Airport renovations aim to boost the aviation sector

Jordan’s aviation market occupies a medium-sized position within the Middle East. While not quite on par with the rapid increase in international routes that has boosted air travel to Gulf countries like Qatar and the UAE, the kingdom’s airports have nevertheless seen steady passenger growth in recent decades, averaging 9.7% per year between 2006 and 2011.

Thanks to the waves of immigrants from Iraq and Syria, as well as Palestinians who use Jordan as their international air gateway, Queen Alia International Airport (QAIA) serves a large and growing population of travellers. Moreover, with a series of renovations nearly complete at QAIA as well as at the kingdom’s second international airport, King Hussein International Airport (KHIA) in the Red Sea port city of Aqaba, the sector looks set for renewed growth.

Renovations

The new terminal at QAIA, complete with a fresh marketing campaign for Jordan’s tourism sector, have boosted overall performance at the airport. Airport International Group (AIG), the Jordanian company responsible for the renovation, expansion and operation of QAIA, signed an operational concession agreement with the Jordanian government in 2007. The company’s shareholders include Abu Dhabi-based Invest AD (38%), Kuwait-based Noor Financial (24%), Jordan’s EDGO Group (9.5%), Cyprus-based J&P Limited (9.5%), Greece’s J&P Avax (9.5%) and France’s Aeroports de Paris Management (9.5%).

AIG spent nearly $750m investing in the new passenger terminal, with an additional $100m for renovations to existing facilities, all of which have been designed by UK-based Foster + Partners. The last two years have seen impressive growth despite regional instability. Year-to-date passenger figures up to April 2014 have risen by 13.6% to 2,282,894 compared with the same period the previous year.

Located 35 km outside of Amman, QAIA processes the majority of Jordan’s air traffic, handling 9m passengers annually. Passenger traffic and aircraft movements increased by 13.2% and 12% year-on-year, respectively, in August 2014. The second phase of the expansion, valued at $100m, will increase its capacity to 12m passengers annually and is slated for completion in late 2016. According to AIG CEO Kjeld Binger, positive growth is driven by an increase in flights to Saudi Arabia, as well as a bump in business and leisure trips to Egypt and the UK. The numbers are encouraging as they come before the peak summer travel season. In addition, the airport ranks among the world’s best in terms of passenger satisfaction and service, according to several international surveys.

KHIA, located in the Red Sea port of Aqaba, is also currently going through expansion. The state-owned Aqaba Development Corporation owns the airport but signed a management agreement with Aqaba Airports Company in January 2008. The current 1500-sq-metre extension, estimated to cost JD5m ($7.06m), seeks to improve facilities at the airport. KHIA’s cargo terminal has been in service since 2006 and plans are under way to boost operations as part of a bid to make the airport a regional centre for transportation. In order to facilitate the further growth of tourism to Aqaba, the government recently agreed to reduce departure taxes for tourists departing from KHIA. The move should help attract more international airlines.

Boosting Security

Keeping in line with upgrades to cargo X-ray technology at Jordan’s Aqaba Port, QAIA is set to install state-of-the-art Japanese security equipment as part of the airport’s renovations. The equipment, estimated to cost JD10.5m ($14.83m), will improve airport security and includes large-scale X-ray machines, explosive detection tomography systems, and handheld metal detectors for cargo and passengers to increase screening capacity and accuracy. The additional security equipment will assist Jordan’s aviation regulatory framework as it continues its efforts to harmonise with EU best practices and an open skies framework. The Civil Aviation Regulatory Commission, established in 2007, is the government body tasked with ensuring procedures remain in line with the EU aviation regulatory framework. As Jordan’s aviation regulatory framework falls in line with standard EU procedures, the kingdom could serve as a regional hub for European carriers. Over the coming years, Jordan could see carriers such as British Airways operate flights from Amman to locations like Oman and Kuwait. Carriers from other countries have already recognised its potential. “Jordan’s regional strategic importance has seen Turkish Airlines increase commercial activity to and from the kingdom,” Sertan Yuce, general manager of Turkish Airlines for Aqaba, told OBG.

National Carrier

Like the country’s major airports, Jordan’s flag carrier, Royal Jordanian (RJ), is in the midst of renovating and redefining its strategy in order to grow during a period of regional instability. The first Arab carrier in the Oneworld alliance, RJ’s main regional routes to Egypt, Libya, Syria and Lebanon have been hit hard by the political instability of the past several years. RJ has curbed expansion in Africa to focus on serving the Levant by servicing destinations such as Tel Aviv and Irbil, where foreign carriers have been more cautious. “Competition in the airline sector has become increasingly challenging, so it is crucial that Jordan plays to its strengths at the centre of the Levant and the greater Middle East,” Nasser Lozi, chairman and CEO of RJ, told OBG.

RJ recently revealed a new 10-year business plan that will drop five locations from its route map of 55 international destinations. The new business plan will focus primarily on regional routes, specifically to Saudi Arabia, with replacement and expansion of its single-aisle fleet from 20 to 30 aircraft. RJ is looking to acquire several small, fuel-efficient planes such as Airbus A320neos, as well as Embraer E-Jet E2s. RJ's fleet of Boeing 787s will expand to five planes by end-2014, boosting cargo capacity by up to 30% on medium- to long-haul routes to Europe and elsewhere.

Jordan’s low-cost carrier, Petra Airlines, owns two Airbus A320s and operates a network ranging from Iraq to Turkey. Having obtained its air operator’s certificate at the end of 2012 after running as a charter airline for seven years, the company is looking to buy additional aircraft and expand its network. “It has been difficult for us to obtain more aircrafts due to the high cost of operating in Jordan,” Fadi Kilani, Petra Airline’s product manager, told OBG. “But we remain committed to the market because of the great potential we see as a low-cost carrier in Jordan.” Low-cost UK carrier EasyJet announced in May 2014 that it would close its Gatwick-Amman route.

The renovations of QAIA and KHIA reflect long-term planning in the aviation sector. An increase in capacity, in addition to the growth of new routes into key tourist and business markets in East Asia and Africa, will help to realise the kingdom’s long-term passenger growth goals. Despite the political instability surrounding it, Jordan has benefitted from its location to establish itself as a vital player in regional aviation.

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The Report: Jordan 2014

Transport chapter from The Report: Jordan 2014

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