Egypt’s aviation sector must strive to reach its potential

Alamy via Reuters

Historically, aviation has played a crucial role in Egypt’s economy. However mounting regional competition in the last decade has brought market share challenges.

The Egyptian aviation sector directly employs about 56,000 people, generating $3.5 billion in annual economic output. When factoring in employee spending and tourism-related activities, the industry’s overall impact rises to $21.1 billion, supporting 1.4 million jobs.

National carrier Egyptair plans to double its passenger numbers to 22 million over the next five years and expand its fleet from 65 to 125 aircraft. Overseeing that growth plan is chairman and CEO Yehia Zakaria, who has headed the EgyptAir Group since 2022.

Egyptian airlines have faced intense rivalry since the turn of the century and have only recently begun to regain ground. 

In terms of competitiveness, Saudi Arabia’s growth has been driven primarily by its expanding local market, particularly the domestic sector. 

In contrast, both the UAE and Qatar have exploited connecting traffic, with Doha relying on such traffic for over 90 percent of its business.

While Egypt does have a modest domestic market of approximately 3.8 million seats per year, 90 percent of its total capacity is dedicated to international destinations.

This suggests an opportunity for locally based airlines to enhance connectivity through Cairo, potentially increasing its role as a regional hub.

Any newly acquired long-haul aircraft should be used to increase services to existing destinations

The success of any airport is contingent on its locally based airlines. In 2010, Egyptair carried 1.8 million connecting passengers through its Cairo hub operation, which amounted to around just 10 percent of its traffic, suggesting that the local airline was purely focused on serving local market demand. 

Last year the volumes of connecting passengers had risen to 3.2 million and accounted for 14 percent of traffic, so there was a modest increase in connecting flows, and as outlined below, many of those connections in relatively obscure markets.

With a long-haul network spanning destinations in Japan in the east, to New York and Toronto in the west, Egyptair’s biggest challenge lies in increasing the frequency of these services. 

For example Tokyo Narita is currently served just once a week – an arrangement that may be appealing for crew but is far from efficient for the airline. Similarly a twice-weekly Jakarta service suggests high crew costs with limited operational benefits.

Given these low-frequency routes, any newly acquired long-haul aircraft should be used to increase services to existing destinations. Alternatively, underperforming routes should be reconsidered.

Dropping Tokyo would, of course, have a significant impact on Japan’s inbound tourist market, which offers a higher average spend per passenger than most other opportunities. 

In North America, adding destinations such as Chicago – home to a major Star Alliance hub – would be a logical step. Looking east, Singapore presents another strong opportunity, offering potential feeder traffic through Singapore Airlines. 

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Strengthening partnerships and expanding strategically in these key markets can help Egyptair enhance its long-haul network more effectively.

The issue for Egyptair is whether it can remain competitive amid rapid developments in the region. Saudi Arabian Airlines is advancing its strategic growth plans, and Riyadh Air’s aviation ambitions are finally getting off the ground. 

Meanwhile, Emirates, Qatar Airways and Etihad continue to dominate, offering superior products, higher frequencies and stronger global connections – all competing with Egyptair for valuable transit traffic. 

A much-needed new airport 

Ask any regular traveller about Cairo International Airport, and they will shudder at the thoughts of chaotic operations, delays, formalities and a poor customer experience. 

Cairo’s new second airport, Sphinx International, offers a much-needed breath of fresh air. A growing number of low-cost airlines have already begun operating from it, capitalising on its strategic location – just 30 minutes from the new Grand Egyptian Museum. 

As tourism and demand for budget travel increase, this airport could play a crucial role in expanding Egypt’s connectivity and aviation landscape.

Egypt’s near year-round leisure market, driven by demand for Red Sea resorts, presents a strong opportunity for growth. 

In 2000, Red Sea-based airport Hurghada was a relatively quiet destination with around 540,000 airline seats annually. By 2010, that number had surged to 1.5 million, and today it exceeds 4.1 million seats per year – 90 percent of which serve international markets, bringing valuable tourists to the region. 

Similarly, Sharm El-Sheikh on the Red Sea has had impressive growth, now exceeding two million seats per year, with both destinations handling a million more seats annually than in 2019. These steep recovery rates place them among the Middle East’s strongest post-pandemic performers.

After years of twists and turns, it seems Egypt is on a more solid path to realising its full market potential, including the eventual privatisation of its airline and airport assets. 

The real challenge, however, lies in navigating a highly competitive regional landscape, where deep-pocketed rivals dominate major markets. 

Instead of competing on all fronts, a strategy of being smaller, smarter and more focused could prove more effective. 

Now is the time for Egypt to capitalise on its strengths and cement its position as a key player in the aviation sector.

John Grant is partner at UK consultancy Midas Aviation