Jordan's airports and flag carrier position for expansion and competition

The aviation sector has been recognised in Jordan’s recent expansion plans as a fundamental driver of the kingdom’s future prosperity, encouraging growth across a variety of sectors, from tourism to trade. Jordan 2025, the long-term development programme, has therefore targeted the Queen Alia International Airport (QAIA) in Amman and the King Hussein International Airport (KHIA) in Aqaba to undergo major renovations.

The Jordan Economic Growth Plan (JEGP) 2018-22, the country’s shorter-term strategy, had set the goal of expanding QAIA to be able to handle 12m passengers per year, which was met in 2016, and the main airport saw 7.9m travellers pass through in 2017. The plan also aims to boost the role of Jordan’s second-largest airport, Marka International Airport. In the south, the JEGP aims to further develop KHIA and mentions construction of an airport at Shuna that will transport both passengers and agricultural goods. The JEGP earmarked funds of JD80m ($112.9m) for Marka International, JD60m ($84.6m) for KHIA and JD321m ($452.8m) for Shuna.

Segment Data

A 2017 report from the International Air Travel Association underscored the importance of Jordan’s air industry. Citing figures from 2014, it contributed some $2.4bn to the economy, with freight and tourists arriving by air comprising about 6.6% of the country’s GDP. The industry also supported approximately 92,000 jobs – 14,000 of which were directly related to the segment, 16,000 positions along the supply chain, 8300 that were supported by employee spending and a further 54,000 tourism jobs dependent on air travel.

Jordan’s aviation sector has seen a steady number of flights in recent years. In the most recent annual report from the Civil Aviation Regulatory Commission (CARC), a total of 81,889 flights were recorded in 2012, 81,478 in 2015 and 83,600 in 2016, up 2.6% over the year. Statistics on the number of passengers, however, showed a stronger trend. In 2012 passengers arriving to and departing from Jordan by air stood at 6.7m, rising to 7.6m in 2016. The 2012-13 period saw a 3.2% increase in passengers, 2013-14 registered 8.6% growth, and growth in 2014-15 rose by 7.9% to reach 7.2m passengers.

Growing the Hub

Much of this increase in passenger numbers is due to the recent renovation and expansion of QAIA. Located some 35 km south of Amman’s city centre, the upgrade replaced a complex built in 1983 that consisted of two passenger terminals and one cargo terminal. The reconfiguration of the airport was designed by Foster + Partners, with the 147 domes inspired by Bedouin tents.

The facility is currently operated by the Airport International Group (AIG) under a 25-year build-operate-transfer concession. Under the arrangement, the government receives 54% of QAIA’s gross revenues, making the airport a major contributor of funds to the kingdom. In 2016 the state’s share was expected to be around $100m, with a further $100m raised from a special tax on flight tickets.

The first phase of the expansion, completed in 2013, expanded the airport to 112,955 sq metres and offered nine new gates. The second phase, which was inaugurated in September 2016, brought the space to 160,462 sq metres and added eight more gates as well as 11 new contact stands. Around 7.4m passengers were handled by the airport in 2016 – a new record – accounting for 97% of all air passengers flying in and out of the kingdom. December 2016, in particular, reached a new high for the facility’s busiest month, with 538,866 passengers.

Figures from the AIG showed that growth continued into 2017. Over the year, about 7.9bn passengers passed through QAIA, a 6.8% increase on 2016. August 2017, in particular, reached a new high of 938,427 passengers, marking the facility’s highest monthly passenger traffic total in its 34-year history.

Secondary Airports

The JEGP and Jordan 2025 envisage an expansion of KHIA as well, which is located adjacent to the industrial zone in the southern port city of Aqaba. The airport has a 260-sq-metre terminal building and a single runway. The complex is home to a civil aviation academy, private aircraft hangar, freight facility and maintenance areas. By June 2017 around JD100m ($141.1m) had been invested for its upgrade. KHIA primarily operates domestic flights to Amman, but in mid-2017 it began offering flights to Dubai two times per week.

The airport, operated by the Aqaba Airports Company, hopes to capitalise on its location near the industrial city and the seaport to offer air freight services. It also aims to develop tourism projects on the Aqaba coast to secure greater passenger traffic. Competition will be fierce, however, with an Israeli international airport near Eilat due to open in late 2018 about 10 km from KHIA. The south-Jordan airport does offer some incentives, though, including exempting passenger tickets from the current $60 departure tax, a fee that applies to travellers flying with major airliners at QAIA.

A third airport attracting attention is Marka International Airport, also known as the Amman Civil Airport. Built in 1950 by the British, this complex was originally a military and civilian airport. It also served as the country’s main international airport before QAIA was opened. The civil airport still acts as a facility for charter and VIP flights, while also serving as a maintenance and training centre. In June 2017 the Cabinet approved a series of public-private partnership projects, which included a JD80m ($112.9m) scheme highlighted in the JEGP for renovating, developing and investing in the airport.

Airlines

The kingdom’s flag carrier, Royal Jordanian (RJ), dates back to 1963. Headquartered in Amman with its main base at QAIA, the airline was privatised in 2007 through an initial public offering on the Amman Stock Exchange. The carrier joined the OneWorld global airline alliance in 2007 as well, extending its reach to 1000 cities in 40 countries, with either non-stop or one-stop flights.

As of March 2018 the carrier maintained a fleet primarily of Airbus and Boeing aircraft: four A319100s, seven A320-200s, two A321-200s, seven Boeing 787-8s, three Brazilian-made Embraer E175s and two Embraer E195s. The last five craft are medium-range, narrow-bodied planes for use on domestic routes. An additional Boeing 787 was due to join the fleet in 2018, however local media reported in January 2018 that the order was cancelled due to concerns over financial viability.

RJ has a subsidiary, Royal Wings (RW), which operates charter services and is in the process of moving its base to KHIA. As of March 2018, RW operates one A320-200 and it has access to the rest of RJ’s fleet when necessary. The subsidiary airline also offers maintenance and handling services at Marka.

Flying Forward

In August 2017 RJ announced that it was drafting a five-year strategy to boost profitability after it sustained losses of JD26m ($36.7m) in the first half of 2017. The plan has three strategic objectives: make RJ the leading airline in the Levant region, make it the preferred airline of Levantine consumers and make it the employer of choice for industry professionals in the Levant. The airline has already undergone some restructuring, closing some routes voluntarily or losing others to local conflicts. Routes to Syria, Libya and Iraq have all suffered major disruption in recent years.

The goal of becoming the number one airline in the Levant will require some hard decisions, as the region is a highly competitive one. Low-cost carriers, such as flydubai and Air Arabia, are well established, with RJ likely to have to take these on if it is to win more customers. RJ promises greater efficiency in the years ahead, with plans expected to increase the number of seats on planes and conduct greater customer outreach. After years of regional conflict, many airlines are beginning to plan, albeit tentatively, for possible reconstruction and the resumption of flights that will follow.

The impact of this on cargo, in particular, may be significant. While passenger numbers have grown in recent years, air cargo has been in significant decline. Figures from the CARC show that 136,579 tonnes of air freight was moved in 2012, with this down to 102,367 tonnes the following year and then further to 96,240 tonnes in 2014. There has been some revival since then, but the 103,369 tonnes registered in 2016 is still a reduction on 2012 volumes.

A resumption of trade activity with neighbours Syria and Iraq would likely see air cargo volumes return to the higher numbers of previous years. Meanwhile, passenger figures will also increase, as business and tourism pick up again. If the national carrier can position itself as the airline of choice in the region, then Jordan’s aviation sector should certainly be clear for many more take offs in the future.