Labour and inflation key issues for Middle East Aviation recovery
Mita Srinivasan
10x Industry
Published:

Labour and inflation key issues for Middle East Aviation recovery

Some of the key insights for the Middle East include labour shortages across the board, from pilots, to baggage handlers, to ticket agents, to flight attendants, to aircraft mechanics. The rise in the price of fuel is the main factor in rising costs. The Airline Economic Analysis is produced by Oliver Wyman on an annual basis, and is aimed at providing the aviation industry with data and commentary to help it address evolving industry challenges.

Oliver Wyman’s recent Airline Economic Analysis 2021-2022 found that labour shortages and inflation were the two biggest issues facing the aviation sector as it emerges from the COVID-19 pandemic, making it difficult for airlines to satisfy growing demand and pushing up operational expenses. As Middle East and airlines get busier, the company looked at what the findings mean from a regional perspective.

Some of the key insights for the Middle East include labour shortages across the board, from pilots, to baggage handlers, to ticket agents, to flight attendants, to aircraft mechanics. The rise in the price of fuel is the main factor in rising costs. According to André Martins, Partner - Head of IMEA Transportation and Services at Oliver Wyman, “airlines have been at the receiving end with the fuel price hikes and personnel shortage impacting their bottom-line”.

The conflict in Ukraine has exacerbated existing stress and meant flight restrictions due to closures of airspace and sanctions. In January 2022, just before the conflict began, Middle East countries represented the second largest destination for air travelers from Russia, at 28 percent measured by scheduled seats (behind Europe with 42 percent). In the other direction, the UAE represented 9 percent of the share of international seats headed to Russia at the same point in time, second only to Turkey.

Sustainable aviation is still a way off, with battery-operated and hydrogen-propelled commercial airliners facing technological and regulatory hurdles, and sustainable aviation fuel too expensive and too scarce to be a viable option. The aviation sector is likely to see an increase in emissions before they fall. Qatar Airways and Dubai Airports have both signed a pledge to work towards 10 percent sustainable aviation fuel by 2030, reflecting regional momentum.

Air cargo is a bright spot, driven by a growth in e-commerce during the pandemic, and shortage of truckers.

“Every downturn in the global economy has proven to be the time for new market entrants in the airline industry. This time around, it has been no different – we have seen multiple airline start-ups just launch or prepare for an upcoming launch such as the proposed new airline in Saudi Arabia, among many others,” according to Martins.

The Airline Economic Analysis is produced by Oliver Wyman on an annual basis, and is aimed at providing the aviation industry with data and commentary to help it address evolving industry challenges.