A steep drop in traditional tourism flows to Egypt has encouraged Nile Air to make its first debut in the domestic market within the North African country. The Cairo-based scheduled carrier, founded in 2006, plans to expand beyond its international network into the Middle East and other parts of Africa with the introduction of regular flights to both Hurghada and Sharm el Sheikh from the capital.
Nile Air will become the first private Egyptian carrier to introduce domestic services within the country when it launches the new three times weekly Cairo – Hurghada and four times weekly Cairo – Sharm el Sheikh starting from July 1, 2016 and June 30, 2016, respectively but it is still expanding its international reach, especially into Saudi Arabia, which remains its main focus market.
Chief executive Ahmed Aly, says the privately owned Nile Air has been shielded from the downturn by its diverse customer base and Middle Eastern and African route network. “We’ve got a very good spread of passengers,” Aly, formerly head of network planning and strategy at Etihad Airways, told Routesonline during an exclusive interview ahead of Routes Africa.
“Tourism from the Gulf has held up much better than from Europe. There’s also a large diaspora of Egyptians living in Saudi Arabia and Kuwait, so we’ve got strong VFR traffic. And we see Umrah and Hajj religious traffic being extremely resilient,” he added.
Nile Air’s existing fleet of four Airbus A320s has grown this summer with the arrival of a fifth A320 and a first A321 during the last month, enabling the carrier to expand its regional footprint and enter additional markets.
“The A321 brings an additional 40 seats per departure and meets the growing demand on our trunk routes,” confirmed Aly. The aircraft is configured in a 204-seat arrangement (C8Y196) and entered passenger service on June 16, 2016. It is currently scheduled to operate on a number of Nile Air’s routes from Cairo. The airline also has two new A321s on order from Airbus for delivery in the second and third quarters of 2018.
The fleet additions, including an A320 leased from Avolon which is wearing a promotional livery to promote tourism to Egypt, will enable Nile Air to expand into new markets. A three times weekly link between Cairo and Al Ain, its first destination in the United Arab Emirates (UAE) will commence from June 29, 2016; increasing to four times weekly from August 15, 2016. A three times weekly flight between Cairo and Istanbul Sabiha Gokcen will also be launched from July 6, 2016.
But it is the Egypt – Saudi Arabia market where Nile Air has its main focus and now operates the largest network of any carrier between the two countries, a market that Aly described as the largest origin-and-destination market in the Middle East.
“The success of our operations in Saudi Arabia is due to the dynamics of that market and the various flows of traffic it supports, ranging from VFR (there are two million Egyptians in the Kingdom), Hajj and Umrah traffic, inbound demand from the ex-pat community in Saudi Arabia and also contract flying for the likes of corporate and government clients,” said Aly.
At the start of June 2016 Nile Air introduced three times weekly flights from Cairo to Abha and Gizan and it will add links from Sharm el Sheikh to both Riyadh (three times weekly) and Tabuk (twice weekly) from July 7, 2016 and July 9, 2016, respectively. This will expand the airline’s network into Saudi Arabia to 10 destinations and 14 routes.
“The Egyptian market is highly dynamic,” Aly says of the country’s wider prospects. “Notwithstanding the impact of recent changes in the political landscape, we’ve got strong potential.” It is this potential that has pushed Nile Air to make the bold move into the domestic market, currently dominated by national carrier EgyptAir.
“We have been considering this for a couple of years but feel now is a good time to expand. The local market is currently underserved and capacity is not meeting demand in the major markets linking the capital with the Red Sea resort cities,” said Aly.
Although high-profile terrorist attacks in Egypt have left lasting concern over the country and a recent hijacking and later a currently unexplained crash of an EgyptAir airliner have further jangled nerves. Government travel restrictions have meant a much softer demand into Egypt from Europe and especially Russia, where all flights are currently banned into the North African country.
However, Egypt remains a “resilient market,” according to Aly who identified that there had been a shift in nationalities flying into the country with strong demand particularly from the Middle East and other parts of Africa. “We have seen growth on our flights from Iraq, for example, which is purely tourism traffic,” he said.
Aly insisted the fundamentals underpinning the country are favourable. “Egyptian aviation is in a strong position given the strong characteristics of the Egyptian market – a tourism destination with global appeal, a large population centre, a regional power and its geographical location,” he said.
The strong role Nile Air is playing in providing stability in the Egyptian market has pushed the carrier to become the first in the country to make an initial public offering (IPO). This is due to take place in 2017 with shares being traded in both Cairo and London. A formal decision on this process and how much stock will be made available is expected to be made towards the end of the third quarter of this year.
“Our aim is to become the leading airline in Egypt, not the largest. We already have the youngest fleet, highest reliability with a 91 percent on-time performance last year and offer our customers a full-service proposition,” said Aly.
This means Nile Air will focus on its core short-haul proposition and growth will see frequency development and likely new markets across the Gulf and the Middle East. Africa is also of interest with the airline’s flights into Port Sudan “developing well,” according to Aly. “We have an eye on Africa,” he confirmed, noting that Libya was of particular interest and where it already holds designated carrier status for future routes.
The geographical position of Egypt means that around 92 percent of the passenger market from the country can be served using Airbus A320 Family equipment, but Aly does not rule out a future growth into widebodied equipment and medium- and long-haul operations.
“We are still a relative newcomer to the industry with just five years of scheduled services. Certainly in the long-term there are opportunities to look at evolving our model, but our strategy has not changed since we launched in March 2011 just after the January 2011 revolution and has served us well.