Royal Jordanian doubles transit traffic as LCC competition in Jordan intensifies

Royal Jordanian has increased its focus on sixth freedom transit traffic, providing better connectivity and competitively priced options for corporates. The oneworld member is particularly targeting passengers heading between the Levant region and Europe or North America.


Summary:

  • Royal Jordanian has increased its focus on sixth freedom transit traffic, providing better connectivity and competitively priced options for corporates;
  • The airline has restructured its banks at its Amman Queen Alia International hub in 2018 to improve connectivity;
  • Now, more than one third of Royal Jordanian’s traffic consists of transit passengers compared to only 16% two years ago.

The airline’s CEO Stefan Pichler told CAPA TV on the sidelines of last month’s IATA AGM that the airline restructured its banks at its Amman Queen Alia International hub in 2018 to improve connectivity. He said transit traffic grew by 42% in 2018 and is increasing another 70% to 80% in 2019 as the airline continues to increase its focus on sixth freedom traffic. Now, more than one third of Royal Jordanian’s traffic consists of transit passengers compared to only 16% two years ago.

Royal Jordanian’s total passenger traffic has increased modestly the last two years (less than 10%) and the airline is planning to grow by only 18% over the next five years. However, local traffic has been declining due to intensifying competition – particularly from European LCCs – prompting the airline to significantly increase its reliance on transit traffic.

Ryanair has had the biggest impact as it has quickly expanded in Jordan since launching services to Amman in Mar-2018. It now operates 11 routes to Amman and will have 19 routes to Jordan (13 to Amman and six to Aqaba) this winter.

CHART – Ryanair currently has nearly 5,000 weekly one-way seats from Jordan and will have up to 7,000 weekly one-way seats this winterSource: CAPA – Centre for Aviation & OAG.

easyJet, Norwegian and Onur Air also launched services to Jordan in 2018 while Transavia is launching Amman on 1-Oct-2019. Prior to 2018 Turkey’s Pegasus Airlines was the only European LCC serving Jordan.

The Jordanian flag carrier has responded by slightly reducing capacity to Europe and significantly increasing its reliance on sixth freedom traffic on the impacted European routes. While the LCCs have stimulated demand and growth they also are flying a lot of Europe-Jordan passengers that previously flew with the flag carrier.

The airline is now carrying a significant volumes of one-stop passengers between Europe and other countries in the Levant region, which includes Egypt, Iraq, Lebanon and Israel. It also aims to resume services to Syria, another Levant country, later this year as Syria starts to stabilise. “Connectivity is the competitive advantage we have,” Mr Pichler said.

Royal Jordanian is also carrying transit passengers from GCC countries to Europe and North America although it is trying to focus more on the Levant as competition for GCC traffic is more intense. In the GCC, it serves Kuwait, Qatar, Saudi Arabia and the United Arab Emirates (UAE).

“The Levant is basically our home market,” Mr Pichler said. “The downside of the market is the political instability but the upside is there is no real strong carrier. We are there with an established product and we have enhanced our connectivity so we think we are in a very good position to compete.”

Royal Jordanian also previously competed with the Gulf carriers on intercontinental connections between Asia and Europe before recognising it is better off focusing on offering Asia, Europe and North America passengers regional connections within the Levant.

The airline has been influenced this decade by regional instability, which has impacted demand and forced it to suspend some services. However, the instability also has led to a reduction in the number of competitors and higher yields. “Within this very fragile environment we have been doing quite well,” Mr Pichler noted.

HEAR MORE… Royal Jordanian CEO Stefan Pichler discusses the airline’s growth plans, narrowbody fleet renewal and the outlook for 2019 in this exclusive CAPA TV interview recorded at the IATA AGM in Seoul, South Korea in early Jun-2019.