The peace process in the Middle East has brought mixed fortunes for Royal Jordanian. While the carrier stands to gain from co-operation with El Al and Israeli overfly rights, the government is slow in its plans to commercialise the airline.
From the summer schedule, Royal Jordanian and El Al will cooperate with six major US tour operators to offer a joint group package from New York. Passengers will, for example, fly to Israel on El Al, transfer by road to Jordan, and return to the US on Royal Jordanian.
Meanwhile, Royal Jordanian started to use its rights to overfly Israel in mid-March, which according to president Nader Dahabi should save $4-$5 million in fuel and maintenance costs and an average of 17 minutes in flight time. The carrier's operating profits in 1994 were 36 per cent down on the previous year at $38 million, and Dahabi has forecast a net loss in 1994.
Dahabi says the plans to commercialise the airline will be initiated within the next 6 to 12 months, following studies by consultants KPMG and Arthur Andersen. 'We must work as a business. We must look at how to improve efficiency, decrease costs and modernise the fleet,' he says. This means replacing the five L.1011s and the two B727s currently in the fleet. Dahabi says commonality is likely to dictate A320s as likely replacements for the latter as the carrier already operates two A320s.
A government decision on how much of the carrier to sell, if any, in a partial privatisation due to take place two years into the commercialisation is still pending. A close source explains: 'There are more important things at the moment for the government to worry about than the airline.'
Source: Airline Business
