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egypt air monopoly canceled
by andrew dowell
egyptian aviation officials broke the national carrier egypt air's
stranglehold on its home market in january by licensing two private
competitors to fly daily domestic scheduled flights.
aircraft maintenance co., or amc, advertised its new privileges
just be-fore the eid el fitr in the semi-official daily al ahram.
the other company, shorouk air, a joint-venture between egypt air
and kuwait airways, was more circumspect but was said by a state
transportation official to be planning routes. their entry into
the market marks the first time the national carrier has faced competition
for passengers on scheduled domestic flights since the 1952 revolution.
"this is a very good sign," said ashraf tantawi, director
of business development at cairo-based emeco travel, of the move's
likely impact on tourism. "it's the first break of the egypt
air chain."
despite the modest start, the implications of the civil aviation
authority's decision are substantial. domestic routes by themselves
have tended to be money losers and nothing to shout about, tantawi
said. but they are valuable for their tieins. private airlines will
now be able to round up passengers from all over egypt to feed into
their charter flights abroad, and distribute travelers from abroad
throughout egypt, without forcing them to change airlines. the result
is a more stable customer base and fewer empty seats.
moreover, the right to offer scheduled flights to egypt's second
cities gives charter airlines looking to set up scheduled international
service a way around the national carrier's biggest anti-competitive
asset: regulations that prevent competitors from flying between
cairo international airport and cities served by egypt air. the
national carrier obviously targets the most lucrative destinations,
which limits competitors' ability to grow. but private carriers
can now circumvent the restriction by flying to paris, say, from
luxor instead, and finish the trip to cairo with a short, scheduled
hop.
"it's a major step for freeing the airlines," said elhamy
el zayat, emeco's chairman and ceo. "what i see happening is
competition, which is healthy and required."
not that private airlines are all that eager to take on egypt air
just yet. officials at shorouk couldn't be reached, but amc owner
el said saber said his company wouldn't try to compete on the national
carrier's routes, something he said was still forbidden. instead,
amc will concentrate on once-daily flights between cairo and luxor,
aswan, sharm el sheikh and hurghada. amc also has permission to
fly scheduled flights between cairo and warsaw and luxembourg beginning
in may, an opportunity saber said he would exploit. future destinations
include italy, russia and france. "we will try to use this
system usefully," he said.
egypt air's monopoly cracked at 8:30 a.m. on jan. 28, when amc took
a full load of passengers from cairo to luxor on its md-90. amc,
which started out as a maintenance company and moved into charter
service in october 1993, has two other planes an airbus 300-b4 and
a boeing 737-200 both configured, like the md-90, for economy class
service. the airline already has a contract for four more md-90s,
with the first one due for delivery in october. the second one is
also a mandatory buy, but the third and fourth are optional.
the goal is to pick up budget travelers, and judging by the company's
constantly jammed phone lines it's being met. flights over the eid
were full, at least in the direction of migration, as amc picked
stranded travelers off egypt air's waiting lists, saber said, and
there were plans at press time to establish misr travel and one
other tour operator as booking agents.
official tolerance for private airlines had been slim since the
1995 demise of the upstart private carrier zas airlines following
what many saw as a joint effort between egypt air and the caa to
drive it out of business. zas had operated quasi-scheduled service
both domestically and abroad, and in the process racked up a number
of regulatory infractions that ultimately grounded the fleet. private
participation in aviation since then has been limited to charter
flights and air taxi service.
private air operators have long complained of special treatment
for egypt-air, itself a victim of nationalization under nasser.
the first blow came in the mid-1990s, when the caa was removed from
the private-friendly atmosphere of the ministry of tourism under
fouad sultan to the ministry of transport. later, egypt air was
effectively removed from the caa's control when it was made to report
directly to the prime minister's office.
this arrangement benefited the national carrier when the prime minister
was a friend, but has become much less supportive following the
appointment of kamal el ganzouri, whose clear mandate is to open
up the economy and spur growth. travel agents haven't minced any
words in explaining that fully developing egypt's tourism potential
requires competing airlines, and el ganzouri is aware that achieving
the nation's growth targets requires a flourishing travel business.
the turn of opinion has been startling. minister of tourism mamdouh
el beltagui started the process early last year when he broke his
long policy of silence and began to criticize the standard poor
service and limited potential for growth in tourism under egypt
air's monopoly. since then, readers of the egyptian press have borne
witness to a yearlong escalating conflict as the tourism and egypt
air camps moved farther apart.
the final straw, industry officials said, came with the devastating
attack in luxor. egypt air, against the pro-tests of chairman mohammed
rayan, was forced by the prime minister to show its national spirit
by offering half-price fares, and ultimately to give up its monopoly.
to be sure, egypt air still has a regulatory edge in that it doesn't
need to pursue the often lengthy approvals the private carriers
need to expand service. but change is, well, in the air. the policy
direction is clear. "we gave them authorization," nadim
riad, undersecretary of state for air transport at the civil aviation
authority, said of the nation's private airlines. "now they
can work domestically with egyptair." and they may be able
to do much more, if they're willing to test the limits.
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