Airlines facing 'bullet' as global downturn bites

Abdul Wahab Teffaha, Secretary General at the Arab Air Carriers Organisation, said the airline industry was facing 'a bullet flying around inscribed with 'to whom it may concern and no one know who it was going to hit'.

Aviation will be hurt by regional recessions, although Middle East airlines will suffer less, he predicted. 'Next year is going to be even worse than this year, no matter what happens, because the market was hit very badly. I believe there will be huge losses for the industry,' said Teffaha.

Those that will succeed in the future, he said, will be the airlines with a strong presence that are well established and have plenty of cash. This last point, he said, was especially important because he soon expects to see a huge round of price slashing for ticket, as competition to attract customers gets harder.

European airlines are better positioned than those in the US, but Teffaha also pointed to the low cost sector as a market facing major problems. Over the past couple of years, 89 of the 120 budget airlines launched have gone under, he said, and this market was a 'bubble', and one that many people have previously predicted as the future of aviation. 'Low cost airlines have brought creativity, but the others have learnt,' he said. Which means 'you can bet their prices are really going to go down', he added.

Marwan Boodai, CEO of Jazeera Airways, disagreed with Teffaha's view of the low cost market. 'Low cost is not a bubble,' he said, adding that it was a niche in the aviation market. He believed that the Middle East is still a strong market with high levels of disposable income.

'It's a very, very rich region which has been poorly served,' he said. 'Problems in other parts of the world have to be turned into opportunities in this part of the world.'

He called for more open sky policies in the Middle East, which would encourage airlines to fly more routes and therefore created additional revenue for those local economies.