Time Traveller

Hussein Dabbas
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“But we anticipated the crash of the oil prices and the level we have now is very feasible for both the consumer and the airline.” Add to that a struggling economy and the airline has done well to record a net profit of JD25.5 million ($36 million) in the first nine months of this year, helped, in part, to a 20% reduction in operational costs.

“We cut capacity and frequency on some flights and sent airplanes to hangars for C-checks, but when demand dropped we had to see what could be done to ensure seats were being sold at the right price.” But, unfortunately, many airlines did the same, and RJ was forced to slash its ticket fares, leading to a 14% drop in passenger yield.

“The Middle East has remained particularly strong throughout this year and the market was, and still is, vibrant. Where we took a beating was on the Far East routes. Yields fell through the floor, and it was the same story for North Atlantic routes.”

But cutting capacity is just one method to bring the airline into order, says IBA Group’s Ahmed.

“Royal Jordanian needs to assess other areas of operations; such as ground operations, network, services contracts, suppliers, lease contracts and maintenance operations. These must be reviewed on a regular basis to ensure the best possible deal. Most importantly RJ needs to achieve high levels of staff efficiency to stay above the water in the current economic conditions.”

So, what about job cuts? On his exit, RJ’s former CEO, Majali admitted that he had made some 500 employees redundant in his last remaining weeks. But Dabbas, it seems, does not have the same methodology. “I’m not here to chop heads and deprive people of livelihoods. I have not initiated any job cancellations since I took over as CEO, although we are not hiring new staff either. But I have told employees that I am here to improve the business productivity and I encourage people to save paper and turn off lights.”

So where to next? Dabbas says the airline has exhausted the region in terms of new route launches, and he will continue to re-examine the airline’s strategy.

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“We have to look at where we want to be by 2012, 2015 and 2020; we need to be creative, assess our successes and change what is lacking.”

But the business strategy doesn’t end there. Dabbas has concerns that the current expansion project at Queen Alia International Airport will not fulfill his ambitions for RJ.

With just 14 bridges opening in 2013, the infrastructure falls far short of the 26-28 bridges Dabbas anticipates will be needed. As a consequence, he plans to fully exploit the airlines affiliation with the oneworld alliance and the airline will soon be codesharing with Cathay Pacific, and on routes to London with British Airways. But it is merger plans that Dabbas is keen to discuss.

“We need to merge with another airline in the region in order to grow, and we will explore this option next year.”

But Ahmed warns that mergers can bring many challenges.

“Internal management needs to adapt to complement working ethics. In addition, fare structures and network optimisation can become key issues.

“The biggest challenge for any airline will always be its competition. At least by merging, RJ will have one less competitor and gain a partner.” And when it comes to finding a partner, Dabbas says he would consider looking to airlines in Europe.

“We would like to find an airline that fits our ambitions and we would not rule out the possibility of partnering with a European carrier.

“We have had our peaks and valleys and I won’t deny that the economic slowdown has made us think that we cannot carry on the business alone, but consolidation is the future and we will use alliances as a means of facilitating travel.”