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in person
braving the skies
minister of civil aviation ahmed shafik encountered
a lot of turbulence when he tried to chart a new course for egypt’s
civil aviation sector, but refused to abandon his plans to improve
the underdeveloped sector. now he’s got the results to show
for it.
by rehab el-bakry
when ahmed shafik was appointed head of the newly created ministry
of civil aviation in march 2002, lots of people geared up for trouble.
the fear was that this hero of the 1973 war was going to butt heads
with key market players. since then, shafik has not disappointed,
becoming one of the country’s most contentious ministers. criticism,
however, hasn’t slowed the former general. quite the opposite,
he says – it has spurred him on. the resistance, he argues,
proves he’s on the right track.
“the criticism only demonstrates that i’m doing something
right to transform a sector that has become accustomed to doing
things wrong,” shafik says with a shrug. “from my first
day in this ministry, i made no secret of the fact that i planned
to change the way things were run around here. every decision i
have made thus far has been in line with this promise. i am not
backing off until these changes are in place... i am not here to
win any popularity contests. i have a job to do and i will do it
if it will help make egypt more competitive in the civil aviation
sector.”
born in heliopolis in 1941, shafik graduated from the air force
academy in 1961 to become a pilot, and served under hosni mubarak
in the 1973 war. after the war, he held several key positions both
in egypt and abroad. he completed his phd in airspace defense from
the national defense academy in 1993 and went on to serve for five
years as air force chief of staff. he left the air force in 2002
to become the country’s first minister of civil aviation, a
post created after president mubarak ordered the dismantlement of
the ministry of transportation in the wake of a deadly train fire
that left more than 400 people dead.
more than four decades in the air force certainly left an imprint
on shafik’s character. in fact, his reputation for hard-line
problem solving preceded him at the ministry. he admits he’s
done little to correct this notion, since it frequently works to
his advantage.
“i don’t usually give off the vibe that i am from the
military, but people are just wary of that fact without me even
having to bring it up. they always assume that i’m aggressive
and [thus] deal with me cautiously,” he says. “but i’m
not aggressive. i pay attention to details and discipline, which
is a by-product not of being in the military, but of being a pilot.
as a pilot in general and an air force pilot in particular, you
depend heavily on fractions of seconds, so you have to be disciplined.”
this discipline doesn’t always sit well with people shafik
interacts with on a regular basis. many comment that he is neither
interested in making alliances nor engaging in small talk –
he is strictly business. “we’re here to do a job,”
he says. “when it’s completed, then we can hang out, chat
and have fun. but when there is work to be done, there is no room
for niceties.”
not everyone has supported his overhaul of civil aviation. in fact,
shafik says that people were generally averse to change, especially
change that brought tighter regulation. support, he says, has been
lukewarm at best. “change is always difficult to implement
and accept,” he says. “within the bodies of civil aviation
around 60 percent of the people were with me initially. around 40
percent were against me, but that number has since dwindled.”
the critics have been held in check by shafik’s accomplishments.
so far, he has tackled some of the major problems at national carrier
egyptair, upgraded airport management and infrastructure, and improved
relations with domestic and international private operators.
“we desperately needed to change the structure of the ministry,
the airlines, the way people behave, the interaction of the bodies
within the ministry, their interaction with other government bodies
and the interaction with the private sector,” he explains.
“we set a list of priorities in order to form a framework that
would encompass everything we do.”
the first public evidence of these changes was major facelifts at
the nation’s key airports, including cairo, sharm al-sheikh,
borg al-arab and luxor. in some cases, the facilities were completely
overhauled. shafik says that in the age of global travel, egypt
could no longer get away with airports that could only be described
as functional. “the airport is the first and last thing visitors
see. so upgrading airports was essential,” he says.
the ministry of civil aviation “inherited” 21 airports,
most of which shafik says were built on unsound economic and commercial
bases. unable to change the number of airports, shafik prioritized
them, starting with the most commercially viable. the profit generated
from these would be used to revamp the others.
the ministry started with the airports most frequented by tourists,
expanding terminals, runways, maintenance facilities and passenger
services. space was left in each refurbished airport for future
expansion. “for a very long time, we’ve been reactive
rather than proactive planners always trying to play catch-up with
what others around us have done. by the time we catch up, we’re
already behind again,” says shafik. “we know these airports
will have to be expanded again, so we’re already working on
the expansion of some and have the land to expand others when the
time is right.”
while the goal for tourist airports was to improve overall performance
and efficiency, the plan for cairo international airport was different.
shafik wants to turn egypt’s biggest airport into a regional
hub where world travelers connect on their way from europe or north
america to africa and asia.
“turning cairo international airport into a hub by 2007 is
not a luxury that we’re trying to pursue. it’s a necessity
if we plan to compete internationally and realize our potential.
this would generate a lot of revenue for the country, not only because
a large number of airlines would use our facilities but also because
it would increase [air] traffic to egypt. but to live up to this
potential, a number of things have to be upgraded – the buildings,
the way we treat passengers and the length of time it would take
to service planes.”
shafik is proud that the ministry borrowed nothing from the ministry
of finance to implement these upgrades. instead, it depended on
its own budget, as well as financing support from international
agencies. the world bank provided a $350 million loan to fund, among
other things, upgrades to the cairo and sharm al-sheikh airports.
the japanese international cooperation bank pitched in with a $47
million loan to fund the construction of a new terminal for borg
al-arab airport near alexandria.
shafik also enlisted the help of foreign airport operators. fraport,
the german company that manages frankfort international airport,
was brought in to manage the newly renovated cairo international
airport, while france’s aeroports de paris was contracted to
manage five tourism airports, including those of sharm al-sheikh
and luxor. while many government agencies have adopted such public-private
partnerships, the ministry of civil aviation’s decision to
do so was heavily criticized by the public and the media. shafik
was surprised.
