BEBA Organizes a Working Dinner in Honor of H.E. Dr. Sameh Ahmed El Hefny, Minister of Civil Aviation, On ‘‘Egypt Aviation Sector: A Key Catalyst for Investment, Tourism and Economic Development’’

Cairo, 21 October 2024: The British Egyptian Business Association (BEBA) organized on Monday October 21st a working dinner in honor of H.E. Dr. Sameh Ahmed El Hefny, Minister of Civil Aviation, under the title: “Egypt’s Aviation Sector: A Key Catalyst for Investment, Tourism & Economic Development.”

In his opening remarks, Eng. Khaled Nosseir, BEBA Chairman, welcomed the guests, notably H.E. Gareth Bayley, British Ambassador to Egypt; Pilot Montaser Manaa, Deputy Minister of Civil Aviation; Eng. Ayman Arab, Chairman of the Egyptian Holding Company for Airports and Air Navigation (EHCAAN); Eng. Yahia Zaki, Chairman of the Suez Canal Economic Zone; Eng. Yehia Zakaria, Chairman & CEO of EgyptAir Holding; and Pilot Mohamed Alian, CEO of EgyptAir. This in addition to representatives of the US and Turkish embassies to Egypt.

Minister Sameh El Hefny Highlights Aviation’s Role in Driving Egypt’s Economy

Egyptian Minister of Civil Aviation, Sameh Ahmed El Hefny, delivered a speech outlining the ministry’s vision for modernizing the aviation sector and enhancing its contribution to tourism, trade, and connectivity.

The Minister added that the aviation sector contributes significantly to Egypt’s economy, impacting various services, including passenger travel, cargo transport, and more. Notably, the aviation industry supports the global economy by 4.1%, with projections indicating a potential growth of 29%, according to the latest studies.

The Ministry of Civil Aviation’s vision embraces the adoption of the best international standards to ensure safety and sustainability in aviation, aligned with Egypt’s Vision 2030. The ministry is committed to enhancing its strategies and goals, supporting projects that comply with environmental regulations, and promoting sustainability within the sector.

A New Terminal at Cairo International Airport To Accommodate 50 Million Passengers

The Ministry is also focused on positioning Egypt as a desirable and effective aviation hub for airlines and passengers in the region. To this end, the Egyptian government is investing significantly in developing infrastructure to boost tourism, trade, and connectivity. This includes airport expansions and the establishment of a new terminal at Cairo International Airport, which will accommodate 50 million passengers, with a total capacity of 58.2 million expected soon. Additionally, a new terminal will be constructed to increase capacity by another 7 million passengers, reaching a total of 20 million.

The government is also developing several regional airports, which will significantly enhance tourism and help us achieve our goal of welcoming 30 million tourists by 2030.

Egypt is adopting a balanced financing approach for infrastructure projects, combining public funding with private sector participation. Public-private partnerships will be essential for efficiently delivering these projects and attracting international investment, such as the Cairo Airport City initiative.

Furthermore, digital transformation is a key priority for the Ministry of Civil Aviation. The ministry is exploring smart airport technologies to enhance efficiency, security, and safety, including biometric identification systems and various AI tools.

The ministry is also committed to promoting religious and spiritual tourism through improved connectivity, which will integrate Egyptian airports with transport and logistics corridors. This development will enhance the role of the Egyptian airports within the international transport network, further establishing Egypt as a regional hub.

Additionally, the ministry is committed to implementing safety and security regulations that meet international standards, fostering cooperation with global aviation authorities. The Egyptian government plans to increase the airports’ capacity to 72.2 million passengers by 2025, up from 66.2 million by the end of 2023, with a target of reaching 109.2 million by 2030.

The Egyptian airports are undergoing comprehensive security inspections by the US Transportation Security Administration (TSA) and the UK Department for Transport, ensuring compliance with the highest international safety standards.

The Ministry of Civil Aviation is advancing several projects to enhance the aviation sector in Egypt. Notably, it is establishing new airports to alleviate congestion in Cairo, including the new international airport serving the New Administrative Capital, which is designed to facilitate tourism and national investment with a capacity of 380,000 passengers.

EgyptAir is expanding its fleet, expecting to operate 125 commercial aircraft and six cargo planes by the end of 2029. The ministry is committed to ensuring compliance with international standards while streamlining procedures.

In the realm of maintenance, repair, and operation, the country has around 11 private entities and subsidiaries under EgyptAir Holding Company, continuously evaluating growth opportunities. The government is also planning to develop Cairo Cargo City to enhance the movement of goods, further establishing Egypt as a central hub for air cargo and global trade between Africa and the Middle East.

Egyptian Government, Private Sector Collaboration

El Hefny detailed ambitious plans to expand EgyptAir’s fleet to 125 aircraft by 2029, despite current challenges with older planes and delays in new aircraft deliveries. He also mentioned that refurbishing the existing fleet is underway, although it presents operational challenges.

