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The playmaker heading for his next goal

Posted 21 March 2018 · Add Comment

Before he became chief financial officer (CFO) of AlMasria Universal Airlines, Ahmed Gadallah was a professional footballer with Egypt’s most famous club, Al Ahly. Ask him in what position he played and he smiles: “I was a playmaker. Same position here!”

Like many Egyptian airlines, family owned AlMasria has had to change its game-plan to cope with recent external problems, notably the floating of the Egyptian currency against the US dollar and the collapse in tourism following terrorist attacks.
The floating of the country’s currency caused problems for many of its carriers. The pound dropped sharply against the greenback, almost overnight making everything denominated in dollars roughly twice as expensive. And, as aviation is a global business, many goods and services have to be paid for in dollars.
“We were 100% scheduled until the currency floating last year. We changed our mind and added charter operations to gain foreign currency; with scheduled services, we weren’t allowed to sell tickets in any currency except Egyptian Pounds.”
In the past two years, like a skilful footballer, AlMasria has pivoted sharply on to its other foot and headed in a new direction; around 80% of its business is now charter flights.
Football will also play a significant role in AlMasria’s activities in 2018, as Egypt has qualified for the World Cup finals in Russia for the first time since 1990 and large numbers are expected to fly north to support their team.
“It has big potential,” said Gadallah. “We are the only private airline in Egypt to have traffic rights to operate scheduled services to Russia.” He anticipates that the airline will add services for the event.
The airline has a small fleet of three Airbus A320s and a single A321; it has recently added a larger A330-200 from lessor CDB and is talking to GECAS about acquiring a second. There is also a single Boeing 737-500.
The A320s can be configured either with a 180-seat all-economy cabin or an eight business-class/156 economy configuration. Similarly, the A321s can have 220 economy seats or a 12/176 layout.
The airline makes a point of owning its aircraft; if it cannot buy outright initially, it will take an aircraft on a finance lease, with the aim of owning it eventually.
Gadallah classes AlMasria as a ‘value-price carrier’, somewhere between a full-service legacy airline and a low-cost carrier. On its flights, it serves a hot meal and offers passengers newspapers, for example.
AlMasria is steadily building up its capabilities to make itself a self-contained airline, said Gadallah. It has its own catering unit, its engineering staff are certified to handle maintenance up to ‘C’ checks, it has recently added ground-handling to its activities and has approval from Egypt’s civil aviation regulator to undertake in-house training in several areas.
The crash of Russia’s Metrojet Airbus A321 shortly after take-off from Sharm El Sheikh in October 2015, due to an improvised explosive device that was placed on board, led to many countries to cease flights to Egypt until the country’s authorities could demonstrate they had tightened up security at its airports.
Gadallah says that the Russian ban on travel to the Red Sea resorts should end “very soon”. However, the travel ban that was put in place, not only by Russia but also by most other European nations, has affected AlMasria less than some other Egyptian carriers because many of its services are operated to the Gulf, carrying Egyptian workers to and from their places of employment.
There is also a steady traffic in Egyptian pilgrims heading to Saudi Arabia for the Hajj and Umrah: the latest statistics show that some 3.7 million people visited the kingdom for religious pilgrimages: “If you target just 5% of that market, it’s still a very large one.”
The Gulf has been something of a double-edged sword, however, as major carriers, such as Emirates, Etihad and Qatar Airways, have temped away around 30% of AlMasria’s pilots with much larger salaries than the small Egyptian airline can offer.
The company was set up by chairman, Ahmed Ismail, who owned a chain of more than 40 travel agencies and had been general sales agent for Qatar Airways and the now-defunct Bahrain Air, as well as for EgyptAir.
His three sons, Ismail, Mohammed and Tareq, are all managers with the airline, with Gadallah the sole non-family director. “It is a family company, yes, but they act very professionally. They began from zero and his sons took training for three years before launching this airline.”
Although Russia will provide a boost to AlMasria’s sales in 2018, the company’s biggest long-term market is Germany; it flies to no fewer than eight destinations there and the European nation accounts for around 20% of its operation. Italy, France and Poland are other significant markets for AlMasria.
German tourists were some of the first to return to Egypt when travel restrictions were lifted “and the market is booming”, said Gadallah. “Last summer, we had 17 flights a week to Germany. Next summer, it will be 30.”
For future expansion, however, AlMasria is looking east, to Asia. The A330s will allow it to reach as far as India and China. “We’re looking at these markets at the moment.”
The phenomenon of outbound tourism from China, as the country’s burgeoning middle class gets a taste for foreign travel, is well-known and has been experienced in many African and European countries. Not only do they want to travel, the yields from that market for an airline like AlMasria are very healthy, said Gadallah.
“That’s where we see the main opportunities in the market. It’s very difficult to compete with the Gulf area carriers to places like New York, Canada and South America, but in China there is no competitor. The Gulf airlines are not allowed to fly direct to Egypt, as open skies has not been implemented here yet.” That would mean Chinese tourists carried by Gulf airlines would have to break their journeys at the latters’ hubs and change aircraft.
“If we operate direct, we will compete,” said Gadallah. Services into airports such as Luxor and Aswan in Upper Egypt, with their access to many of the country’s historical sites, are a possibility.
The Egyptian economy, although hit by the recent fall in tourism, is not a story of unrelieved gloom. It is often not realised in the West that Egypt has its own oil and gas reserves and a new gas field recently discovered in the Mediterranean looks like being the biggest in the area.
Ask him where he would like AlMasria to be three years from now and Gadallah has no hesitation: “From my point of view, we have to make some connection with a large company, such as an interline agreement or codeshare, or enter into an alliance.”
That would mean aligning reservation systems and Gadallah points out that AlMasria is already registered with Amadeus, Galileo and Sabre. It also has an online booking system.
“The mentality has changed now in Egypt. My mother, grandmother and grandfather use computers; everyone has credit cards and 30% of our direct sales come from a booking engine.”
Gadallah accepts that on-going terrorism threats in Egypt, notably in the Sinai Desert, make life difficult for companies such as AlMasria. “But if we are able to save our company, there is no ceiling for expansion here at all.”
And with that comment and a brisk handshake, he is off, the playmaker heading for his next goal.
 

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