Speaking at an air finance conference in Dubai, Abdul Teffaha, secretary general of the Arab Air Carriers Association (AACO), says budget operators will come under increasing pressure as airlines worldwide cut their fares to boost passenger volumes.
With carriers squeezed by high fuel costs, and passenger traffic growth dropping in the Middle East and worldwide, Teffaha says the region is in danger of overcapacity and budget airlines are particularly exposed because margins are slimmer.
He points out that few Middle East budget carriers, in fact, offer fares that are significantly lower than state-backed national carriers.
“Here we have a few low-cost airlines but they are not running a pure low-cost model while flag carriers will continue to be very important to their nations,” he says.
“I am calling for consolidation. I see it happening in Europe and the US, and hope to see it in the region.”
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