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Egypt: air travel's sensitivity to geopolitical events shows in falling international seat numbers

Air travel to Egypt continues to be very susceptible to geopolitical events. The fall-out from the Metrojet incident at the end of Oct-2015, just as the winter season was starting, continues to be felt as the summer 2016 schedule gets under way. All flights between Russia and Egypt continue to be suspended, as do flights between the UK and the Red Sea resort of Sharm el-Sheikh. The 29-Mar-2016 hijacking of an Egyptair domestic flight, causing its diversion to Larnaca, further threw the spotlight on security concerns in Egyptian aviation.

International seat capacity to Egypt enjoyed a number of years of double-digit growth before this was interrupted by the Arab Spring of 2011. There followed a period of virtually stagnant capacity. International capacity returned to growth in 2015, before being interrupted once more by these more recent events. According to OAG data, international seat numbers will fall by 4% in summer 2016.

Russian and UK airlines are the biggest contributors to the fall in capacity this summer, while Egyptian airlines and many from other countries in the Middle East are set to grow on international routes to Egypt. The Egypt tourism market has in the past demonstrated its powers of recovery and is likely to do so again.

Egypt: growth in international seat capacity interrupted again by geopolitical events

From 2006 to 2010 the number of scheduled international seats to Egypt grew at a compound average rate of 15% pa, according to data from OAG Schedules Analyser.

This rapid growth rate was interrupted by the events of the so-called 'Arab Spring' of 2011, and the CAGR in seat numbers from 2010 to 2015 was less than 4% pa. In particular, there was very little growth from 2010 to 2014 but there was a 10% year-on-year increase in 2015.

However, OAG data as at early Apr-2016 indicate that the growth of 2015 will be reversed in 2016, when scheduled international seats are set to fall by 9%. There is still time for this figure to change, particularly with respect to the winter 2016/2017 schedule, which is still incomplete. This means that this 2016 growth rate figure is not yet reliable.

Egypt: international scheduled seats (one way) 2006 to 2007

Summer 2016 international seats to Egypt to fall 4%, in spite of growth by leading airlines

A slightly more reliable view can be taken of the summer 2016 schedule, rather than calendar 2016 data. According to OAG, international scheduled seats to Egypt will be 4% lower in summer 2016 versus summer 2015.

This capacity reduction is mainly because 19 airlines that flew to Egypt in summer 2015 do not currently plan scheduled services in summer 2016. The 67 airlines that are flying to Egypt this summer collectively plan a capacity increase of 5% over last summer.

Egyptair, the number one airline by international seats to Egypt in summer 2016, plans a 13% increase in seat capacity versus summer 2015 and the number two airline, Saudia Arabian, will grow by 7%. The next four airlines in the ranking will grow more rapidly, according to OAG data, with Nile Air increasing international seats by 42%, Air Cairo by 40%, Nesma by 99% and AlMasria by 52%.

There will also be strong rates of growth this summer from Emirates (+22%), Air Arabia (+22%), Etihad (+37%), Neos Air (+200%) and Air Leisure (+301%).

By contrast, a number of European airlines are making significant capacity cuts to Egypt this summer. Turkish Airlines is to reduce seat numbers by 10%, Condor by 40%, Thomson Airways by 72%, Monarch by 64%, Air France by 15% and airberlin by 40%.

Kuwait Airways (-20%) and flydubai (-23%) are also cutting markedly.

Egypt: top 35 airlines ranked by international scheduled seats (one way) summer 2016*

18 airlines no longer operating international flights to Egypt

Among the 18 airlines that no longer plan scheduled flights to Egypt in summer 2016, the most significant withdrawal is from the now bankrupt Russian airline Transaero, which was the third largest operator of international seats in summer 2015 (from OAG Schedules Analyser data).

Another Russian carrier, Ural Airlines, which was ranked 23 by international seats to Egypt in summer 2015, is the second most significant withdrawal this summer, according to the OAG data. Aeroflot and Yamal airlines complete a quartet of Russian withdrawals from Egypt.

A number of other airlines from Eastern/Central Europe also plan not to operate flights to Egypt in summer 2016, although they did so in this market in summer 2015. These include SmartWings, four Travel Service group airlines and Wizz Air.

Egypt: international scheduled seats (one way) summer 2015 for airlines planning zero capacity in summer 2016*

Five Egyptian airports with more than 1 million passengers in 2015

In 2015 Egypt had five airports with throughput of more than one million passengers. According to preliminary figures from the Egyptian Holding Company for Airports and Air Navigation (EHCAAN), four of these five suffered a drop in passenger numbers in 2015.

At Cairo, the largest airport (with twice as many passengers as second placed Hurghada in 2015), the preliminary EHCAAN data indicate that traffic fell by 4.3%. Passenger numbers also declined at the three Red Sea resort airports Hurghada (-6.3%), Sharm el-Sheikh (-7.4%) and Marsa Alam (-8.3%).

