GERALD BUTT / NICOSIA
Middle East airline is beginning to feel the effects of growing Western nervousness
Royal Jordanian (RJ) has reported a 20% drop in passenger traffic since the outbreak of violence between the Palestinians and the Israelis a year ago.
During the same period, according to the airline's chief executive, Samer Majali, 70,000 reservations and 40 charter flights have been cancelled "because of the political circumstances in the region".
Jordan, like other states in the region, is suffering from a sharp drop in tourism. The downturn in business has deprived RJ of an estimated $12 million in revenue. Majali, speaking in the Jordian capital Amman last week, said that, prior to the outbreak of violence, the airline was making an operating profit and was paying off debts.
"The numbers reflected in 1998 and 1999 illustrate that, under normal circumstances and after the restructuring programme, Royal Jordanian as a business enterprise makes money," he said.
"It is only because of the situation in the region that we are taking a hit," he points out.
As part of its privatisation programme, RJ has sold off its duty free, pilot training and catering divisions, and the airline is registering as a private company, even though the majority share is still owned by the government.
The Jordanian authorities are hoping to sell 49% of RJ's shares to a strategic partner, with the remainder held by the private sector in the kingdom.
But with the declining security situation in the region, particularly in the wake of the terrorist attack on the USA, likely to inflict further damage on airline finances, observers say the timing is unclear.
Majali said that a committee had been formed to work out a long-term strategy for the airline.
While the plan was to cut costs, the inclination at present was to maintain long distance services to the USA and the Far East. If this option was chosen, RJ would require aircraft that could make those long-haul flights non-stop in order to remain competitive. The airline is now looking to lease Airbus 340s or Boeing 777s.
Source: Flight International
