LATEST ECONOMIC BRIEFINGS
EMIRATES: DUBAI | 30.07.2010
Dubai’s capital markets appear to be in for significant change with plans unveiled to establish a second-tier stock exchange coming hot on the heels of Dubai Financial Market (DFM) – the government-administered domestic bourse – and the DIFC-based NASDAQ Dubai’s move to formally link their trading platforms. All of this is happening as speculation of a merger between the bourses of Dubai and Abu Dhabi mounts.
ALGERIE | 30.07.2010
Les efforts importants déployés par l’Algérie pour augmenter la production céréalière commencent à porter leurs fruits, dans la mesure où les récoltes record de l’année dernière et les rendements importants de 2010 aideront à réduire les coûts d’importation et à créer des emplois sûrs dans les zones rurales. Cependant, l’objectif de l’autonomie alimentaire fixé par le pays reste encore bien éloigné.
SENEGAL | 30.07.2010
Le Sénégal est en train de devenir un leader en matière de développement de l’énergie solaire comme énergie de l’avenir, et ce, à la fois à l’échelle nationale et continentale. Pour y parvenir, le pays veut augmenter l’utilisation des énergies renouvelables afin de surmonter ses propres manques et promouvoir un grand programme international ayant pour but de mettre fin à la dépendance de l’Afrique de l’Ouest à l’égard des combustibles fossiles.
BULGARIA | 30.07.2010
Though Bulgaria’s economy is likely to remain in the slow lane for the rest of this year, the country’s banking sector continues to show resilience in the face of global economic contraction. There are concerns, however, that increasing levels of bad loans carried by some lenders could add to pressures on the sector.
OMAN | 28.07.2010
A raft of new agreements recently signed by the Ministry of Transport and Communications will see a significant round of investment in Oman’s transport infrastructure. The 15 agreements, signed earlier in July, cover projects in land, sea and air infrastructure and are worth a total of OR136.9m ($355.9m).
COUNTRY COVERAGE
Sky High Prices
Algeria, Volume 7
01.03.2005
01.03.2005
The announcement this week by French airline Aigle Azur that it would cut the price of its Algiers-Paris flight by up to 25% was greeted in Algeria with widespread enthusiasm. However, much less happy was rival Air Algerie's management, which has come under growing criticism lately for its pricing policy.
Talking at a forum organised by el-Mudjahid newspaper on February 26 in Algiers, the general manager of Aigle Azur, Arezki Idjerrouidene, boasted that his company was now offering the cheapest airfares between France and Algeria in 40 years.
Depending on a number of conditions, flying from Algiers to Paris and back with Aigle Azur costs around DZD37,040 including tax, or $514 - down almost 25% from the previous $665 fee. This is still a fairly high price, however, particularly when compared to the cost of flying the other way round. A Paris-Algiers-Paris flight - bought outside Algeria's protected market - can be purchased for as little as $320, depending on dates and validity. This gap made the Algiers-Paris ticket arguably one of the most expensive flights per kilometre worldwide.
The new promotional fares were submitted by Aigle Azur two months ago to the National Civil Aviation Department (Direction Nationale de l'Aviation Civile, DNAC) for approval. This body is charged with setting airfare reference prices - usually at the level that best suits the interest of the national carrier, Air Algerie.
Aigle Azur's announcement comes at a time when Air Algerie has spurred increasing discontent at all levels of society, mainly because of its pricing policy. Indeed, in the last 12 months, the national carrier has performed a record five price hikes, amounting to a hefty 110% increase in the price of the reference airfare, Algiers-Paris.
The DNAC is also regarded widely as only apparently independent from the national operator. It has diligently assented to these large, although spread out, price increases, which have made air travel too expensive for a large percentage of the Algerian population. The price hikes have also sparked many protests against Air Algerie's management.
Air France reopened its Paris-Algiers line only in mid-2003, after an eight-year embargo. The reopening was also made in the face of protests by the main French air trade union, which was worried about staff and passenger safety. According to industry insiders, the move was also only made under the strict condition that the Algerian government, and hence the DNAC, would guarantee its profitability. The French national carrier had therefore omitted to protest against the local price policy.
In order to circumvent this lack of competition and increase its market share, French airline Aigle Azur, which was bought by the GoFast group in 2001, is now launching promotional fares for non-redeemable tickets with a validity date between one week and three months. The discount on these tickets varies between 10 and almost 25%. This has been made possible by the excellent results the company registered in 2004, "due to a 20% increase in the number of passengers" between France and Algeria, according to Idjerrouidene.
Aigle Azur, which has flown to Algeria for almost four years now, is currently operating 74 international flights between six French airports and nine Algerian cities every week, and is planning to increase this number to a hundred by the end of 2005. It carried a total of 1.1m passengers last year, including 300,000 during the summer - a number it hopes to raise to 450,000 this coming summer. Clearly looking to capitalise on Algeria's improving security and economic climate, the French airline has also launched a freight service over the Mediterranean.
Meanwhile, Idjerrouidene reiterated his company's interest in Algeria's domestic flight market, currently exclusively in the hands of Air Algerie following the collapse of its main competitor, Khalifa Airways, which was triggered by the liquidation of el-Khalifa bank in early 2003 in one of the largest African financial scandals to date.
In this respect, Aigle Azur has submitted a request to the Algerian authorities to be allowed to service the domestic market. The airline underlines the fact that it is open to various possibilities, such as creating a new company or partnering with Air Algerie "as soon as the authorities give their OK", as Idjerrouidene put it.
