Royal Jordanian (RJ), the national carrier of Jordan, has suspended operations to five destinations on its route network in order to reduce the operating costs brought up by the soaring fuel prices and to offset the decline in tourism.

RJ president and CEO Hussein Dabbas said the company suspends operations to Brussels, Munich and Alain starting with 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, he said.

Dabbas added that in order to reduce costs, 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 said.

It 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 CEO said that the airline will also reconsider its fleet size, in light of the above measures, and pointed out that the financial results of the airline were adversely affected in 2011 due to the constant increase in fuel prices.

Oil had reached had JD115 ($162) a barrel, which led to an increase in the fuel bill, and 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, Sana’a, 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.

Dabbas said that the decision to suspend flights was taken to help efforts to overcome this difficult stage.

The company, the president added, 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 euro zone.

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 said that reducing the airline’s operations is 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 also said that many international airlines 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.

However, 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.

Dabbas attributed this improvement, however modest, in the airline’s performance to the employees and their understanding of the challenges faced by the company, their great efforts exerted in an attempt to mitigate the effects of these challenges, as well as to the various initiatives launched by the airline in order to reduce cost and increase revenues. – TradeArabia News Service