Will EgyptAir Survive?

The future of the Egypt’s national airline is in question after another major security breach, the third in less than a year, caused the crash of an international flight.

In an era of heightened global sensitivity among travelers, EgyptAir does not bode well.

Just in March, a ‘psychologically unstable’ man forced an EgyptAir flight en route to Cairo from Alexandria to divert to Cyprus, signaling a worrying absence of simple safety measures. That was a mere five months after a terrorist bombing brought down a Russian plane, killing 224 people over Sinai.

The immediate response was heightened security at Cairo Airport, a commendable, if superficial solution. Patrick Werr, an economics and finance journalist based in Egypt for 25  years, shared this scene:

I’ve never seen such security at Cairo Airport! Long lines in front of check points. They made me take off my shoes twice and run them through the scanners. There was a showdown between the police officer and two angry Coptic priests, but in the end he won and they had to take off their turbans and run them through the scanner. All the police were stern. I, a non-expert, have never seen security so tight.

While it’s already clear that the lack of a sufficient security protocol is a death knell for the tourism industry – where the number of visitors to Egypt has fallen to 9 million in 2015 from a record 14 million in 2010 – there are questions over the survival of the nation’s flagship airline. The fate of EgyptAir is inextricably linked to Egypt’s tourism industry and, unfortunately the other problem plaguing Egypt: oil. As a result, the company has suffered considerable losses since the beginning of the uprising in 2011 – incurring losses of nearly $1 billion since the beginning of the 2011 – partly due to an increase in fuel prices, the devaluation of the Egyptian currency and continuous strikes within the company.

What’s worse, EgyptAir is actually self-financed. Although the airline is 100 percent state-owned, it has a special agreement with the government that allows the management to operate as if the company were privately owned. That means the company claims it has no financial backing from the Egyptian government. That contract has already caused problems. Last year, it was forced to hire an American firm to restructure. Over the course of the last few years, it has had to slash prices for tickets several times and it’s goal now for the fiscal 2016 year is to merely break even.

The question is, can EgyptAir sustain repeated losses and reputational damage as a result of mounting security threats? It’s not just the recent years. EgyptAir’s track record is appalling – just think back to 1999, when an EgyptAir flight from Los Angeles to Cairo, with a stop at a New York airport, crashed into the Atlantic. Back then, the airline absolved responsibility, and it does today, hiding behind the shroud of terrorism.

Yes, this may be down to a terrorist threat, but at what point will the airline be accountable for its lack of security? There may be a point where the government is forced to fully takeover EgyptAir, dipping into the state coffers to support it financially. But that doesn’t change its operations and the responsibility of the management over their company. If a tragedy such as what happened this week had affected an airline such as RyanAir in England or United in the U.S., calls for resignations would come fast and hard.

However, Sameh Hafni, the president of EgyptAir, has not uttered a word.

One Comment

Post a Comment

Your email is kept private. Required fields are marked *