Egypt: airports ranked by total passenger numbers 2015

Rank

Airport

2014

2015

% change

1

Cairo

14,684,892

14,051,989

-4.3%

2

Hurghada

7,222,540

6,770,297

-6.3%

3

Sharm el-Sheikh

6,235,912

5,777,152

-7.4%

4

Alexandria Borg el Arab

2,499,032

2,796,911

11.9%

5

Marsa Alam

1,174,289

1,077,189

-8.3%

6

Luxor

601,294

697,239

16.0%

7

Sohag Mubarak

568,472

654,568

15.1%

8

Aswan Daraw

269,644

363,132

34.7%

9

Asyut

174,516

87,026

-50.1%

10

Port Said

51,550

36,350

-29.5%

11

Alexandria El Nouzha

6,959

26,347

278.6%

12

Abu Simbe

10,813

23,251

115.0%

13

Taba

41,142

13,488

-67.2%

14

El Kharga

7,415

6,764

-8.8%

All Russia-Egypt flights and UK-Sharm el-Sheikh flights suspended

Sharm el-Sheikh was the origin of a Metrojet flight that crashed on its way to St Petersburg on 31-Oct-2015. Russian authorities suspended all flights between Russia and Egypt in Nov-2016 and stated on 17-Nov-2015 that the crash was the result of an explosive device.

According to OAG data, Egyptair is set to resume three times weekly Cairo-Moscow Domodedovo flights in May-2016. Nevertheless, this may be subject to change following the hijacking of Egyptair flight MS181 and subsequent questions raised by the Russian authorities.

Regular UK flights to Sharm el-Sheikh have been suspended since 5-Nov-2015 and the UK's Foreign and Commonwealth Office is currently still advising against all but essential travel by air to or from the airport. The UK government has not issued any advice against operating flights to other Egyptian destinations.

Numbers fall heavily at Sharm el-Sheikh, Hurghada and Masra Alam into 2016; Egypt tourism suffers

In the month of Nov-2015 passenger numbers at Sharm el-Sheikh fell by 54% year-on-year and the rate of decline was more than 70% in each of Dec-2015, Jan-216 and Feb-2016, according to EHCAAN data.

At Hurghada, traffic fell by 32% in Nov-2015 and by around 50% in each of the three following months. At Masra Alam, in Nov-2015 the passenger decline was only 12% but this accelerated to 22% in Dec-2015, 46% in Jan-2016 and 61% in Feb-2016.

Passenger numbers at Cairo were more stable in the first two months of 2016, but the aftermath of the Metrojet crash can still be seen in the negative impact on overall tourism in Egypt.

According to the country's Central Agency for Mobilisation and Statistics, the number of tourists visiting Egypt in 2015 was down 5.6%, reversing an 8.2% increase in 1H2015. Tourist numbers fell by 37.8% in Nov-2015 and by 30.7% in Dec-2015. Data for the early months of 2016 show the rate of decline accelerating, with the number of tourists falling by 46% year-on-year in Jan-2016 and Feb-2016.

Summer 2016 seat reduction focuses on Sharm el-Sheikh and Hurghada

The 4% reduction in international scheduled seats in summer 2016 is not evenly applied across Egypt's airports. Cairo actually expects a 15% year-on-year increase in international scheduled seats in summer 2016, according to OAG data.

The capacity cuts this summer are almost entirely focused on the Red Sea resorts of Sharm el-Sheikh (-71%) and Hurghada (-60%). The two airports will each experience a reduction of more than 600,000 seats relative to last summer, more than offsetting the additional 900,000 seats planned at Cairo.

There are also increases planned at Asyut and Mersa Matruh, although these are small airports and are matched almost exactly by cuts at other Egyptian airports.

Egypt: airports ranked by international scheduled seats (one way) summer 2016*

Sharm el-Sheikh: international seats down 71% in summer 2016, mainly due to UK and Russian airlines

The biggest reduction in seat numbers this summer will be at Sharm el-Sheikh, where the total will be 645,000 below its summer 2015 level, a 71% cut. Based on data from OAG Schedules Analyser in early Apr-2016, UK airlines account for more than 60% of the net year-on-year reduction in international seat numbers to Sharm el-Sheikh in summer 2016. Russian airlines account for more than 30% of the net reduction.

By airline, the biggest reduction is from Transaero, which operated 157,000 seats to Sharm el-Sheikh in summer 2015, when it was the second largest operator of international seats at the airport. In addition to the bankrupt Transaero, a further 15 airlines that operated to Sharm el-Sheikh in summer 2015 currently have no capacity planned in summer 2016. The most significant of these are Monarch Airlines (which was the number three international airline in summer 2015), easyJet, Thomas Cook Airlines and Ural Airlines.

Sharm el-Sheikh International Airport: airlines by international scheduled seats (one way) summer 2015 & summer 2016*

Thomson Airways, last summer's biggest operator, will continue to operate to the resort this summer but with 148,000 fewer seats compared with last summer, a cut of 81%, according to OAG data. The capacity that Thomson is planning to Sharm el-Sheikh from 26-May-2016 will be conditional on a change in UK government travel advice.

