Ryanair expands its low fare formula into Jordan after Israel network shows success

European low cost carrier, Ryanair, is to expand its network in the Middle East after agreeing to introduce operations in Jordan with a network that will see it established as the country’s third largest operator by the end of the current calendar year. After its successful expansion in Israel, Ryanair believes that Jordan has untapped potential for business and leisure growth that can be stimulated through its low fare offer.

The airline will follow a similar strategy in Jordan that it successfully started in Israel last year. Initially debuting with a Paphos – Tel Aviv route in summer 2017, it subsequently ramped up its presence to include links to Tel Aviv from eight markets and launch services to Ovda, north of the city of Eilat, from 14 destinations, boosting its winter 2017/2018 offering to almost 400,000 two-way seats through the full schedule. It has already confirmed plans to add Burgas to its Tel Aviv network in summer 2018.

Similarly, Ryanair will initially introduce flights to Jordan this summer when it launches a four times weekly flight between Paphos in Cyprus and Queen Alia International Airport in the capital, Amman, from Mar-2018. It will grow to a network of 14 routes serving both Amman and King Hussein International Airport in the coastal city of Aqaba during the winter 2018/2019 schedule, offering 29 weekly return flights and introducing 11,000 weekly seats into the market.

CHART – Ryanair’s proposed winter 2018/2019 schedule will position it as the third largest operator in Jordan behind national carrier Royal Jordanian and Emirates AirlineSource: CAPA – Centre for Aviation and OAG (data: w/c 05-Feb-2018)

The proposed winter network into Amman will comprise a three times weekly connection with Bergamo and twice weekly links with Bologna, Brussels, Bucharest, Budapest, Krakow, Paphos (extending the summer route into the winter schedule), Prague, Vilnius and Warsaw Modlin. At Aqaba the network will comprise four routes with twice weekly connections with Athens, Cologne/Bonn, Rome Ciampino and Sofia.

Enhancing air connectivity has been one of the key areas Jordan of focus for Jordan as it works to enhance its economic prosperity, especially given its proven record in unlocking economic growth through attracting business investment as well as spurring tourism, two factors that are vital to the country’s development.

“This is a significant development in Jordan’s travel industry that will offer travellers greater choice and value for money,” acknowledges Lina Mazhar Annab, minister of tourism and antiquities and chairwoman of the Jordan Tourism Board. “Ryanair’s decision to fly to Jordan sends a loud and clear message about the diversity and the untapped potential of Jordan’s tourism product.”

After a record year in 2010 when tourism arrivals exceeded 4.5 million visitors, the market had stalled during the rest of the decade as political tensions and terrorism impacts across the Middle East impacted demand. However, after returning to growth in 2016 the market grew at almost double-digit rates throughout 2017 to once again pass the 4 million arrival figure.

Central Bank of Jordan reported tourism revenues increased 12.5% year over year in 2017 to USD4.6 billion, supported by an 8.7% increase in tourist numbers. Latest performance figures from Queen Alia International Airport, the largest air gateway into Jordan, show seven months of consecutive year over year traffic growth since the middle of 2017 with rates as high as 12.6% recorded in Oct-2017 and 9.8% in Nov-2017.

CHART – Low cost carriers (LCCs) helped drive much of the international growth in Jordan in 2017 with LCC system seat capacity rising 15.2% versus 1.6% for non-LCC operations year over year. This increased the LCC share of international capacity by 1.4 percentage points from 12.6% in 2016 to 14.0% in 2017Source: CAPA – Centre for Aviation and OAG

Ahead of Ryanair’s arrival, low cost carriers (LCCs) held a 14.0% system capacity penetration across Jordan in 2017. The Blue Swan Daily analysis of OAG schedule data shows that this is just below the 14.6% average recorded across the Middle East as a whole and the fifth largest country share behind United Arab Emirates (21.3% share), Saudi Arabia (18.1% share), Oman (16.4% share) and Israel (14.4% share). The largest LCCs in Jordan in 2017 were Air Arabia, flydubai and flynas with flights to 17 destinations, mainly across the local region.

Ryanair will not be the first major European LCC to introduce flights into Jordan. Vueling previously operated flights into Amman from Barcelona in 2010, while easyJet flew between Amman and London Gatwick between 2011 and 2014. The airline’s initial routes have clearly followed a careful selection formula with only Bucharest expected to face direct competition, a route that is currently served by Romanian flag carrier TAROM.

The fact that Ryanair is offering a complementary network to national carrier Royal Jordanian will explain why the airline has been so positively received in Jordan, and likely to have helped develop a commercial deal that will reduce its operational risk. Royal Jordanian has been undergoing a restructuring to return to profitability and will see it focus more on developing a hub model in Queen Alia International Airport in Amman as part of a five year plan to become the number one network carrier in the Levant.

Royal Jordanian already plans to open new international routes in the coming five years to Washington, USA; the Scandinavian capitals of Copenhagen, Denmark and Stockholm, Sweden and add flights to Kyrenia in Northern Cyprus. It will also resume flying on some of its previously suspended routes including Damascus, Syria; Mosul, Iraq; Aden and Sanaa, Yemen and Benghazi, Libya.

It will also seek to grow its presence in the Jordanian port city of Aqaba on the Red Sea. In collaboration with the Aqaba Special Economic Zone Authority and the local tourism entities, it aims to boost international arrivals into Jordan’s sole coastal city from several countries around the world.

Ryanair’s route selection provides plenty of room for future growth once it is happy with its market development and the airline will closely monitor the performance of the routes ahead of potentially extending the network into more competitive markets in the future. There are a number of additional destinations that could be part of any expansion and the arrival of 100 new 737MAX-200 aircraft (a variant based on the 737MAX-8 but with seating for up to 200 seats) from 2019 could facilitate growth into Jordan.  According to the CAPA Fleet Database, Ryanair has a firm order for 100 aircraft, plus 100 options.