The minister also discussed aligning in-flight services with international standards through the Skytrax program, which has already seen Egypt improve its ranking. He emphasized a comprehensive approach to enhancing customer experience, from reservation to arrival, including modernizing check-in processes and lounges. Notable improvements in cabin service, crew training, and in-flight amenities are expected by early 2025.

Aviation Minister: EgyptAir reduces its debts from over $30 billion to around $16 billion

Moreover, the minister highlighted the significant reduction in EgyptAir’s debts, from over $30 billion to around $16 billion, with a target of reducing it further to $13 billion next year.

He expressed optimism that once EgyptAir is on the right financial track, it will start generating acceptable profits, especially in maintenance and cargo operations. He also mentioned strong interest in forming partnerships with private companies, anticipating developments in this area soon.

Meanwhile, Minister El Hefny invited private investors to consider participating in EgyptAir. However, he emphasized that the first step would be to review the airline’s financial statements from the past five years to assess the situation. The minister noted that EgyptAir is not currently ready for an IPO, due to the need for financial and quality improvements.

Egypt’s Aviation Sector Targets Major Growth in Cargo Operations to Boost Exports

The moderator, Kareem Refaat, Chairman of the N Gage Group, emphasized the significant role the aviation sector can play in supporting Egyptian exports, particularly to regions where land transport is challenging, such as parts of Africa.

Responding to these points, Minister El Hefny outlined a strategic vision for the aviation sector, particularly focusing on cargo. He mentioned that two airlines are currently working closely with digital solutions, despite initial concerns during feasibility studies. He detailed the government’s clear program aimed at liberalizing the cargo sector and implementing a strategic policy to encourage growth.

Minister El Hefny shared that he has personally met with key players in the cargo industry to attract investment and increase cargo volume. Currently, Cairo airports handle about 33,000 tons of cargo, with a target to reach 2 million tons within five years. This ambitious goal reflects a clear vision for establishing a significant cargo hub in Egypt.

He also mentioned that there is strong potential for investment from various global locations, as evidenced by recent meetings with major stakeholders in the cargo city initiative. Minister El Hefny emphasized the government’s commitment not just to set goals but to accelerate progress towards achieving them, aiming to transform Egypt into a major player in the global cargo industry.

Minister El Hefny: “Egyptian Airports are not for Sale”

Minister El Hefny clarified that Egyptian airports are not for sale. He emphasized the government’s goal to enhance airport service quality and actively engage the private sector to improve operations and the overall business cycle. He outlined the government’s commitment to increasing private sector involvement through various models, including operating, managing, leasing, and investing in airports.

El Hefny mentioned ongoing collaboration with the International Finance Corporation (IFC) to explore investment opportunities. He stressed the importance of a strategic approach, considering which airport models would best suit Egypt’s needs. The evaluation includes whether to bundle airports or approach them individually, particularly in complex cases like Cairo Airport, where different parts may require different management structures.

Potentials for Decarbonizing Aviation Sector

Minister El Hefny outlined several key areas of focus for decarbonization. These include large sustainability projects, restructuring aerospace processes, and adopting new technologies such as advanced systems and engines. A critical aspect highlighted was the decarbonization of ground operations.

He emphasized the importance of sustainable aviation fuel (SAF), which can be produced locally or imported. He noted Egypt’s significant role in this sector, including providing carbon credits to tourists who invest in local cultures. Despite the substantial growth potential, challenges remain, particularly regarding SAF infrastructure at airports and limited production capacity.

He also mentioned the government’s commitment to increasing SAF usage from 5% to 30%, aligning with international commitments made at conferences, including in Dubai. Feasibility studies are being conducted to identify the best sources for SAF production, whether from waste, agriculture, or other means. Establishing connections between the energy sector and the aviation sector for certification and approval is crucial.

Additionally, the minister discussed efforts to adjust airport infrastructure to support SAF. Currently, no airport in the Middle East or Africa has a comprehensive strategy for SAF, except for Heathrow, which mandates a percentage of fuel to be SAF by 2030. Moving forward, the aim is to clarify these issues by the next assembly in 2025, focusing on creating agreements to guide environmental initiatives.

Challenges and Future of General Aviation in Egypt

Ambassador Gareth Bayley praised the Egyptian aviation sector. He highlighted Manchester Airport as a potential partner for Egypt, emphasizing its agility and eagerness to collaborate. He raised a question about the potential for developing general aviation in Egypt, given the country’s ideal weather, affordable fuel, and aviation tourism potential.

Responding to this, Minister El Hefny acknowledged the complexity of the issue. He explained that general aviation in Egypt requires significant groundwork before the market can be fully opened. Challenges include the registration and licensing of aircraft, with many operators choosing not to register their aircraft under the Egyptian Civil Aviation Authority, limiting control over operations and safety.

At the end of the discussion, Refaat recapped the key points. He clarified that the goal is not to sell EgyptAir but to invite active private sector engagement to enhance service quality by aligning with international standards. Refaat expressed optimism that these efforts, including improving financial statements, would make EgyptAir more appealing to potential investors.