Saudi aviation industry continues to lead passenger revenue losses in MENA: IATA

Dubai — Saudi Arabia's aviation industry continues to suffer the most from passenger revenue losses in the Middle East and North Africa region as travel restrictions remain intact in the biggest Arab economy, the International Air Transport Association said Thursday.

The kingdom's aviation industry is forecast to lose $7.2 billion in passenger revenue this year amid a 51% drop in passenger numbers, the organization said in a new report. Earlier this month the forecast was $5.61 billion in lost passenger revenue.

In the UAE, the second-biggest Arab economy, the aviation industry is forecast to lose $6.8 billion in passenger revenue amid a 53% drop in passenger numbers, compared with the previous estimate of $5.36 billion, IATA said. IATA represents 290 airlines comprising 82% of global air traffic.

The MENA region as a whole is forecast to lose $24 billion in passenger revenue in 2020, compared with previous estimate of $19 billion, out of $314 billion total projected for the global aviation industry as countries across the world suspend flights and impose various travel restrictions. Full-year passenger traffic in MENA is expected to plunge by 51% from 2019, compared with the previous estimate of a fall of 39%.

'Not satisfied'

The Middle East aviation industry is not receiving enough government financial support to keep it afloat, Muhammad Al Bakri, IATA's regional vice president for Africa and the Middle East, said in a briefing on Thursday.

"We are not satisfied (with government support in the Middle East), but we have not given up yet," he said.

"We would like them (the Middle East governments) to prioritize aviation and announce specific rescue measures for airlines and the aviation industry in the region in line with other regions."

Demand for oil products in the Middle East will drop by a record 2.9% this year, with jet fuel/kerosene consumption plunging 15% due to travel restrictions, according to forecast from S&P Global Platts Analytics.

Saudi Arabia, the most populous Gulf state, was among the first countries in the Middle East to suspend international flights and impose a curfew as it sought to combat the spread of the coronavirus pandemic.

The country, which is home to the holy cities of Mecca and Medina, will lose some 10 million religious tourists who converge on the kingdom to perform the annual Hajj pilgrimage and Umrah or mini-pilgrimage each year.

Record low

The cash differential for jet fuel cargoes loading in the Arab Gulf dropped to a record low on Wednesday, and sources cautioned the market has yet to reach bottom.

At the Asian close on Wednesday, the cash differential for FOB Arab Gulf jet fuel cargoes was assessed at minus $1/b to the Mean of Platts Arab Gulf jet fuel/kerosene assessment, a steep decline from the start of the year when the differentials were assessed at plus $1.80/b, S&P Global Platts data showed. That's the lowest assessment since the Platts data began in January 1998 and marked the 16th consecutive day at a discount, the longest streak ever.

Busiest hub

The UAE is home to Emirates, the world's biggest long-haul carrier that operates the world's largest fleet of A380 superjumbo planes and Boeing's 777.

Dubai International Airport, the home of Emirates, last year retained its title as the busiest hub for international travel, despite a 3.1% drop in passenger numbers to 86.4 million, which was attributed to global market conditions and the grounding of Boeing 737 Max aircraft.

Emirates on April 6 resumed a limited number of passenger flights, while Abu Dhabi's Etihad Airways will start a number of flights between May 1 and June 30. The UAE suspended all passenger flights on March 25, except for emergency evacuation and cargo flights, marking the country's worst aviation crisis.

Jet fuel demand in the UAE alone accounts for more than 30% of the jet fuel consumption in the Middle East region and more than 2.5% of the global jet fuel demand, according to Platts Analytics. The demand does not include refueling aboard of UAE's international flights. Given the increasing connectivity of UAE's international flights in different regions, the impact of suspending some flights will likely dampen the global jet fuel demand more than that to the ME regional demand, according to Platts Analytics.