in Air Transport / Features

One Nilestone after another

Posted 13 June 2018 · Add Comment

Nile Air, Egypt’s largest privately owned airline, is exploring several avenues to ensure its continued growth in the challenging economic climate. Alan Dron reports.

The past year has seen a series of initiatives by Nile Air to cope with the difficult economic circumstances faced by the nation’s airlines. And the pace of change is due to be maintained in 2018.
All Egypt’s airlines had to restructure to cope with the sudden 2016 loss in value of the nation’s currency. “We, for example, became more aggressive in the domestic market and added new domestic services to Luxor and Aswan in December 2016,” said Nile Air CEO, Ahmed Aly.
Hurghada and Sharm El Sheikh were also added to the company’s Egyptian route map earlier that year.
Domestic services now make up 25% of Nile Air’s flights, but the most extensive section of its route map still lies between Egypt and Saudi Arabia, with 13 routes to 10 Saudi destinations. However, although the Middle East remains very much at the core of its activities, it is starting to look further afield.
It has expanded into what is technically Europe, with a new route to Istanbul, while a second new service to Port Sudan is the first stage in what Aly hopes will be a new chapter of growth in Africa. The latter region has particular problems, however.
Nile Air is very committed to expanding in Africa. “We see it as a unique but challenging opportunity,” said Aly, who intends to start a new route this year to an as-yet unrevealed African destination, currently not served by any carrier from Cairo.
The costs of operating African routes are considerable, with airport charges, taxes and a visa regime for intra-African travel that needs to be overhauled. All these pose hurdles for airlines that want to expand in the continent.
Tentative steps are being taken to try to create a European-style visa-free zone and a new, pan-African passport has been launched but, as yet, very few countries have adopted it.
Local governments have to understand that airlines need a support mechanism that allows them to nurture new routes, said Aly. “If you look at a destination like Kigali, for example, there isn’t a pre-existing market; there isn’t natural traffic between Egypt and Rwanda – whether it’s investment, or business or labour movement, or tourism, – so it does need time to develop.
“To make Africa work, we’re going to have to rely on partners. This winter, we’re launching two codeshare agreements, with Flydubai and Pegasus Airlines of Turkey. Flydubai has a huge crossover in its Saudi networks, while Pegasus gives us that network into the European market to test the waters.”
The next major milestone in Nile Air’s evolution will come later this year, when the company will issue an initial public offering (IPO). There is a family ethos around the company, said Aly. The intention is that all Nile Air’s staff will receive stock in the privatised airline, making them shareholders rather than employees.
Over the past year, Nile Air has invested heavily in several behind-the-scenes infrastructure projects aimed at ensuring the airline’s future, and that investment will continue this year.
“It’s very important to invest in structure that’s going to allow us to grow in a safe and efficient manner,” said Aly. “We announced last year that we were the first Middle East airline to take the full suite of Amadeus products and we’re launching a frequent flyer programme in March based on the Amadeus system.”
And, despite having launched its first website just two years ago, this spring will see a completely new online platform opening to the public, together with an app. “It will be a fully interactive website as we drive further traffic towards it. Today, web sales account for just 15% [of the total]. We’re aiming to quickly get that up to 30-35%.”
New personnel have also been recruited to improve customer service in a drive to make this area “a real, significant point of differentiation” compared to other airlines.
Allied to this, the airline has launched a subsidiary, Nile Academy, 50% of whose students will study aviation-related subjects. This, hopes Aly, will develop a new pool of talent that understands the complexities of the airline business and will form a recruiting ground on Nile Air’s doorstep.
Even before the academy comes on line, however, Aly is more than happy with his staff. “I have a really genuinely outstanding team here. I was blown away when I arrived; people were so committed and so loyal.”
By way of example, he pointed to the company’s 92% on-time performance record: “People think that’s just a number, but it comes about as a result of a huge amount of hard work.”
Another indicator of the quality of the personnel, he said, was the fact that Nile Air undertook an ‘enhanced’ IATA operational safety audit (IOSA) in 2016 and became the first Egyptian airline to achieve that standard without a single ‘finding’, or fault, being raised by the auditors.
The airline has also recently established another daughter company, Nile Air Catering. Ground was broken in December 2017 for a new building to house this business and Aly hopes it will be up and running by summer this year.
The decision to set up its own catering division was taken firstly to give Nile Air full control of its catering, particularly in terms of flexibility and quality: “There are no viable, independent catering organisations. The only one we have is LSG in Egypt, but that is 70% owned by EgyptAir,” he explained. That is a profitable business, he noted, with catering for non-aviation customers bringing in even better yields than those for airlines.
Nile Air has a current fleet of five Airbus A320s and two larger A321s, with the second A321 added in 2017 and bearing a special colour scheme promoting investment in Egypt. The company plans to continue expanding by at least two additional aircraft a year over the next few years, with the newcomers most likely to be leased further examples of the two European types.
In April 2017, Nile Air became the first Egyptian airline to order the neo version of the A320 family when it converted an existing order for two A321ceos to A321neos. Deliveries are planned for 2020.
Despite the country’s recent problems, Aly said he is confident that the situation is improving in terms of political stability. Tourists and investments are returning: “We’re not out of the woods yet, but we’re certainly moving on the right track,” he said.
“The good thing about Egypt is, despite all the problems, it’s a country full of opportunity. If you’re committed for the long term, you will see fantastic returns – not just in aviation.”
 

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