IATA: Middle East holds potential for growth but still has obstacles to overcome

The Middle East's aviation market supports over 2.4 million jobs in the region and generates $130bn in GDP
Muhammad Ali Albakri, regional VP, Africa and Middle East.
Muhammad Ali Albakri, regional VP, Africa and Middle East.

In a media briefing that included journalists from both Africa and Middle East, Muhammad Ali Albakri, regional VP, Africa and Middle East, shared an update on the progress of the region that supports 8.2 million jobs and generates $185.8bn in GDP. Of those figures, the Middle East supports 2.4 million jobs in the region and generates $130bn in GDP.

Recent findings from IATA also point out that the Middle East’s compound annual growth rate for 2018 – 2037 will be 4.4% and will record an extra 278 million passengers to reach a total of 501 million by 2037.

Commenting on the progress Albakri, shared: “We have three different scenarios; we have an optimistic scenario, an as is scenario, and a pessimistic scenario. If you looked at all three scenarios, you see that the demand for travel by people in the region is increasing in terms of travel.”

He addes: “Africa and the Middle East is one of the most promising regions of all the regions worldwide.”

Despite the forward progress however, the regional VP is quick to point that there are still challenges that need to be overcome. One such issue shared between Africa and the Middle East is the constriction of profit margins.

Where the global average profit per passengers was recorded reaching $6.12 in 2019, airlines in the Middle East saw a decline to -$4.46 per passenger, while carriers in Africa lost $1.09 per passengers.

Delving more specifically into the issues faced in the Middle East, Albakri noted that despite a reduction in oil prices that should have benefitted airlines, oil producing nations moved to recoup lost revenue through additional taxes and charges. This in turn impacted the Middle East’s aviation market.

The ongoing political instability of the region has also affected the Middle East’s performance, particularly when it comes to management of the airspace. The fact that most of the airspace is managed by the military has led to severly constricted zones of operation within a small geographic area. This has resulted in an increase in the number of ATC issues across, as well as a significant increase in the average delay of flights. 

Pointing a previous study done on the region, Albarki explained that the average delay per flight attributed to ATC issues reached as high as 29 minutes. Unless addressed soon, this figure could double by 2025, resulting in over $7bn in lost productivity time to passengers, while also adding $9bn to airline operating costs.

The final challenge is around capacity-building, securing the necessary talent within the region to cope with future air demand.

“We are working very hard with the regulatory and governments to really address the issue of taxes and charges, to bring them down. Improving air traffic management that's a huge priority for us in the Middle East. Skies are over congested,” shared Albakri.

“And capacity building in terms of knowledge and skilled resources that will be able to provide support needed for the expected growth in the region,” he concluded.

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