EgyptAir must make some tough choices

The national carrier is being battered by the competition and needs a recovery strategy

February 15, 2024

Tourists board an EgyptAir flight in Aswan. The national carrier's share of MEA capacity has fallen from 5.4% in 2010 to 3.5% in 2023 — Tourists board an EgyptAir flight in Aswan. The national carrier's share of capacity has fallen from 5.4% in 2010 to 3.5% in 2023

Just over a decade ago, EgyptAir was the fifth-largest scheduled airline operating in the Middle East and Africa, offering more than 12 million seats.

Fly forward to 2023 and the airline was operating with only 12.4 million seats and had slipped down to sixth spot. New competitors such as Saudi Arabia’s FlyNas and South Africa’s Safair are inching ever closer.

For many years, EgyptAir was regarded as a rapidly developing carrier, while it added new destinations and built frequency through its Cairo hub.

However, the past decade has seen the airline virtually standing still, while others around it have leapt ahead.

The concept of airline alliances is sound, at least from a marketing perspective, as two like-minded airlines coordinate schedules, combine products and offer seamless connectivity. Well, that is the theory anyway.

Ask Lufthansa what it thinks of Turkish Airlines taking large chunks of revenue from Germany and you may receive a different answer. Competition within airline alliances is as fierce as between non-aligned carriers.

For EgyptAir, the presence of Turkish Airlines, which joined Star Alliance in 2008, and Ethiopian Airlines, which joined in 2011, has created significant unwelcome competition in connecting Europe to Middle East, Africa and Asia.

From a position of relative strength, EgyptAir has increasingly been marginalised by extreme competition as some of the airline’s operating metrics show.

Post-pandemic, EgyptAir’s results have not improved: the carrier reported a loss of $990 million in June 2022.

Although the pick-up in global demand will have offered some benefit in 2023, losses are expected once again for a carrier which consistently underperforms.

As a fully state-owned entity, EgyptAir may have wider strategic and national interests to support as the country’s flag carrier, but equally it must cease to be a drain on public resources or it will see the owner’s patience exhausted. Which begs the question: is there a recovery strategy for such an airline?

The headline numbers for EgyptAir do not make for pleasant reading and highlight just how becalmed the airline has become in recent years.

Since 2010 capacity has increased by less than four percent in one of the world’s fastest growing markets. Meanwhile, capacity across all Middle Eastern and African carriers has increased by nearly 60 percent.

Unsurprisingly, EgyptAir’s share of capacity has fallen from 5.4 percent in 2010 to 3.5 percent in 2023, all of which points to an airline struggling to find a strategy going up against some of the toughest competition on the planet.

For the latest management team at EgyptAir, the list of questions to be answered will grow unless some clear decisions and tough choices are made.

EgyptAir's headline numbers highlight just how becalmed the airline has become in recent years

The current network connects Cairo to markets as diverse as North America, Japan and China, but competes with some best-in-class carriers, which offer higher frequencies and a broader range of destinations.

The current fleet plan assumes just one B737 aircraft being delivered (hopefully) this year and then a mix of B737s and A350s in 2025. Tough choices also need to be made here. The airline is saddled with archaic operating systems and practices, which stifle productivity.

It may be nice for the Egyptian diaspora in New York and Toronto to feel at home when travelling back to Cairo with their national airline, but these services compete with numerous indirect and cheaper routings through Europe with Turkish Airlines.

Scheduled services to China will increasingly be competing with local airlines in a market where virtually all the traffic originates in China.

As for Japan, a twice-weekly service is no competition against other options and must cost a fortune in crew expenditure in one of the most expensive countries in the world.

EgyptAir’s central geographical position lends itself to niche connecting flows between two continents. Europe to Africa connectivity may not be sexy but this type of niche has generated high yields and profitable services for many airlines.

EgyptAir has already tried many strategies to no end. Trying something different may break the consistent under-performance of the airline.

John Grant is a partner at the UK consultancy Midas Aviation