CAIRO: With the government aiming to increase the annual number of tourists from 8 million to 15 million by 2011,Minister of Tourism Ahmed El- Maghrabi met with experts and EgyptAir officials to consider what changes to the government’s aviation policy are necessary to cope with the anticipated increase in travelers.
Speaking at the Egyptian Center for Economic Studies yesterday, Cairo University Assistant Professor Adla Ragab outlined the two alternatives to the status quo: a unilateral open-skies policy and opening specific routes to foreign airlines through bilateral agreements.
The present seat capacity of domestic and foreign airlines serving Egypt is only 8 million, thereby requiring an increase in fleet sizes to support the growth of tourism.
According to Ragab, the expansion of EgyptAir’s fleet is constrained by its inability to raise sufficient financing and its lack of the operational skills to support a larger fleet. Local chartered flight companies are also restricted by domestic and international regulations. This leaves increasing foreign airline capacity into Egypt through a unilateral open-skies policy or through bilateral agreements as the only alternatives.
A recent study by the World Travel and Tourism Council (WTTC) estimated that liberalization of the aviation industry in Egypt would result in 13.5 million visitors by 2011, compared to 11 million if there are no changes in policy. The WTTC recommended that 285 flights be added to Cairo International Airport and 425 flights to other airports, along with putting an end to restrictions on chartered flights into Cairo and to privately-owned Egyptian airlines.
Former Minister of Tourism Fouad Sultan disagreed with Ragab’s assessment of EgyptAir’s financing capacity, citing that EgyptAir recently borrowed millions of dollars to renew its fleet without having to resort to a government guarantee. “This reflects the financial strength and flexibility available to EgyptAir, said Sultan.
EgyptAir Chairman Atef Abdulhamid echoed Sultan’s view, saying that his company plans to nearly double its fleet to 64 aircrafts by 2010.Abdulhamid also warned of the risks of deregulation without proper organization, saying that deregulation of the aviation industry in Peru, Switzerland and the United States resulted in the bankruptcy of several airlines.
Abdulhamid was particularly concerned about the threat from heavily subsidized Gulf carriers. “Gulf companies have an extraordinary financial capacity, said Abdulhamid. “They can buy aircrafts in a quantity that is beyond description. They are capable [of] offering extremely low prices; they sell tickets from the Gulf to Alexandria Airport at half the actual cost.
While most of the discussions focused on foreign travelers, former Minister of Economy Sultan Abou Ali emphasized the role air travel can play in supporting population growth and reversing the trend of urbanization.
“We suffer from an overcrowding [of the population] into only 5.5 percent of Egypt’s land, said Abou Ali, adding that a dispersion of the population will be necessary in the future and needs to be supported by greater domestic air travel.
Whereas the meeting addressed how to enlarge flight capacity, EFG-Hermes Research Analyst Wael Ziada told The Daily Star Egypt that the government should work on bringing in more “high quality tourists with bigger wallets, in addition to increasing the total number of visitors.
“Egypt is one of the cheapest destinations to travel [to], said Ziada. “The average tourist spends $72 per night, compared to close to four times more in Turkey.
With regard to the present state of regulation, a large number of tourists currently travel on chartered flights into Sharm El-Sheikh. Ziada said that at this point in time it is unclear what the impact of deregulation will be on these chartered flights.
Egypt generates some $6 billion in revenues from tourism. Over the past decade, a 17 percent increase in the number of tourists was associated with a 34 percent growth in foreign currency receipts.