Private route for legacy carriers in the Middle East

07 June 2011

Privatisation and streamlining is key for flag carriers in the region to keep up with newer airlines

The challenge of turning round the Middle East and North Africa’s ailing legacy carriers has become much tougher with the new revolutionary mood in the region. Saddled with ageing fleets, unprofitable routes and faced with increased competition from younger and sleeker airlines, the flag carriers that date from the 1940s and 1950s have become a drain on government coffers. Losses at Bahrain’s Gulf Air reached more than $500m in 2009.

Privatisation is seen as the best solution to put national airlines back on a commercial footing. Several carriers are now headed in this direction. Key to this process would be restructuring the business to become more efficient, which would include shedding hundreds of jobs.

Saudi Arabian Airlines, one of the carriers set to be sold off, is a major employer in the kingdom with about 20,000 staff. Any cuts at the firm would be felt nationwide. One of the causes of discontent being vocalised on the street is the shortage of jobs in the region. Redundancies from state-owned enterprises now risk becoming an incendiary issue.

Gulf Air has taken advantage of the civil unrest to dismiss several hundred workers, amid a wider purge of protesters from state-backed firms, but this has potentially made the situation worse. Other airlines will be wary of following suit. Job cuts will be needed to make any newly privatised airlines profitable. Governments will now be thinking more carefully about how they will go about doing this.

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