Airlines restructure assets as global crisis hits travel business

JEDDAH: Airlines, impacted by the world financial crisis and turbulent fuel costs, have been restructuring their assets in the face of reduced traffic and high cost of operations. “Some such (legacy) airlines have been resorting to measures like reducing the size of aircraft to destinations with reduced passenger loads, and using part of their fleet for charter services,” Peter Spencer, managing director of British airline bmi, told a press conference at the Jeddah Hilton on Monday night.

“Legacy carriers are experiencing a reduction in traffic volumes and have reported an overall drop in sales by 30 percent. Passenger traffic is down by 10 to 15 percent. As a result, some airlines have cut their capacity ranging up to 15 percent,” Spencer said, adding that the next nine to 12 months will be difficult for every carrier.

Spencer singled out the Middle East as an exception where the travel trade is not affected as much as in most of the Western world. “The Middle East is doing well as is evident from the growth in our operations, especially to Saudi Arabia, Syria, Jordan, Lebanon and Egypt,” he added.

Spencer, who worked with British Airways in Jeddah and Dhahran in the 1970s, said one of the factors that had helped bmi to maintain its steady growth was to study and know the local market needs. “We have been operating between Saudi Arabia and London continuously since 2005, and during this time we have seen demand for travel between both the Kingdoms rise considerably. This is testament to the strong and growing trade relationships between Saudi Arabia and the UK,” he said.

When bmi launched services to London in 2005, it was the only British airline to serve Saudi Arabia from the UK, providing a much-needed connection to London, the rest of the UK and Europe as well as a gateway to the US and Canada through its Star Alliance partners. “Currently bmi remains the only British airline to fly between Saudi Arabia and London flying from the three international gateways of Riyadh, Jeddah and Dammam into London Heathrow Terminal 1 — the home of bmi,” he added.