29

AIR TRANSPORT TUNISIA

To many international observers, Tunisias JasmineRevolution is best known as the catalyst for the2011 Arab Spring uprisings across the Middle Eastand North Africa popular demonstrations which, by andlarge, fell short of their lofty aspirations.

But, for Tunisians, the legacy of the Jasmine Revolutionis much rosier. The country last year held its first open anddemocratic election since independence from France in1956, swearing in 88-year-old Beji Caid Essebsi as its newpresident.

The Economist hailed the vote as proof of a precioustruth: the Arab world can change for the better, and Islamcan be reconciled with democracy. Such idealism may behard to stomach when considering the disastrous effects ofthe Arab Spring elsewhere unleashing civil wars in Syria,Libya and Yemen, and replacing one dictator with anotherin Egypt but it is a kernel of hope that must be preserved.

Only when economic prosperity trickles down to theArab street will the full benefits of democracy begin toresonate across the region. Tunisians, therefore, continueto fight for progress in the Arab world, even as theirJasmine Revolution fades into history.

Flag-carrier Tunisair, which suffered heavy financiallosses during the political crisis, but is now showing signsof a sustained turnaround, illustrates this struggle on amicrocosmic level.

Revenue at the airline inched up by 0.8% last year, evenas its overall passenger count fell by 5.1% to 3.5 million.That reflected a fine-tuning of operations,according to president and director generalSaloua Essghaier, with load factors and

With Tunisia emerging as theonly true beneficiary of theArab Spring, Martin Riverstalks to Tunisair presidentSaloua Essghaier about theflag-carriers prospects.

Finetuning in Tunis

Continuedon Page 30

Saloua Essghaier: We believethat with the implementation ofthe new business strategy, thecost-cutting programme, theincrease of the ancillaryrevenues, and the drop in fuelprices, 2015 will be the year to re-position our company.

AA25_sect_Layout 1 23/04/2015 22:09 Page 29

TUNISIAAIR TRANSPORT

30

ancillary earnings benefiting from a re-deployment of capacity away from volatilemarkets towards charter flying and more stablescheduled points.

Regarding the turmoil in Libya, we shut downour activities in August 2014 and, consequently,traffic from Libya dropped by 42% comparedwith 2013, she said.

But the overall traffic of Tunisair hasdecreased by only 1.9% [when measured byrevenue passenger kilometres] due to therecovery of charter activity and scheduledactivity in other markets, especially in Europe.

As well as suspending flights to six points inLibya Tripoli, Misrata, Benghazi, Bayda, Tobrukand Sabha the flag-carrier last year droppedservices from Tunis to Manchester and Lille. It alsoadjusted capacity at secondary bases, withdrawingnon-stop links to Europe and Russia from Enfidha,Monastir, Djerba and Tozeur.

Having already put eight aircraft up for sale in2013 three ageing Airbus A300s, four Boeing 737-500s and one ATR 42 Tunisair ended the year with17 A320s, four A319s and seven 737-600s.

Meanwhile, its regional subsidiary, TunisairExpress, retained three ATR 72s and oneBombardier CRJ900.

But it will not be long before the fleet startsgrowing, with the flag-carrier this summer takingdelivery of two A330s. A third unit will arrive in2017, by which time Tunisairs long-term fleetstudy will have been concluded and itsrequirements for the period running 2018-28will be known.

These wide-body aircraft will be operated toreinforce the medium-haul routes to SaudiArabia and Turkey, but will also fly long-haulroutes, Essghaier said of the imminent A330deliveries.

Obvious candidatesJeddah and Istanbul are obvious candidates forup-gauging, being the second and third largestpoints in the network when measured byavailable seat kilometres. The airlines largestmarket, Paris, which accounts for nearly one inevery six flights, will almost certainly also beserved by the wide-bodies. Local media reportshave further suggested that Dubai and Dakarmay benefit from the larger aircraft.

Although the president did not single outSenegal for A330 deployment, she stressed theneed to strengthen our operations in thecontinent and confirmed that the new type willmake an appearance on African routes soon.

