(MENAFN - Jordan Times) Royal Jordanian (RJ) announced this week that its board of directors decided to suspend operations to five destinations on its route network.
"The decision aims at reducing the operating costs brought by soaring fuel prices and at offsetting the decline in tourism to the region, the outcome of the Arab spring and the political unrest," the airline said in a press statement.
RJ President/Chief Executive Officer Hussein Dabbas indicated that the company is suspending operations to Brussels, Munich and Al Ain starting March and April respectively, and to two other destinations in the Gulf area, to be announced at a later time.
The decision was based on the assessment of the performance and economic feasibility of these stations.
In order to reduce costs, Dabbas said in the press release that the company has also decided to reduce the number of frequencies to destinations like Rome, Vienna, Zurich, Geneva, Amsterdam, Colombo and Khartoum.
"The company will cancel more flights during this year, to be decided by the amount of bookings to certain destinations, and will keep tight control on all aspects of capital expenditure," he added.
RJ stopped employing new personnel in 2012, focusing on increasing staff productivity. These measures, stressed Dabbas, will not affect in any way the level of services provided to passengers.
The chief executive officer said the airline will also reconsider its fleet size, in light of the above measures.
Noting that RJ's 2011 financial results were adversely affected due to the constant increase in fuel prices he revealed that the fuel bill reached JD293 million last year, compared to JD203 million in 2010, leading to about 20 per cent increase in the overall operational cost of the company.
The Arab Spring and the political unrest that swept the Arab region last year is having a significant impact on Royal Jordanian, and the aviation industry in the region in general, forcing the airline to close some of its stations, such as Tripoli and Benghazi, for several months.
At the same time, other stations experienced a noticeable decline in traffic, such as Tunis, Damascus, Aleppo, Sanaa, Aden, Bahrain, Cairo, Alexandria and Sharm El Sheikh, translating in the loss of hundreds of thousands of passengers.
"A significant drop of tourists, mainly from Europe, could be noticed at all destinations, which forced the airline to cancel more than 1,300 flights last year and to take the decision to cancel over 460 flights in the first three months of this year," the press release said.
Dabbas added that the decision to suspend flights was taken to help efforts to overcome this difficult stage indicating that the company conducted extensive studies aimed at finding the best possible solutions and techniques to mitigate the impact of the increase in fuel prices and the instability in the Arab region, as well as the impact of the economic crisis experienced the world over and particularly in the eurozone.
It also based its decisions on the forecast that tourism to Jordan and the Middle East will decline due to all these challenges, as expected in the first quarter of 2012.
The president described the reduction in the airline's operations as a normal and necessary procedure under these difficult circumstances, and that the company is determined to overcome this adverse phase by cutting costs and thus increasing revenues.
He pointed to many international airlines that took similar decisions as a result of the challenges facing the aviation industry. Some were forced to stop operations completely, while others had to give up one third of their destinations and fleet.
Dabbas said that the increase in number of passengers and revenues in previous years ranged between 15 per cent and 20 per cent.
"Despite all the difficulties, the company was able to achieve positive operational results during 2011, as it increased the number of passengers by 6.5 per cent, the operational revenues by 6 per cent, the flying hours and departures by 3 per cent, the seat factor reached 70 per cent.
He pointed out that the increase of the operational cost by 20 per cent against an increase of only 6 per cent in its revenues has led to losses in 2011.
