Labour woes and debt clip the wings of Mena aviation

Labour shortages, high interest rates and sustainability challenges are the most pressing concerns facing both the global and Mena aviation sectors in the post-pandemic environment, says Hugo Santo, partner at McKinsey and Co.

Travel trade body the International Air Transport Association recently reported that total traffic in February 2023 rose 55.5 percent year-on-year, and Middle Eastern airlines recorded a 75 percent traffic increase compared with February last year.

However, managing the shortage of pilots, mechanics and handlers continues to be an issue for the aviation sector. According to a 2022 Oliver Wyman report, the Mena regional shortfall of pilots could reach an estimated 3,000 this year and 18,000 by 2032 if no action is taken.

The pandemic also led to airlines accumulating even higher levels of debt, Santo said. This has been made even worse by the rise in global interest rates.

“They had to undergo two very tough years during Covid-19, and so, their debt levels over revenue are around 10 percent,” he said in an exclusive video interview with AGBI.

With new Saudi airlines such as Riyadh Air and Neom Airlines entering the market and existing carriers continuing to expand their operations, Santo asks “As capacity expands, is demand going to expand too? Or will we run the risk of some airlines getting into trouble”?