Shell predicts growth in ME Aviation and Jet Fuel Business
Posted: 4 December 2003
Aviation industry experts are projecting a significant growth in
the business in the Arab region, which will reflect positively on
the US$ 12 billion jet fuel supply industry. The Middle East consumes
8-10 per cent of global demand for jet fuel and the key differentiator
between suppliers has become the quality of service and after-sales
support.
Growth rates in the Middle East aviation industry are higher than
anywhere else in the world, with the exception of the Far East.
Mike Lumley, Shell Aviation’s General Manager for the Middle
East, Central & South Asia, said: “We see the Arab World
in particular as being one for the few regions in the world where
the Revenue Passenger Kilometers (RPKs), are growing at a significantly
higher rate than regional GDPs. This can only be good news to the
industry and indicates significant ‘pent-up’ demand
which is not yet fully satisfied .” RPKs are the key measure
used by airlines in Revenue management and measure the number of
kilometers flown for which they receive passenger revenues.
On average, the annual growth rate (aagr) in RPKs in the Middle
East region between 1990 and 2000 was 6.2 per cent, compared to
4.5 per cent worldwide. Passenger growth rate in 2003, compared
to 2002 is expected to be 7.5 per cent and has rebounded solidly
after the significant dip experienced during the ground war in Iraq.
Growth in aviation jet fuel in the region is also expected to hit
the 4.5 per cent mark in 2003 compared to 2002, and will continue
to achieve a steady growth of 4.5 per cent-5 per cent annually,
according to Mike Lumley. “In global terms this reflects a
significant increase.” The US$ 70 billion global jet fuel
industry will see no overall growth in 2003 as a consequence of
the SARS epidemic and the continued decline in long haul transatlantic
traffic.
Shell Aviation, which will have a big presence at Dubai Airshow
2003, said that the rapid developments that the Arab aviation industry
is undergoing at the moment would create a new stimulus for generating
more demand, and thus further grow the market.
“We see new regional airlines developing interesting niche
markets, and if they get their business model right the way Ryanair
and easyJet did in Western Europe, they will find a unique place
for themselves amongst the bigger players and have the potential
to further stimulate market growth.”
Shell Aviation, which has been voted as the Best International
Jet Fuel Marketer in the Middle East, Africa and Asia Pacific regions
by The Armbrust Aviation Group survey, one of the most respected
independent airline industry surveys in the world, is well placed
to assist the newcomers with its Customer Value Propositions, which
go beyond the mere supply of products.
“Regional airlines need business partners and not just suppliers
of products. At Shell, we try to offer a comprehensive expert advice
on our clients’ businesses, starting from providing information
on new locations they are considering flying to, right to hedging
their risks to help them manage costs.
Shell has developed specific risk management tools for its aviation
customers, to offer them consultancy on the financial aspects of
their business. Another of Shell’s innovative value propositions
is the “Out-of-Hours” Helpline that gives customers
the option of seeking Shell’s help if their aircraft was diverted
to an airport from where they do not have scheduled flights.
Shell will help provide them with rapid information on pricing
at any given location within their network on a 24/7 basis and will
assist them with any urgent requests during such unfortunate stops.
Similarly, “Your Friend Away from Home” proposition
has been developed specifically for regional airlines with a growing
international network. The programme will offer the airline use
of Shell’s office facilities at any international airport
serviced by Shell, where the airline has no physical presence and
requires communication facilities.
For more information see www.shell.com.
Posted by Richard Price,
Editor Pipeline Magazine
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