CAIRO: The British airline BMI is relatively new to the Middle East. After acquiring British Mediterranean, a franchise of their main competitor British Airways, in late 2007, the carrier has expanded into markets like Saudi Arabia, Jordan, Syria, Lebanon and Egypt.
So far, it seems demand is high. Despite the decline of global trade and tourism, the carrier will start using bigger planes to run their daily flights between Cairo and London.
Daniel Breen, BMI s regional manager for Sudan, Sierre Leone, Ethiopia and Egypt, sat with Daily News Egypt to discuss how the newcomer is looking to navigate regional politics, well-established rivals and the challenges posed by the economic downturn.
Daily News: How long have you been working in the region?
Daniel Breen: I joined BMI in August 2008, and started coming into the region – particularly to Ethiopia and Egypt – around September. With the previous organization I worked for, I was based in Morocco and covered Morocco, Tunisia and parts of southern Egypt.
Do you have an office you consider home?
The real office, I suppose, is our office in the UK. But as the song goes, wherever I lay my hat, that is my home.
And the region you now cover includes Sudan?
Yes, we fly to Khartoum four times a week, and we re probably going up to five times a week. It s a very important business for us. There is lots of traffic into and out of Khartoum: international traffic, international aid agencies, NGOs, business from the Far East, which sometimes goes over the Gulf but sometimes comes in and out with us.
Sudan is another one of those markets that we see over time as expanding. We ve been serving Sudan probably about the same length of time we ve been in Egypt. I think October 2007 we started flying into Sudan.
Has the warrant issued by the International Criminal Court for Sudanese president Omar Al-Beshir s arrest had any affect on your business there?
I think it s like all these things – we don t get involved in politics. We re interested in business traffic. And we ve had great support from the Sudanese government. There are close ties between Sudan Airways and airlines like us.
I think as time goes on, impacts of world events tend to less and less affect business. That doesn t mean to say they don t affect them at all, but over time, over the last five, six, seven years, all sorts of things have happened all around the world. And I think fundamentally, people continue to need to fly. Trade happens between countries and therefore they need to service that trade, and that s what we as a business do.
So I think the fast answer to that is that we re still flying in and out of Khartoum, we see it as an important part of the network, and business, from a purely commercial point of view, is very strong. Enormous efforts have been made in Sudan and in Khartoum in particular to develop oil and gas and there are enormous projects going on which various international organizations are involved in developing.
Now, back to Egypt, who fills the daily flights you run? Businessmen? Tourists?
It s a mix. There are people who are coming to Egypt to taste the wonderful things Egypt has to offer – the Pyramids, Nile cruises, Egyptian Museum, weather. There s a group of people like that. A large segment of the market is businessmen, some of whom travel in the business cabin and some of whom travel in the economy cabin.
In terms of the split, I ll say at the moment the mix is probably about 60 percent leisure, 40 percent business. That doesn t mean sitting in the business cabin, but businessmen coming to Egypt.
How full are those flights?
One of the reasons we are expanding the capacity is that the average load – I can tell you precisely because I was looking at it yesterday in anticipation of these discussions – the load factor for January and February 2009 was in excess of 85 percent. The load factor, that is, the number of seats that have been taken, was 85 percent of the aircraft. And the projected load factor for March – which might change – is around 87 percent.
Now, basically what that means in the wonderful world of airlines is that if you ve got a load factor in excess of 80 percent, you re basically full. Because with the sort of ebb and flow of people changing their dates and flights, there s very little room to maneuver to be able to offer more seats. So those sorts of load factors in the airline world tend to mean you re actually full.
That s great for us. It s fantastic. It shows that we re making an impact in the market. But on the other hand, we re having to turn people away. We re having to say to people, Sorry, flights are full. We don t like doing that and no business should really want to do that. And that s one of the reasons we re changing the aircraft.
What will the new aircraft be like?
It s going to have many more seats. It s going to go up from something like 140 seats to 198. Three cabins, flat beds in business class, much more space in the intermediate cabin. And as I was postulating, more space in economy.
Why are we doing it? Purely and simply because we re full. We need the bigger aircraft to satisfy demand. I m not just saying it. We wouldn t be putting this aircraft here if it couldn t wash its face, as I say.
The new aircraft is an Airbus A330, what are you using now?
We re using an Airbus A320-321, which is a single-aisle. It s a bit like the Boeing 737-700. It s a single aisle aircraft whereas the new one will have both sides.
The 320 will be used on another route, probably in Europe.
Why are these flights so full with both global trade and tourism declining?
I think there are a number of reasons, and I will be brutally honest with you. One of the reasons we re full is our aircraft is small at the moment, and therefore we don t have as many seats to fill as some of the other carriers.
Number two is that, there is an economic crisis, I agree, and therefore we as an airline have to be smarter. That may sound arrogant, I don t mean it in an arrogant way. But in order to survive, all airlines need to look at ways of doing things differently.
We believe it s very important to add value on one side and lower price on another side to make sure we re competitive in the marketplace.
Another important part for this market, if we re specifically talking about Egypt, is that Egypt always gets good press in the UK. So when people are looking at where they want their next holiday destination to be, they want to go somewhere that s sunny, somewhere that s different, and somewhere where their British pounds are going to buy more. particularly during this economic crisis. Now that the British pound is roughly at parity with the Euro, for someone from Britain to go to Europe is very expensive. Egypt is one of the countries where people do get better value for money.
That s coming from England. Going to London from Egypt – and this is not just BMI, frankly, any airline operating into the UK can make this claim – because the value of the British pound has depreciated by about 27 percent in the last four months, my Egyptian pound is buying me that much more than it was four or five months ago.
Are you noticing more businessmen flying economy rather than business class?
Yes we are. A number of things have happened. Many companies are saying to their employees — and it s the same here in Egypt – that you cannot spend more than X per roundtrip. So there is pressure within organizations to encourage those who have been flying first class to downgrade to business class, those who have been flying business class to downgrade to the premium economy cabin.
So what we re saying is that we understand there are these pressures. And that is why we have said to the market that we will set our fares in the business cabin at LE 1,000 less than our main competitor on the route – British Airways – and that we will do more, we will add value. We will give you an onboard chef, we will give you more space in the business class, we will compete vigorously in the premium economy cabin, which on many
carriers is simply an economy seat with a curtain behind it.
Is there any update with Lufthansa s takeover of BMI that was announced late last year?
There isn t really an update. It s factually correct that Lufthansa will be buying BMI. The process is through the bureaucracy that goes with an announcement like that. When it needs to go through various governmental authorities, this tends to mean that it always takes longer than you think it s going to take.
Will the takeover affect your regional strategy or routes?
I think it will strengthen our business. It will reinforce the message that we re making to the market. I personally don t see any change. I think we complement rather than compete. And if history is an example for future happenings, then Lufthansa have always been proactive and constructive in the way they have managed new businesses.
