefinitely withdraw from Sharm El Sheikh could create an opening for Egyptian carriers like Nile Air, though demand is unlikely to pick up until Britain’s Foreign Office amends its travel advisories.
“We certainly believe that, in the foreseeable future, Nile Air will have a presence in Europe,” Aly confirmed, leaving the door open for top-tier cities like London as well as more niche secondary and tertiary destinations. “But the European market, at this point in time, is not growing as fast as the Middle East and Gulf region, which is an area we will continue to focus on for the immediate future.
“We’re confident that as the [European travel] restrictions are removed – and we’ve been getting clear indications … that they will be hopefully this year – we’ll start to see a strong rebound.”
Nile Air already carries a significant number of Europeans thanks to interline agreements that synchronize its flight schedules with inbound services from the continent. The airline’s route to Port Sudan is particularly popular with European scuba divers.
Aly said he conservatively expects to lease another two A320-family aircraft next year, before taking delivery of two owned A321s in 2018. A planned IPO next summer should help to fund the fleet expansion.
“Our plan is stable growth year-on-year,” he affirmed. “Ninety two per cent of the Egyptian market is within four and a half hours [flying time of Cairo] … There are significant opportunities in terms of network coverage as we continue to expand our services.”