Jetrader - November/December 2010 - 9

The competition comes from the European carriers like Lufthansa, Air France, Turkish Airlines and so on. They do compete with us going east because they have a huge network from the Gulf, within the Gulf and to the Far East. That’s why if you look at the route map of Royal Jordanian, you’ll see it quite tilted toward the west rather than the east. We are a private company; we have to make sure that we make ends meet. Therefore, if a route is not commercially feasible and doesn’t cover the cost or we don’t generate revenue from it, we just do not go for it, but we might consider it in the future, depending on the trafﬁc of travelers to and from the destination. That’s why for the Far East right now we are concentrating on Bangkok as our main hub with connections to Hong Kong and Kuala Lumpur. Hong Kong is basically because of our connection with Cathay Paciﬁc as a oneworld partner. The competition is there. We welcome competition. We have no problem with that whatsoever. We believe that Royal Jordanian is a small airline. We have 30 aircraft now, and I think in six or seven years, we will only have 40. So we’re not this 150-, 200-aircraft kind of an airline. We believe that because we are small, we are able to provide personal service to our passengers and travel agents, as well as our freight forwarders.

JT: How is the Embraer ﬂeet working for you?
HD: It is doing very well actually. I believe we are the ﬁrst airline to introduce them in the Middle East. And it’s superb because it is a small aircraft, but it looks like a jet airplane. In our part of the world, aviation isn’t such a well-known industry. People think that aircraft with propellers is an old airplane—not knowing that it is probably newer than the 747 or the 777. Therefore, we opted for a jet engine and a small engine. And it is doing superbly well. It is very well accepted by the public. It is very comfortable. It is doing a huge number of hours—between 10 to 12 hours a day on the small airplanes. We have the same crew operating several sectors rather than just going on the ﬂight and coming back home. People like them very well, and we have plans to increase the seven we have to maybe nine or 10 in the coming few years. As I said, we are getting the E-175 on the ninth of November of this year to make the ﬂeet of E-175 larger than what we have right now. It is doing very well—very well accepted by the passengers.

JT: What are your thoughts about re-engining?
HD: Deﬁnitely the engines on the Embraer are good. There’s only one choice. The A320 family, of course, we know there is a plan to have newer engines, but we are waiting to see. It might be worth it or it might not. The planes that we are ordering—we are getting another seven—will have the same engines that we have. We will see when we receive the aircraft or before we receive them, if there is new technology coming in. We are always hoping for new suggestions, and we hope that the manufacturers will come up with a better engine in terms of fuel consumption, performance or range. It is a very important question. With the yields being so stressed and pushed as low as possible, the cost of the operation becomes a major factor to the success or failure of an airline. The less consumption of fuel, the less maintenance requirements and the better range. It is a major factor in success of airlines nowadays. We will keep our options open. Whether we are going to buy the airplanes or lease them, we’ll need to review what kind of engines and what kind of performance they offer the market.

JT: How do you typically ﬁnance your aircraft?
HD: Well we own some airplanes. We own ﬁve A310s and four Embraers—two E-175s and two E-195s. We’ve been mostly leasing airplanes. The rest of our ﬂeet is leased from different lessors. But we put in an order for seven 787s, and we are buying those seven, plus we are leasing another four. We also, according to our ﬂeet plan, do require some more A320s and A321s in 2015, 2016 and 2017. We are debating now and doing the math to see whether we should buy or lease the extra ones. We are replacing six A320s and A321s, starting in the end of 2011/early 2012. Plus we are getting an extra one in April of next year and that is leased as well. We are a small company, so it becomes quite difﬁcult for us to be able to buy a lot of airplanes. So we are still tilting toward more leasing than buying.

JT: Have you seen any challenges ﬁnancing the E-195 or the 787s?
HD: Deﬁnitely, the capital market is quite tight as we speak. It is still a difﬁcult situation, and the world hasn’t picked up as fast as we would have liked it to. But we are seeing that a lot of banks are interested in supporting our 787 program. We had a meeting with Ex-Im Bank just a couple of weeks ago, and they seemed very interested in backing our request for their support. We’re seeing a lot of interest by many banks willing to go into the ﬁnancing of the 787s—the seven of them which we will be receiving in 2013. It’s not an easy process. It’s deﬁnitely an expensive proposition for us as a small airline and a privately owned airline. However, we are also looking at increasing our capital—our capital is still very low in comparison to our ambitions and revenues we are generating. We do have the board meeting that will decide on the present capital base that we will have, and if we need to increase it, and if we do, by how much, to what process and how many years will it take to reach the desired capital base of the airline.

Royal Jordanian Airlines Fleet
Aircraft A340-200 A330-200 A321-200 A320-200 A319-132 A310-300 Embraer 195 Embraer 175 A310-300 freighters Total Aircraft Number in Fleet 4 2 4 4 4 3 5 2 2 30

Future Plans
Embraer 175 Boeing 787 1 to come in November 2010 11 to start joining ﬂeet in 2013 Jetrader 9

Jetrader - November/December 2010

Table of Contents for the Digital Edition of Jetrader - November/December 2010