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Syria's expanding tourism sector forces airline to consider overhaul

More visitors are coming from middle east region
Syrianair has plans to purchase 3-5 new aircraft, with potential

With the country recording a dramatic boost in tourist arrivals during the first half of this year, these are interesting times for Syrian tourism.

The figures confirm what many analysts have been saying for some time - that in the post-Sept. 11, 2001, world, Middle Eastern tourism markets have undergone an important shift in customer profile, with intra-regional tourism a clear winner.

According to a statement from Tourism Minister Saadallah Agha al-Qalaa to Tishrin newspaper July 8, Syria recorded a 60 percent jump in tourist numbers in the first six months of 2004, year-on-year. Almost 1.2 million tourists traveled to Syria during the period, up from 725,000 visitors in the first half of last year.

The country-of-origin breakdown of these figures was also telling. While the number of Western tourists rose to 141,000 from last year's 85,000, Qalaa said, visitor numbers from neighboring Iraq, Jordan, Lebanon and Turkey had also increased sharply. This has many implications for the country's tourism sector, and for its transport infrastructure.

In particular, this extra business comes as a stark reminder that Syria's air transport business is long overdue for an overhaul. The Transport Ministry has plans to modernize the country's flag carrier, Syrian Arab Airways (Syrianair, or SAA), and the challenge is to update the fleet and modernize operations in the face of increasing regional competition.

In addition, the international airports in Damascus, Aleppo and Latakia are having their capacity increased, while the airports in Damascus-Mezzeh, Palmyra, Deir al-Zour and Qamishli are being modernized. Elsewhere, new airports are being constructed at Thawra and Hassakeh in the northeast.

As for Syrianair the airline's financial performance is satisfactory: in 2003, when it transported 1 million passengers, revenues rose to $171 million and net profits reached $9 million, against $7.9 million in 2002, while the first half of 2004 is also reported to be promising.

Nevertheless, the company, which remains a state monopoly, suffers from various problems. One of the most important of these is overstaffing, with the carrier employing about 4,000 people in Syria, including over 200 pilots. Downsizing is off the agenda for the moment, but at least some efforts are being made to improve the quality of human resources: there is a $1.7 million project to construct a Syrian air training center, which can prepare future employees, including pilots. At the same time, the airline is deemed to have too many offices abroad (close to four dozen at last count) and a study currently being undertaken by the German airline Lufthansa will determine which of these will be shut down.

Meanwhile, it remains to be seen if the taboo subject of airline privatization will be raised. It seems unlikely and perhaps unnecessary at Syrianair's current stage of development, but what is certain is the airline needs to bring in a more commercial approach. In the meantime, Law No. 4 of 2004 authorizes Syrianair to subcontract services to private-sector companies. Catering is an obvious candidate, while even airport management may be subcontracted.

Some of the other issues recently facing the airline include the need to update its planes. Syrianair has an aging fleet made up of eight Boeings (six old 727s and two newly renovated 747s), six Airbuses which were received in 2000, and four Russian Tupolevs. The airline is expected to buy between three and five new aircraft in 2004. These will replace some of the existing 727s and Tupolevs, whose maintenance costs are increasingly difficult to sustain. To finance the deal, the company is seeking a loan from the European Investment Bank, but is also reported to be in discussions with the Gulf Investment Corporation in Qatar as well as the Saudi Islamic Investment Bank.

Meanwhile, Syrianair continues to expand its route network, with flights to Barcelona, Benghazi, Manchester and Milan launched in June this year. Internal and regional flights are also set to increase. This will come especially through a joint Syria-Lebanon regional airline, involving the Lebanese national passenger carrier, Middle East Airlines and private Syrian and Lebanese investors, along with Syrianair. Although the scheme was being discussed quite seriously in 2001, during the past couple of years it has been put on hold due to the worldwide airline slump and unfavorable conditions within Lebanon's aviation sector. With these negative issues now seemingly things of the past, the new firm aims to connect Syrian and Lebanese cities by air, as well as serve other regional destinations, through both regular and charter flights.

This regional carrier is being dubbed the air taxi project. The new carrier will have to compete with other regional airlines, one of these being Royal Wings (RW), a subsidiary of Royal Jordanian. With plans to fly twice a week from Amman to Aleppo starting this summer, the well-established RW will give the new Syrian-Lebanese operation a run for its money.

However well the new air taxi does, Syrianair is also in danger of losing clients to more dynamic regional airlines, notably in the Gulf. One of these is Arabian Airlines (AA), a new generation, low-cost air carrier. Owned by the United Arab Emirate of Sharjah, AA will also now fly to Aleppo. Flights will serve the northern Syrian city from Sharjah twice a week, with a one-way ticket from there to Aleppo starting at around $100. Inaugurated in Oct. 2003, AA already flies three times a week to Amman, and the airline is now adding the coastal city of Latakia, increasingly a favorite with Gulf travelers, to its schedule. The bottom line is that fueled by a regional tourism boom, AA and other low cost Arab air carriers are now forcing Syrianair to wake up and face the competition.

With Syrianair planning to move to new headquarters near Damascus International Airport (once it has been constructed), things are definitely progressing, it seems. There is still plenty to be done, but there is also plenty of willingness to do it.

Beirut,07 19 2004
The Daily Star
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