While Algerian travellers and businessmen are grateful to Aigle Azur for its commercial offensive, the good news has not overshadowed the growing discontent against Air Algerie. Most observers seem to agree that the national carrier's pricing policy is mostly a sign of poor management - thus dismissing unofficial claims that the International Air Transport Association (IATA) was pushing Air Algerie to raise its prices. Algeria's leading private newspaper, el-Watan, quashed this rumour on February 28 by talking to the IATA, which confirmed that "airlines are free to modify their fares".
Under increased scrutiny, the national carrier has retreated into absolute silence about this crucial issue: the Algiers-Paris-Algiers ticket is now worth almost six times the national minimum monthly salary. In addition, passengers are complaining that service quality is declining both at Air Algerie and at its competitors - a direct consequence of the lack of competition in the market.
The only winner in this situation is obviously Air Algerie, which can pride itself on showing a profit in spite of overstaffing and excessive running costs - not to mention organisational flaws and regular lateness.
Yet while the national carrier's management may be able to coast along with this for now, the damage to Air Algerie's image might trigger bitter regrets sooner or later, when Algeria's air travel market is finally opened to real competition. The market's reaction in the coming months to Aigle Azur's bold pricing initiative will be an interesting test in this regard.
Talking at a forum organised by el-Mudjahid newspaper on February 26 in Algiers, the general manager of Aigle Azur, Arezki Idjerrouidene, boasted that his company was now offering the cheapest airfares between France and Algeria in 40 years.
Depending on a number of conditions, flying from Algiers to Paris and back with Aigle Azur costs around DZD37,040 including tax, or $514 - down almost 25% from the previous $665 fee. This is still a fairly high price, however, particularly when compared to the cost of flying the other way round. A Paris-Algiers-Paris flight - bought outside Algeria's protected market - can be purchased for as little as $320, depending on dates and validity. This gap made the Algiers-Paris ticket arguably one of the most expensive flights per kilometre worldwide.
The new promotional fares were submitted by Aigle Azur two months ago to the National Civil Aviation Department (Direction Nationale de l'Aviation Civile, DNAC) for approval. This body is charged with setting airfare reference prices - usually at the level that best suits the interest of the national carrier, Air Algerie.
Aigle Azur's announcement comes at a time when Air Algerie has spurred increasing discontent at all levels of society, mainly because of its pricing policy. Indeed, in the last 12 months, the national carrier has performed a record five price hikes, amounting to a hefty 110% increase in the price of the reference airfare, Algiers-Paris.
The DNAC is also regarded widely as only apparently independent from the national operator. It has diligently assented to these large, although spread out, price increases, which have made air travel too expensive for a large percentage of the Algerian population. The price hikes have also sparked many protests against Air Algerie's management.
Air France reopened its Paris-Algiers line only in mid-2003, after an eight-year embargo. The reopening was also made in the face of protests by the main French air trade union, which was worried about staff and passenger safety. According to industry insiders, the move was also only made under the strict condition that the Algerian government, and hence the DNAC, would guarantee its profitability. The French national carrier had therefore omitted to protest against the local price policy.
In order to circumvent this lack of competition and increase its market share, French airline Aigle Azur, which was bought by the GoFast group in 2001, is now launching promotional fares for non-redeemable tickets with a validity date between one week and three months. The discount on these tickets varies between 10 and almost 25%. This has been made possible by the excellent results the company registered in 2004, "due to a 20% increase in the number of passengers" between France and Algeria, according to Idjerrouidene.
Aigle Azur, which has flown to Algeria for almost four years now, is currently operating 74 international flights between six French airports and nine Algerian cities every week, and is planning to increase this number to a hundred by the end of 2005. It carried a total of 1.1m passengers last year, including 300,000 during the summer - a number it hopes to raise to 450,000 this coming summer. Clearly looking to capitalise on Algeria's improving security and economic climate, the French airline has also launched a freight service over the Mediterranean.
Meanwhile, Idjerrouidene reiterated his company's interest in Algeria's domestic flight market, currently exclusively in the hands of Air Algerie following the collapse of its main competitor, Khalifa Airways, which was triggered by the liquidation of el-Khalifa bank in early 2003 in one of the largest African financial scandals to date.
In this respect, Aigle Azur has submitted a request to the Algerian authorities to be allowed to service the domestic market. The airline underlines the fact that it is open to various possibilities, such as creating a new company or partnering with Air Algerie "as soon as the authorities give their OK", as Idjerrouidene put it.
While Algerian travellers and businessmen are grateful to Aigle Azur for its commercial offensive, the good news has not overshadowed the growing discontent against Air Algerie. Most observers seem to agree that the national carrier's pricing policy is mostly a sign of poor management - thus dismissing unofficial claims that the International Air Transport Association (IATA) was pushing Air Algerie to raise its prices. Algeria's leading private newspaper, el-Watan, quashed this rumour on February 28 by talking to the IATA, which confirmed that "airlines are free to modify their fares".
Under increased scrutiny, the national carrier has retreated into absolute silence about this crucial issue: the Algiers-Paris-Algiers ticket is now worth almost six times the national minimum monthly salary. In addition, passengers are complaining that service quality is declining both at Air Algerie and at its competitors - a direct consequence of the lack of competition in the market.
The only winner in this situation is obviously Air Algerie, which can pride itself on showing a profit in spite of overstaffing and excessive running costs - not to mention organisational flaws and regular lateness.
Yet while the national carrier's management may be able to coast along with this for now, the damage to Air Algerie's image might trigger bitter regrets sooner or later, when Algeria's air travel market is finally opened to real competition. The market's reaction in the coming months to Aigle Azur's bold pricing initiative will be an interesting test in this regard.
