CASE IN POINT // EgyptAir
By: Andrew Ngozo
Opening Up Foreign Markets
EgyptAir is one of the most valuable aviation companies in Africa. It is the major employer in a sector that boasts 197 000 jobs in Egypt. This total, says, Ashraf Hakim Alsayad, Regional General Manager of EgypyAir South Africa, is further broken down in the following manner: 53 000 jobs are directly supported by the aviation sector; 97 000 jobs indirectly supported through the aviation sector’s supply chain; and 46 000 jobs supported through the spending by the employees of the aviation sector and its supply chain. In addition there are a further 1 384 000 people employed through the catalytic (tourism) effects of aviation, he states.
A visionary, Ashraf says African countries ought to apply the open skies policy, even internally amongst themselves, in order to cut costs and have more profitable operations as well as faster intermodal transportation.
“Operating in this space has several challenges of its own. These include, but are not limited to, the following: air traffic rights difficulty especially on the fifth freedom; the transport of cargo from one African nation to the other sometimes may not be possible. That we have to fly to Europe in order to fly back to Africa contributes to the enormous costs added to the movement of cargo from/to sister African countries. Local currency devaluation has a negative impact on the trade exchange between states. Movement and governmental rules are stricter on transferring airline dues,” he points out.
A Rich Heritage
EgyptAir has a rich heritage and aviation leadership role in the Middle East and North Africa and will continue to ensure that they build on this successful track record. Captain Bassem Goher, chairman EgyptAir Cargo elaborates that within five years EgyptAir Cargo will acquire a mixed fleet comprising of long, mid and short range aircraft. It will consist of five freighters (three aircraft type A330-300F and two aircraft type A320F) to cope with its expansion plan on the network. He continues that the future of air transport is bright with regards to efficiency and economic growth. To validate this fact, Ashraf cites a study done by the International Air Transport Association (IATA) and Oxford Economics. The aviation sector contributes EGP15 billion (1.2%) to Egyptian gross domestic product. Declares Ashraf: “This total comprises EGP7.7 billion directly contributed through the output of the aviation sector (airlines, airports and ground services); EGP4.9 billion indirectly contributed through the aviation sector’s supply chain; and EGP2.3 billion contributed through the spending by the employees of the aviation sector and its supply chain. In addition there is EGP81.1 billion in catalytic benefits through tourism, which raises the overall contribution to EGP96.1 billion or 8% of GDP.”
To conclude, Ashraf says the aforementioned positively impact air transport with regards to Egyptian economic growth. It means that it opens up foreign markets to Egyptian exports and lowers transport costs, particularly over long distances, thereby helping to increase competition because suppliers can service a wider area and potentially reduce average costs through increased economies of scale. It also increases the flexibility of labour supply, which should enhance allocative efficiency and bring down the natural rate of unemployment. Lastly, it encourages Egyptian businesses to invest and specialise in areas that play to the economy’s strengths.