Shell projects regional growth in aviation and jet fuel business in the Middle East

The Middle East consumes 8-10 % of global demand for jet fuel and the key differentiator between suppliers has become the quality of service and after-sales support.

Growth rates in the Middle East aviation industry are higher than anywhere else in the world, with the exception of the Far East. Mike Lumley, Shell Aviation's General Manager for the Middle East, Central & South Asia, said: "We see the Arab World in particular as being one for the few regions in the world where the Revenue Passenger Kilometers (RPKs), are growing at a significantly higher rate than regional GDPs. This can only be good news to the industry and indicates significant 'pent-up' demand which is not yet fully satisfied ." RPKs are the key measure used by airlines in Revenue management and measure the number of kilometers flown for which they receive passenger revenues.

On average, the annual growth rate (aagr) in RPKs in the Middle East region between 1990 and 2000 was 6.2%, compared to 4.5% worldwide. Passenger growth rate in 2003, compared to 2002 is expected to be 7.5% and has rebounded solidly after the significant dip experienced during the ground war in Iraq.

Growth in aviation jet fuel in the region is also expected to hit the 4.5% mark in 2003 compared to 2002, and will continue to achieve a steady growth of 4.5%-5% annually, according to Mike Lumley. "In global terms this reflects a significant increase." The US$ 70 billion global jet fuel industry will see no overall growth in 2003 as a consequence of the SARS epidemic and the continued decline in long haul transatlantic traffic .

Shell Aviation, which will have a big presence at Dubai Airshow 2003, said that the rapid developments that the Arab aviation industry is undergoing at the moment would create a new stimulus for generating more demand, and thus further grow the market.

"We see new regional airlines developing interesting niche markets, and if they get their business model right the way Ryanair and easyJet did in Western Europe, they will find a unique place for themselves amongst the bigger players and have the potential to further stimulate market growth."

Shell Aviation, which has been voted as the Best International Jet Fuel Marketer in the Middle East, Africa and Asia Pacific regions by The Armbrust Aviation Group survey, one of the most respected independent airline industry surveys in the world, is well placed to assist the newcomers with its Customer Value Propositions, which go beyond the mere supply of products.

"Regional airlines need business partners and not just suppliers of products. At Shell, we try to offer a comprehensive expert advice on our clients' businesses, starting from providing information on new locations they are considering flying to, right to hedging their risks to help them manage costs.

Shell has developed specific risk management tools for its aviation customers, to offer them consultancy on the financial aspects of their business. Another of Shell's innovative value propositions is the "Out-of-Hours" Helpline that gives customers the option of seeking Shell's help if their aircraft was diverted to an airport from where they do not have scheduled flights. Shell will help provide them with rapid information on pricing at any given location within their network on a 24/7 basis and will assist them with any urgent requests during such unfortunate stops.

Similarly, "Your Friend Away from Home" proposition has been developed specifically for regional airlines with a growing international network. The programme will offer the airline use of Shell's office facilities at any international airport serviced by Shell, where the airline has no physical presence and requires communication facilities.