MEA joins SkyTeam in bid to increase revenues

Middle East Airlines is set to see growth in revenues and passengers, chairman Mohammad Hout said Thursday as the company became a member of international airline alliance SkyTeam. “Becoming a part of SkyTeam would allow MEA to increase the number of passengers and increase its revenues by at least 10 percent,” Hout told a news conference held at the MEA headquarters at Rafik Hariri International Airport in Beirut. SkyTeam is a global airline alliance which provides passengers of member airlines with access to flights operated by allies. Travelers benefit from various supplementary services, including airport lounges, baggage handling and a pan-alliance frequent traveler plan. Hout highlighted that Lebanese passengers would particularly benefit from better-priced long-haul trips to destinations including Japan, the United States and China. “Joining SkyTeam allows us to expand our global reach and offer our customers hundreds of new destinations,” he said. The news conference followed a signing ceremony which saw the participation of representatives of the Lebanese government, MEA, SkyTeam and alliance members. MEA is the 17th member of SkyTeam, which gathers big players in the aviation industry, including Air France, China Airlines, Delta, KLM, and Saudi Arabian Airlines. Public Works and Transportation Minister Ghazi Aridi said the step was of considerable importance for MEA, particularly at a time when Lebanon was facing turbulent economic and political conditions. He added that MEA remains a vital public company, reiterating that the Lebanese Cabinet would likely renew MEA’s exclusive rights when the airline’s government-sanctioned monopoly license expires at the end of 2012. Lebanon granted MEA exclusivity in 1969 as the country’s only commercial airline. The original 20-year deal was extended to 2012. While some argue that abolishing exclusivity would boost competitiveness in the sector, reduce travel costs and boost job creation, MEA has urged the government not to abolish the agreement, which it says is vital for safeguarding the company. Despite the Open Skies policy introduced in 2001, which effectively opened up Lebanon’s airport and airspace to foreign carriers, the agreement allows MEA to retain control of over 35 percent of total flights at the airport. Michael Wisburn, SkyTeam’s managing director, welcomed MEA to the alliance, saying the step would be highly beneficial to both sides. “By welcoming MEA into SkyTeam we are offering our customers increased travel options to and from Lebanon, particularly given its strong trade links with the Gulf region, Asia, Africa and the Americas – all regions with a considerable SkyTeam footprint,” he said. Wisburn said that the Middle East continues to be a strategic market for the alliance. “The region has seen an impressive growth in [air] traffic over the past decade, and we want to engage actively in this expansion,” he added. According to a joint press release issued on the occasion, MEA customers would be immediately able to earn and redeem miles on any service operated by the alliance. Members of SkyTeam airlines’ frequent flyer programs can also earn and redeem miles when flying on MEA flights, the statement read. Despite MEA being the smallest among the members of the alliance, Wisburn said Rafik Hariri International Airport would serve as an important hub for the partnership. “Every week, 545 SkyTeam flights arrive and depart to 33 destinations in Europe, Africa and the Middle East,” Wisburn added. During the ceremony, Hout spoke about the rigorous restructuring in the late 1990s that allowed MEA to develop from a loss-making carrier to a very profitable one. “The unprofitable long-haul routes were closed and more flights were added to the profitable routes, particularly in the Arab world and to points in Europe,” he said. The restructuring process, Hout said, allowed the company to achieve profits totaling some $595 million over the last decade. Despite an ongoing expansion of its fleet, MEA saw its operating profits in 2011 plunge from $90 million to some $40 million. The more-than-55-percent drop came as the firm faced much higher fuel costs, a decline in the number of tourists and significant hikes in wages of MEA pilots and staff.