By Ian Goold
AWN European columnist
In
what may come to be seen as watershed in the development
of co-operation in the region, technical officers from leading
Arab airlines are to meet in Beirut this month to establish
a joint marketing alliance after a milestone agreement by
the Arab Air Carriers Organization (AACO) executive committee
in October.
The move could result in co-ordination of service schedules
among 20 member airlines to offer travelers connecting flights
at hubs in the region. AACO comprises the national carriers
of Algeria, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya,
Morocco, Saudi Arabia, Sudan, Syria, Tunisia, and Yemen,
plus Emirates, Gulf Air, Oman Air, Palestinian Airlines,
Qatar Airways, Trans Mediterranean Airways and Trans Sahara
Airlines.
The airlines have talked about the potential gains to be
realized from greater co-operation over very many years,
but have been slow to establish appropriate agreements.
In the late 1990s, perhaps stimulated by the optimism that
a new century might bring, progress in identifying potential
areas of co-operation had led to initial agreements. For
example, in 1999 a framework agreement had been set up covering
single-source supply of ground-handling at European airports.
Essentially similar arrangements were planned covering the
joint purchase of fuel and insurance.
The airlines are facing greater international competition
and possible "open skies" in the region. At last April's
annual general meeting in Cairo, AACO resolved to expand
five areas: co-operation on airport services; fuel-purchase
arrangements; improved computer-reservations system (CRS)
contracts; joint-purchase of market-intelligence data; and
development of an electronic-commerce strategy. It appointed
Amadeus and Galileo to provide CRS services to AACO members
under new agreements that were forecast to increase annual
revenues by as much as 40% to about $100 million.
Signatories to the marketing initiative, which aims to
enhance members' traffic by stimulating flight connections
between local, domestic services and medium- and long-haul
services of partner airlines, are the chief executives of
EgyptAir, Middle East Airlines, Royal Air Maroc, Royal Jordanian
and Saudi Arabian Airlines. With 15 additional Arab carriers
that might join as partners, they believe an AACO alliance
could link with a global alliance to feed traffic into the
region.
According to secretary-general Abdul Wahab Teffaha, this
month's meet will "identify the technicalities" implied
by a marketing-alliance project. Initially, plans call for
co-ordination of existing services to link the broader Arab
region with points in Asia and Africa. The alliance is to
be based "on exchanging cross-feeding on long- and medium-haul
routes that are covered by some members and not by others."
Arab operators could use existing flights to major airports
(such as Cairo (Egypt), Casablanca (Morocco) or Dubai (United
Arab Emirates)) to connect with services to other regions.
E-commerce and other initiatives
AACO has appointed IBM to advise on a strategy for the
introduction of e-commerce. It has asked IBM for "specific
implementation plans" so that member airlines may use the
potential of e-business in local travel and tourism markets.
A further IT move has been the executive committee recommendation
to members "to join simultaneously two 'dot-com' companies
to work in the business-to-business area." Initially, this
will be to buy and sell spare parts on the Internet, according
to Teffaha.
Under last year's agreement covering AACO flights at London
Heathrow, Air France Servisair was appointed ground-handling
service provider. At least nine carriers have now adopted
the basic framework agreement, which is saving them $5 million
a year, according to Teffaha.
In addition, seven AACO carriers have been able to save
$1 million overall under an agreement for handling by Olympic
Airways at Athens. A similar scheme has been introduced
at Frankfurt (Germany), and others are planned for Amsterdam
(Netherlands), Manila (Philippines), Paris (France), and
Rome (Italy).
Teffaha reckons that ten AACO members could save $10 million
a year through joint fuel purchasing at local Middle East
airports. This sum likely would grow 50% as the group moves
to appoint a single-source supplier at 15 out-stations in
the next two years.
The CRS agreements with Amadeus and Galileo were preceded
by a "beauty contest" which included Sabre and Worldspan.
Eight Galileo customers-Egyptair, Emirates, Kuwait Airways,
Middle East Airlines, Royal Jordanian, Saudi Arabian, Syrian
Arab and Yemenia-now enjoy enhanced contracts.
Existing Amadeus customers Royal Air Maroc and Tunis Air
will be joined from 2002 by Libyan Arab, Palestinian Airlines,
Qatar Airways and Sudan Airways. "We have been able to change
or add to existing terms. The deals are extremely good for
both sides," says Teffaha.
AACO is looking to cut the costs arising from fictitious
passenger bookings. Teffaha says that the European Commission
and Arab League transport ministers agree fees should be
based on ticketed sectors, not bookings. "This will reduce
costs by a significant amount." He said that an AACO plan
to obtain market-intelligence data on behalf of members
awaits an EC ruling on a legal interpretation of the term
"a group of airlines" in the context of buying the service
for individual members' use.
AACO is talking with the Arab League ministers about deregulation.
First moves toward open skies are expected to come through
bilateral agreements, change beginning with the easing of
visa and Customs regulations in the region.
