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Air Arabia to launch Jordanian LCC; IATA revises Middle East and Africa forecasts

8-Jun-2010

Air Arabia (1.2%) signed a JV agreement with Jordan's Tantash Group to launch Air Arabia Jordan, Jordan's first LCC. The new LCC will serve destinations across Europe, the Middle East and North Africa and will be managed by the Air Arabia Group.

As CAPA predicted in Mar-2010 in its Monthly Essential Middle East report, "a focused, well-funded LCC operation could be imminent in Jordan as the country's significant market liberalisation efforts continue".

Middle East 2010 traffic growth projection increased by IATA

IATA revised its 2010 passenger and cargo traffic forecast for the Middle East and Africa with the industry body predicting a rise in traffic for both regions compared with its Mar-2010 forecast. Traffic growth in the Middle East is now expected to reach close to 20%.

IATA Middle East and global traffic* and capacity forecast (% change year-on-year) for 2010 (USD)

 

 March Forecast 

 June Forecast

 Global Traffic (TKP)

+7.3%

 +10.2%

 Middle East Traffic (TKP)

 +15.2%

 +19.5%

 Global Capacity (ATK) 

 +4.0%

 +5.4%

 Middle East Capacity (ATK) 

 +14.5%

 +15.9%

IATA Africa and global traffic* and capacity forecast (% change year-on-year) for 2010 (USD)

 

 March Forecast 

 June Forecast

 Global Traffic (TKP)

+7.3%

 +10.2%

 Africa Traffic (TKP)

 +7.4%

 +13.5%

 Global Capacity (ATK) 

 +4.0%

 +5.4%

 Africa Capacity (ATK) 

 +7.8%

 +9.5%

IATA now expects Middle East carriers to post a profit of USD100 million in 2010, their first since 2005. This is significantly better than the previously forecast USD400 million loss and the USD600 million loss in 2009. GDP growth of 4.3% is outstripping the global average and Gulf carriers continue to gain market share through their hubs for Europe to Asia Pacific traffic even as capacity is being added at a more cautious rate, according to IATA.

African carriers are expected to post their first profit since 2002, expected to be USD100 million. This reverses the USD100 million loss forecast in Mar-2010 and the USD100 million the region lost in 2009.

The upgrades were not enough to prevent share market weakness yesterday. Kuwait Airways (-1%), Jazeera (-1.5%) and Royal Jordanian (-1.2%) all dropped. Kenya Airways (-1.9%) fell after launching a Nairobi-Juba service on 07-Jun-2010. Shares of Lonrho (-6.4%) and 1time (-1%) also fell, while Comair remained stable.

The Centre for Asia Pacific Aviation (CAPA) has launched a unique new strategic business information service covering one of the world’s most exciting emerging aviation markets. Middle East-Africa Airline Daily is an efficient morning briefing on airline developments from both regions. Covering fleets, routes, financials, traffic, bilateral agreements, alliances, financing, ownership, along with analysis of all significant developments, it is your one-stop shop to aviation news from Africa and the Middle East – and best of all it’s free for a limited time. Sign-up today!

Selected African and Middle Eastern airlines share price movements (% change): 07-Jun-2010


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