At the start of the summer 2016 season the only western European airlines operating to Sharm el-Sheikh are the Italian carriers Meridiana and Neos. Meridiana is adding new flights from Milan Malpensa and Milan Bergamo and reducing services from Verona and Rome. From Mar-2016 Neos has resumed four routes launched in Jul-2015: from Milan Bergamo, Bologna, Milan Malpensa and Verona.

Turkish Airlines (-55%) and Pegasus (-87%) are also making significant capacity cuts to Sharm el-Sheikh in summer 2016, according to OAG. Among the 18 airlines scheduled to operate international routes a further seven are also cutting seat numbers: Meridiana, Jazeera, Air Arabia Jordan, Air Cairo, Edelweiss Air, Germania and Middle East Airlines.

Sharm el-Sheikh International Airport: international scheduled seats (one way) summer 2015 for airlines planning zero capacity in summer 2016*

However, there are some airlines that are adding capacity to Sharm el-Sheikh, including this summer's number one carrier by international seats, Saudi Arabian, which will grow by 26% (an additional 8,600 seats). The biggest single increase will come from fourth ranked Neos Air, with growth of 138% (13,400 more seats). There will also be growth from Egyptair, Flynas, Kuwait Airways and Danish Air Transport.

UK airline plans at Sharm el-Sheikh depend on government travel advice

UK-based airlines have been continually extending the period of their flight suspensions, generally following government advice. As things currently stand, Monarch, easyJet and Thomas Cook Airlines have announced the cancellation of all flights to Sharm el-Sheikh through to the end of Oct-2016.

Thomson Airways has cancelled its services to the end of Sep-2016 and British Airways to the end of Jun-2016. In any case, British Airways did not schedule any flights in the peak summer period of July to mid-September.

These deadlines may be brought forward or pushed further back, into the winter schedule, if UK government travel advice changes. Thomson has explicitly indicated that it will resume weekly services from Gatwick and Manchester on 26-May-2016 if the government allows this.

Sharm el-Sheikh: UK airline route suspensions summer 2016

Airline

Flight operation 

Monarch

All flights to 30-Oct-2016

easyJet

All flights to end summer 2016

Thomas Cook Airlines

All flights to 31-Oct-2016

Thomson Airways

All flights to 30-Sep-2016

British Airways

All flights to 30-Jun-2016

Hurghada: international seats down 60% in summer 2016, mainly due to Russian airlines

OAG data currently indicate that the year-on-year reduction in international seats at Hurghada in summer 2016 will be 624,000, or 60%. There is no UK government advice against travelling to Hurghada by any mode of transport and UK airlines account for only 4% of the net year-on-year reduction in international seat numbers in summer 2016.

Russian airlines account for 48% of the net reduction. Western European airlines, other than those based in the UK, account for 30% of the net reduction in seats this summer, according to the data from OAG.

As at Sharm el-Sheikh, the biggest contributor to the reduction at Hurghada is Transaero, which operated more than 259,000 seats to Hurghada in summer 2015, when it was the largest operator of international seats at the airport.

Among the top 10 airlines by international seats at Hurghada this summer, only one is contributing an increase in capacity. The Cairo-based LCC Air Leisure launched a service to Beijing in Nov-2015 and to Shanghai in Jan-2016. Air Cairo and Thomas Cook Airlines are keeping capacity at last summer's level, according to OAG.

Outside the top 10, Jetairfly, Neos Air, TUIfly Netherlands, Danish Air Transport and Edelweiss are also adding modest amounts of capacity. The remaining 17 out of 26 airlines are cutting international capacity to Hurghada in summer 2016 relative to summer 2015.

Among these, the biggest cut is from TUIfly, with a reduction of 57,000 seats (-71%), followed by Condor, with a reduction of 51,000 seats (-40%). Germania is reducing its summer 2016 capacity by 35,000 seats (-69%) and airberlin by 31,000 seats (-54%).

Hurghada International Airport: airlines by international scheduled seats (one way) summer 2015 & summer 2016*

In addition to the loss of Transaero from Hurghada's list of international airlines, a further 13 carriers that operated in summer 2015 do not currently plan to serve the airport in summer 2016. The most important of these are Ural Airlines, Travel Service and SmartWings. Unlike at Sharm el-Sheikh, none of the UK operators has completely withdrawn from Hurghada this summer.

Hurghada International Airport: international scheduled seats (one way) summer 2015 for airlines planning zero capacity in summer 2016*

Egypt has recovered from geopolitical demand softness in the past

Egypt and the countries whose airlines serve Egypt are working to restore 'business as usual'. This will require reassurance that the nation's aviation security system is reliable. It is important to note that the UK government has not raised security concerns about Sharm el-Sheikh the resort; rather, its advice is against travelling there by air. This focuses its concerns specifically on aviation security.

As is often and understandably the case in such matters, perception is all important and can lag reality. Nevertheless, in spite of the ongoing concerns, particularly from Russia and the UK, many Middle Eastern airlines are growing in Egypt and the total international capacity reduction of 4% this summer is modest.

Egypt has recovered from geopolitical demand softness in the past and will continue to work hard to do so again.

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