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Syria


Syrian private airline faces stiff competition

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Feb 19, 2008

DAMASCUS • Syria's first privately owned airline is set to expand with routes to Egypt, but is already facing powerful competition after decades of a government monopoly on air transport.

"We are still testing the business. The market has opened only recently and there are uncertainties. The next target for expansion is tourists and Syrian expatriates," Salim Soda, vice president of Sham Wings, said.

The Syrian government has taken limited steps to liberalise the economy in recent years after decades of nationalisation under the ruling Baath Party. Last year, new regulations allowed private airlines to use routes not flown by state-owned Syrianair.

Sham Wings, headed by young Syrian businessman Issam Shammout, has leased a medium-bodied McDonnell Douglas aircraft and started flights three times a week between the Syrian capital and Baghdad, at the end of last year.

With 1 million to 1.5 million Iraqi refugees in Syria Soda said the route to Baghdad is profitable but new Syrian visa regulations that severely restricted entry of Iraqis have undermined business. Iraqi Airways is the only other airline currently flying between Damascus and Baghdad.

Soda said Sham Wings will this month start flying to Sharm el-Sheikh in Egypt, a favourite destination for Syrian tourists.

"There is also a potentially lucrative market in European tour groups that are increasingly making Syria a destination. Buying another aircraft is among our plans," Soda said.

Charter routes to France and Spain were an option as well as a sizeable Syrian expatriate community in Scandinavian countries and Syrian students in Russia, said Soda, a former Syrian aviation official.

However, Sham Wings could soon face a large competitor with resources to dominate Syria's air transport market. The government granted a licence this year to Syria Pearl, another airline in which Rami Makhlouf, Syria's most powerful businessman, is a major shareholder through a company called Cham Holding.

Makhlouf is the cousin of President Bashar al-Assad. His airline includes Kuwaiti investors and a 25 percent share granted to Syrianair. Some businessmen expect Syria Pearl to operate on routes also flown by the state-owned airline. Syrianair has five aircraft and 5,000 employees.

The airline has seen foreign carriers, especially Emirates and no-frills Gulf carriers, operate more flights to Damascus, such as on the lucrative Dubai route. Syria received 237,000 European tourists last year compared with 220,000 in 2006, according to government data, although the United States has expanded sanctions on the government for supporting militant Arab groups.

Passenger traffic at Damascus airport rose 15 percent in 2006 to 3 million travellers. The government has awarded Malaysian company Muhibbah Engineering a $59m contract to upgrade a main section of the dilapidated airport.

thepeninsulaqatar.com

Syrian private airline faces stiff competition
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