Royal Jordanian is carving out a niche for itself as the first-choice airline of the Levant. Chief Executive Samer Majali explained the strategy at Routes World. Mark Pilling reports
Samer Majali is crystal clear about the mission statement for the airline he leads: it is geared towards being the “Levant to the globe connector”.
Majali was aware that many of the Routes delegates he was addressing in Istanbul would be unfamiliar with what and where the Levant is, so he helped: “Levant is an old French word that describes the near east. Essentially, Jordan, Iraq, Syria, Lebanon, Palestine, Israel and southern Turkey.”
From its hub in Amman, Royal Jordanian serves its country’s needs for a flag carrier and offers a multi-day service to all primary and secondary points in the region, said Majali.
However, his airline operates in a tough market. In the face of competition from “some of the best carriers in the world – Emirates, Qatar Airways and Turkish Airlines – we are a little bit sandwiched in the middle”, said Majali.
“Over the past 40 years Royal Jordanian grew by working a lot with transit passengers,” he explained. “But that is no longer our market because the larger carriers have come in and taken that space with much lower seat-mile costs, bigger aeroplanes, bigger size and so on.
“So, we have had to adapt, and we’ve switched strategies,” said Majali. The Levant strategy sees Royal Jordanian performing regional, medium-range and long-range operations, all through Amman. “For example, we do Erbil to Alexandria with Embraers; we fly Basra to Istanbul; and in the future we’ll do Baghdad to Neom in Saudi Arabia,” he said.
Regional network
The carrier is steadily building up its network of primary and secondary destinations across the region which are connected to its European network and to Royal Jordanian’s services to the Gulf, North America, Canada and the Far East.
“This is the cornerstone of Royal Jordanian’s strategy in the coming two years: providing these three layers of connectivity allows us to find our niche market and compete,” said Majali. “It is not huge volumes of passengers, but a higher frequency operation with relatively high yields allows this concept to work.”
The carrier’s brand remains strong in the region and Jordan itself is seen as a stable country to do business with. “Jordan has been and hopefully will continue as an oasis of relative stability within a very difficult region,” said Majali, referring to the recent events in Israel and Palestine.
And although Jordan is frequently surrounded by countries in turmoil, which is a challenge, this can also bring opportunities. “We’ve been in Iraq since 2003 developing that network quite well and hopefully Syria will come online in the future once the sanctions are out,” said Majali.
In addition, many businesses have been basing themselves in Jordan and using Amman as a hub to travel and commute to cities around the region.
Royal Jordanian’s latest route additions are Dusseldorf, Lille and Stockholm, while Al Ula in Saudi Arabia is on the radar, said Majali. The carrier’s already extensive network features 20 daily flights to the US in the summer.
Fleet plan
For the past 12 years, Royal Jordanian has been unable to renew its fleet because of the various trouble spots in the region, such as the Arab Spring, ISIS in Syria and so on, explained Majali. “We have been negatively affected over the last 10 years by events in the region,” he said. “But post-Covid, we have put in a new fleet renewal and expansion plan.”
The carrier currently has a fleet of just under 30 aircraft which it aims to expand to 45 in the next two years, said Majali. This will enable the airline to add new destinations and increase frequencies on existing ones.
The fleet renewal plan will see it replacing its two Embraer E195-E1s and two E175-E1s with 10 Embraer E190-E2s/E195-E2s, with six of these coming from lessor Azorra and two direct from the manufacturer in a deal announced in May. The first two E2s will arrive from Azorra in December with a further three in the first quarter of 2024, said Majali.
The narrowbody fleet renewal continues, with Royal Jordanian replacing all its A320ceos with A320neos over the coming years. The carrier has signed contracts for 16 A320neos with lessors and has another four to find, said Majali.
Royal Jordanian has no option but to use the leasing market for A320neos as “Airbus has nothing to deliver until 2029,” he noted, and it is continuing to operate its fleet of A320ceos, which are long in the tooth, because of delivery delays from the manufacturers.
The delays have been a “disaster” in planning terms for the carrier, forcing it to postpone its growth plans. “Our original A320neos were supposed to start coming in May this year,” he said. “We have had to shift the whole [fleet renewal] plan.”
On the widebody front, Royal Jordanian currently has seven Boeing 787-8s and will add two larger 787-9s in 2025 and another in 2026 from lessors, said Majali. It is in advanced talks with Boeing for six 787-9s with first deliveries starting in 2027, which is “the earliest Boeing could give us”.
This is Majali’s second stint leading Royal Jordanian. He joined the carrier in 1979 and was CEO from 2001 to 2009. After roles leading Gulf Air and helping found SaudiGulf Airlines he was asked to return to Royal Jordanian in April 2021.
His task is to put the carrier back onto a profitable growth trajectory after it suffered heavy losses during the pandemic. It lost about US$100 million in 2021. And despite the high cost of jet fuel, which makes up 42% of its cost base, Majali hopes the traffic recovery seen this year will enable it to return to breakeven.
A landmark deal to recapitalise the airline was agreed recently. Year-long negotiations between the carrier and its state owners culminated in October with an equity injection for Royal Jordanian, covering losses accumulated during the pandemic. This strengthened its balance sheet, enabling the fleet renewal and restoring the carrier’s “ability to do business”, said Majali.
While fixing the airline appears well within Majali’s grasp, events such as the turbulent geopolitical environment in the Middle East, the cost of fuel and disruptors like Covid, clearly are not.
But he presses on with what he can control. “Sometimes we feel a little bit hemmed in, but in spite of this we are renewing; we have a very good product and brand,” concluded Majali. “Jordan is a very unique destination and I encourage everybody to visit.”
