With much of the Middle East’s airline fleet grounded amid government lockdowns, the skies above the region are empty, but for a smattering of cargo planes and chartered repatriation flights.
Covid-19 has already cost airlines in the region $7 billion in revenues, according to the International Air Transport Association (IATA), which estimates that carriers in the Middle East will lose out on $19 billion this year.
The picture is much the same as the rest of the world and with experts predicting that the crisis will stretch well into the summer, it is difficult to see light at the end of the tunnel.
Michael Wette, a partner at international consultancy firm Oliver Wyman, thinks that airlines in the Middle East could in fact reboot faster than the Western world.
“In the Middle East, countries have reacted relatively fast and the shutdown is relatively strong,” he added.
“If the numbers hold, maybe the Middle East can reopen as the next region after Asia, way before the US. Governments in the Middle East, see aviation and connectivity as core to their countries; if they put up a proper programme that helps, then maybe these players can put the core of the schedule and the network back into place sooner.”
A number of governments in the Middle East are majority stakeholders in their country’s airlines, meaning they have a vested interest in their survival.
Dubai’s government on Tuesday, unveiled an equity injection for its prized Emirates Airline and other major carriers in the Gulf have already said they will eventually ask for state aid, which they can expect to receive.
The UAE has continually declared how important its position as an international aviation hub and gateway between China and Europe is to its economy. The likes of Emirates Airline can effectively rely on a state safety net, which is a luxury few airlines in Europe and the US can guarantee.
Wette said that in the Western world, private carriers may struggle and take longer to negotiate with governments.
“Especially in Europe you have a lot of competition and several privately owned carriers per market segment; there are many players in many different countries now.
“The governments in Europe are arguably not as focused as a national ruler in the Middle East who sees his state carrier as very important. I think direction and support for airlines will be clearer in the Middle East in this crisis.”
Wette added: “I think that as long as governments stand by their carriers, the Middle East could come out a bit earlier from this crisis, and I think then the region as a whole could start to heal quicker than Europe, for example.”
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