The FINANCIAL — Strong passenger traffic and higher yields will help the Gulf airlines to defy the downward global trend in the aviation industry suffering from high oil prices that are eating into profits and in some cases forcing bankruptcies in the more mature markets.
Sharjah-based budget carrier Air Arabia yesterday reported a 39 per cent increase in its first-half net profit that hit Dh160 million, up from Dh115 million for the first six months of last year, on strong passenger traffic – demonstrating continued superior performance and ongoing organic growth.
The airline served more than 1.6 million passengers during the first half of 2008, a 33 per cent increase compared to 1.2 million passengers during the same period last year.
"During a period of unprecedented challenges for the global aviation industry as a result of the continuously soaring oil prices, we are proud of these results, which demonstrate Air Arabia's ability to continue to deliver sustained growth and excellent returns to our investors," Shaikh Abdullah Bin Mohammad Al Thani, Air Arabia chairman, said in a statement. "We believe that Air Arabia enjoys the proper model and infrastructure needed to remain amongst the most profitable airlines in the world."
Emirates airline, which reported a Dh5.3 billion profit for 2007-08, yesterday hinted it would be difficult to match last year's performance. To offset the extra burden of jet fuel cost, the airline last month increased its fare by 10 per cent while an additional increase in fuel surcharge is on the cards.
"Jet fuel bill represents more than 40 per cent of our operational cost. So, like all other airlines, we are also feeling the pressure," Mike Simon, Emirate's senior vice-president for corporate communications told Gulf News yesterday.
"It will be difficult to match last year's profit figures. However, we have about eight months into our financial year. I'm sure the management will take measures to retain growth."
The airline, which has 118 aircraft on its fleet and about 300 more on order, recently inducted its first of the 58 superjumbos into the fleet. The Middle East's largest passenger carrier receives an aircraft per month – adding more capacity.
Tim Clark, president of Emirates airline, told the media in New York on Friday that his airline is considering other US cities to expand network such as Chicago, Atlanta, Dallas and Washington.
Aviation industry insiders say though it could be difficult to maintain such a high profitability for airlines like Emirates year after year, it wouldn't be an impossible task.
"Emirates will have to remain innovative in managing the business, fleet and bottomline," said an industry analyst, requesting anonymity.
Revenue Passenger Kilometres that measures actual passenger traffic, grew 12.4 per cent in the Middle East for the first five months in 2008 compared to the same period last year, according to the International Air Transport Association.
The Middle East is the world's second biggest growth market.
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