Tunisairs foreign network presently includesfour north African destinations (Algiers, Cairo,Casablanca and Oran) plus five in west Africa(Abidjan, Bamako, Dakar, Nouakchott andOuagadougou).

The reference to long-haul services is lessclear-cut. There had been speculation thatTunisair may launch flights to Montreal takingthe baton from local rival Syphax Airlines, whichwithdrew from the Canadian city last year after

just a few months of operations but no planshave been announced. Asked about the prospectof route launches, Essghaier would only confirmthat Scandinavian markets are in the pipeline.

She emphasised that growing frequencies onEuropean routes is the top priority, withBarcelona, Dusseldorf, Frankfurt, Milan andMarseille earmarked for additional flights.

The upcoming delivery of four A320neos two next year and two in 2017 will propel thisshort-haul expansion.

Greatest potentialBut it is the wide-body fleet that has the greatestpotential to drive future growth. Despitecancelling a commitment for three A350-800s in2013 originally ordered alongside the A330s management continue to talk about the need forsix twin-aisle aircraft.

Essghaier confirmed that the on-going fleetstudy is evaluating whether switching toA330neos will be considered. The re-enginedversion of the A330 was only confirmed byAirbus in July 2014, but anticipation of its launchamong customers is believed to havecannibalised sales of the more advanced A350.

Having lost an average of $100 million in eachof the three years following the JasmineRevolution, Tunisair is not expecting a profit for2014. However, the president is upbeat about theflag-carriers broader prospects.

We look to the future with optimism, shesaid. We believe that with the implementation ofthe new business strategy, the cost-cuttingprogramme, the increase of the ancillaryrevenues, and the drop in fuel prices, 2015 willbe the year to re-position our company.

Her target of breaking even this year willdepend in large part on successfulimplementation of the restructuring plan.

Two internal committees have beenestablished under the turnaround project, whichwas initiated in 2012. The first has a mandate topursue cost-cutting measures and boost ancillaryrevenues, while the second is tasked witharticulating a short-term commercial strategythrough to 2018.

Government support will be crucial for both

committees. As well as providing guarantees foraircraft financing, Tunis has pledged to fund aportion of the severance allowances owed to the1,700 employees who face redundancy by 2016.Those job-cuts will nearly halve Tunisairs 3,700-strong workforce bringing its ratio of aircraft tostaff in-line with industry norms but couldprovoke industrial action without the backing oftrade unions.

While the threat of strikes loom large, Tunisairis at least enjoying a competitive reprievefollowing an unfortunate few months at Syphax,the private carrier founded by businessman-turned-politician Mohamed Frikha in 2011.

Syphaxs withdrawal from the Montrealmarket last year precipitated a raft of problems atthe fledgling carrier.

Accounting anomaliesIn November, the Tunis Stock Exchangesuspended trading of its shares due to allegedaccounting anomalies. Barely a fortnight later,newly appointed chief executive Christian Blanc the distinguished former boss of Air France was forced out of the job following a regulatorydispute with Tunisias civil aviation authorities.Syphax subsequently returned its A330, leavingit with just two A319s.

With Frikhas aim of deploying a 15-strongfleet by 2018 in tatters, Tunisair has breathingspace to finalise its restructuring plan andcapitalise on improving business sentiment inthe country.

Competitive headwinds are, however, likely toresurface. Tunisia has, since November 2012,been negotiating an open skies treaty with theEuropean Union (EU). Although the latest roundof talks was postponed in June 2014, Tunisairsfortunes have been explicitly linked to the pace ofreform.

The agreement on open skies with the EUwill be implemented once the restructuring ofTunisair is completed, Essghaier affirmed,reiterating earlier pledges.

While liberalisation is a daunting prospect,Moroccos open skies deal with Europe in 2006proved to be a boon for country and flag-carrieralike. Time will tell if Tunisia follows its example.

The overall traffic of Tunisair has decreased byonly 1.9% due to the recovery of charter activityand scheduled activity in other markets.

CONTINUED FROM PAGE 29

AA25_sect_Layout 1 23/04/2015 22:09 Page 30