“everyone complains about the performance and appearance of
the airports. so being criticized for taking some concrete steps
to address these complaints was unexpected. what they don’t
understand is that the presence of these companies will help boost
the performance of the airports, which will help boost the overall
performance of the sector.” he says the fact that high-profile
international companies agreed to manage egyptian airports was an
indicator of the potential of the market.
to recover the costs associated with airport upgrades and maintenance,
shafik says the ministry referred to international studies that
pointed out that the costs of expansion would not be met through
ticket prices or airline fees. instead, revenues would have to come
from the commercial activities within airports.
“sixty percent of airport revenues today come from commercial
activities. within the next 10 years this will become 80 percent.
we have to boost the commercial activities of airports or else we’ll
fall behind. that’s why we decided to build a mall within the
airport complex. heliopolis is less than three kilometers from the
airport, so why shouldn’t people shop there? why can’t
we have decent restaurants and shops and make the airport an outing
and not just the place from which people leave the country?”
it’s not just airports that have received a facelift. the country’s
national airline, egyptair, also underwent major changes following
shafik’s appointment. as a starting point, the minister decided
to split the company into seven subsidiaries – egyptair airline,
egyptair maintenance & technical affairs, egyptair ground services,
egyptair inflight services, egyptair cargo, egyptair hospital and
egyptair tourism and tax free shops – all of which report to
egyptair holding company. although many perceived this as a prelude
to the sale of egyptair, shafik says this couldn’t be farther
from the truth.
“we did not dismantle egyptair, we dismantled the specializations,”
he clarifies. “turning the company into a jack-of-all-trades
was a big mistake that resulted in the waste of energy and resources.
we needed to divide the responsibilities within the company in order
to assess the performance of each function.”
he says that prior to this arrangement, no one was keeping track
of which functions generated revenues and which lost money. “this
will also allow each subsidiary to make decisions in its best interests,”
he says. “they can create public-private partnerships with
counterparts around the world, or continue to function independently.
regardless of the decisions they make, they will be the only ones
accountable.” however, at the end of the day, all revenues
are controlled by the holding company, which distributes funds to
the subsidiaries based on their performance.
egyptair has also changed the way it operates. shafik explains that
poor planning meant that the airline was operating inefficiently.
for example, large jets designed for long-haul flights were operated
on domestic lines. “it’s a waste of resources when you
have a 200-plus passenger jet flying the cairo-sharm al-sheikh route.
the planes often took off half filled, yet the company incurred
the full cost of operation.”
as a way to deal with this problem, shafik supported the ascendancy
of cairo air, a small airline loosely affiliated with egyptair.
cairo air functions as a domestic carrier with the odd short international
hop. “this frees up the bigger jets of the egyptair fleet to
operate the longer international routes.”
though the changes shafik has brought to egyptair may not have been
popular with the public, critics cannot argue with the results.
in 2004, the national carrier turned a profit for the first time
in years.
egyptair generated a net profit of £e 644.4 million in fy
2003-04 with total revenues reaching £e 947.1 million. by
comparison, the company reported losses of £e 300 million
in the previous fiscal year.
but perhaps shafik’s most controversial decision has been his
refusal to adopt an “open skies” policy, whereby international
carriers are permitted unlimited flights to and from egyptian airports
provided the policy is reciprocated. while shafik does not object
to the policy in principle, he says its implementation is not as
simple as many think.
“the americans were the first to coin the phrase, and they
are among the worst when it comes to implementing it because there
are serious implications to this policy,” he explains. despite
its much stronger civil aviation sector, the us has not implemented
a full open skies policy. instead, it has limited itself to signing
bilateral open skies agreements. “why should people expect
more of us than they do of the us?”
shafik’s reservations are not, as many suspect, designed to
protect egyptair. “the issue here is that i can’t afford
to have an international airline flying to and from egypt and selling
tickets below operational cost. they will steal customers from [all]
egyptian airlines,” he says. “i have no problem with signing
mutual aviation agreements as long as they are custom made to meet
our interests as well as theirs.”
that said, shafik says he’s willing to adopt an open skies
policy if it would generate revenue. he would, he insists, be willing
to reconsider the matter when upgrades to egypt’s civil aviation
are completed and cairo becomes a regional hub in 2007. but, for
the time being, the subject is non-negotiable.
simply put, arm twisting doesn’t work with shafik. this was
amply demonstrated when egyptian air traffic controllers went on
strike in march and may of this year, costing the airline a $600,000
loss every day. the strike ended after shafik fired four senior
controllers and threatened to hire replacement controllers. other
than that, the minister simply ignored that matter. he argued that
while his way to handling the problem may not have been popular
with the public, “it got the job done.”
shafik managed to make his point, however, he doesn’t really
like to rub it in. nor is he planning to hold it against anyone
misled by erroneous information. “a very small minority deceived
their colleagues into believing that the strike would yield results,”
he recalls. “however, the problem was not the strike, it was
the unrealistic demands they were making. i simply couldn’t
meet their demands and they wouldn’t meet me halfway.”
shafik says air traffic controllers had demanded salaries equal
to those of their counterparts around the world. “we’d
all like to make as much as our counterparts in other countries
are making, but the simple fact is that we don’t. i don’t
have the budget to do that and they knew it. so the strike was simply
a way to back me into a corner. and no one does that.”
this hardline approach might not make him popular, but he insists
the results prove he is doing what’s right for the civil aviation
sector. “the moment there is adequate proof that my management
system is faltering, i will be the first one to admit that it failed.
i will also be the first one to seek another way to get the job
done. but until then, i will continue to focus my attention on the
goal regardless of the number of distractions.”
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