Rabat – Border reopening in 2022 has boosted the Middle East’s aviation sector with the region recording less losses this year estimated at $1.9 billion, compared to a $4.7 billion loss last year, according to the International Air Transport Association (IATA).
IATA released on Monday a report on the impact of economic recovery from COVID on airline profitability, stressing the resilience of the sector and its economic rebound amid uncertainty surrounding the lingering effects of the war in Ukraine.
With the Middle East hosting 4% of global passengers, the region’s recovery slightly contributes to the global cut in aviation-related losses that are estimated to reach $9.7 billion this year, down from $42.1 billion losses in 2021 and $137.7 billion in 2020.
The Middle East is expected to recover 80.5% of its pre-pandemic capacity and 79.1% of its 2019 levels of demand, the report added.
With government worldwide easing travel restrictions, Willie Walsh, IATA’s Director General, noted that “People are flying in ever greater numbers and cargo is performing well against a backdrop of growing economic uncertainty.”
He further argued that now is “a time for optimism” despite the surge in airline’s costs related to fuel, the recruitment and training of new labor force, and “some lingering restrictions in a few key markets.”
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IATA’s report notably warned of the need to keep costs under control especially that the share of fuel in overall costs will increase to 24% this year, up from 19% in 2021.
“Our suppliers, including airports and air navigation service providers, need to be as focused on controlling costs as their customers to support the industry’s recovery,” said Walsh.
Labor-related costs come second as airlines recruit more staff following labor layoffs in the early months of the pandemic. Still, employment rates are expected to be below 2.93 million jobs recorded in 2019.
Additionally, inflation rates, interest rates, and exchange rates are forecasted to impact the recovery of the aviation sector and IATA’s projectections in its latest outlook.
With the world’s regions recovering disproportionately to the impact of economic crises on the aviation sector and North America being the only region to return to profitability in 2022, Walsh urged governments to abstain from border closures that cause “economic pain” with “little” control of contamination rates.
Moroccan Case
Like most countries in the MENA and beyond, Morocco’s economy was heavily hit by the COVID crisis and its lingering effects before facing more burden related to higher energy and food prices which were exacerbated by the war in Ukraine.
In the early months of the pandemic, Morocco maintained firm control over people’s mobility through the imposed state of emergency and the immediate border closure after the confirmation of the first COVID cases.
While all economic sectors in Morocco suffered from such measures, the national carrier Royal Air Maroc (RAM) was one of the biggest losers.
In May 2020, Abdelhamid Addou, RAM CEO, addressed the “violent” COVID-19 impact on the company’s revenues in a letter. Addou notably revealed that the crisis was costing RAM MAD 50 billion ($4.99 billion) per day due to a sharp drop in airline passenger revenues estimated at $314 billion ($31.36 billion) in 2020.
In response to the crisis, the Moroccan flag carrier established a layoff plan that affected 30% of its workforce, 858 jobs, as well as a voluntary redundancy plan for employees aged above 57 years and with 15 years of seniority.
With the government’s decision to reopen Moroccan borders on february 7, RAM and other airlines resumed flights to Morocco and even opened new international routes to and from the North African country.
By late April, more than 2 million passengers entered Moroccan territories by air. The 2022 Operation Maraha is expected to push this number way higher with the return of Moroccans living abroad as well as the welcoming of foreign tourists.
Since border reopening, Morocco’s National Tourism Office (ONMT) has notably worked to sell the country as an ideal travel destination to tourists from Europe, North America, and the Middle East, especially Israel. The office launched numerous campaigns to revive the country’s tourism sector including “Morocco, the Land of Light,” “Aji”, and “ We are Open.”
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