Leveraging On Opportunities Arising From The Development Of New Middle East-China

Air Routes

Syed Mohammed MehdiDirector of Marketing and Promotion

Civil Aviation AffairsKingdom of Bahrain

Introduction

• Assessing the growth potential in the Middle East-China market

• How to capture China Market from the perspective Middle Eastern Airport

• Learning how to serve untapped markets• Developing the optimal entry strategy for the Middle

eastern market

Where is Kingdom of Bahrain?

KUWAIT

OMANU.A.E

SAUDI ARABIA

QATARBAHRAIN

IRANPakistan

IndiaIRAQ

YEMEN

P.R.CHINA

Location of Bahrain

Existing CausewayPlanned CausewayCompletion 2012

Saudi ArabiaQatar

BAHRAIN

What Happens in Bahrain and Around? Bahrain has over 350 banking, Bahrain has over 350 banking,

financial and insurance houses financial and insurance houses serving the Middle East and wider serving the Middle East and wider regionregion

50% of Saudi Arabian Business is 50% of Saudi Arabian Business is based in the Eastern Province. The based in the Eastern Province. The major industry in the province is Oil major industry in the province is Oil and Petrochemicals. Other major and Petrochemicals. Other major industries supporting the Oil and industries supporting the Oil and Petrochemical industries are Petrochemical industries are construction, power plant, food construction, power plant, food processing, etc. processing, etc.

Over 100 projects have been signed Over 100 projects have been signed off with a total project value about off with a total project value about US $200 billion. Some of the major US $200 billion. Some of the major projects are listed below:projects are listed below:

US$ 16 billion Petrochemicals at US$ 16 billion Petrochemicals at Ras TanuraRas Tanura

US$ 25 billion mineral processingUS$ 25 billion mineral processing

US$ 6 billion heavy oil refineryUS$ 6 billion heavy oil refinery

US$ 3 water and electricity US$ 3 water and electricity projectproject

Government Services

11%

Financial Corporations

22%

Crude Petroleum and Natural Gas

22%

Transport and Communications

6%

Trade9%

Real Estate and Business Activities

7%

Manufacturing12%

Other11%

Bahrain Economic Structure - 2005

BAHRAIN

Middle East – China Trade

• In 1991, total trade between China and Arab countries was $2.42 billion. grown twentyfold to $51.3 billion in 2005.

• The Chinese government has targeted US$100 billion in total trade with the Middle East by 2010 -- up from US$51.3 billion in 2005.

Trade Volumes between Middle East and China

Middle East China Trade

• Assessing the growth potential in the Middle East-China market– Growth in the Middle East region

• Trade with the World• Trade with China

• The Middle East currently provides over 45 per cent of China’s total oil imports.

• By 2015, 70 per cent of China’s oil imports is expected to come from the region

• Saudi Arabia, its top oil supplier

.

Middle East – China Trade

• Saudi Arabia provides about 17 percent of China’s oil imports

• China National Petrochemical Corporation (SINOPEC) & Arabian American Oil Company (ARAMCO), – Invested $300 million to explore the Ghawar natural gas field in the Rub

al-Khali desert in Saudi Arabia

• ARAMCO – Investment $3.5 billion refinery expansion project in China’s Fujian

province– $1.2 billion refinery in Qingdao with SINOPEC.

Middle East – China Market

• Middle East – China passenger traffic has been growing at 50% over past 3 years

• Destinations Served from the Middle East– Beijing– Shanghai

– Guangzhou

Year Passengers Growth

2005-06 516,940 2006-07 609,560 18%2007-08 764,441 25%

Middle East Market

• Major Markets from Middle East – P.R.China – Sept 07 – Aug 08

City Total O&D Pax Total Direct PaxDubai, UAE 199,188 171,947 Doha, Qatar 22,526 19,059 Amman, Jordan 17,048 Not ServedTehran, Iran 16,541 9,038 Dammam, Saudi Arabia 12,360 Not ServedBahrain 12,317 3,329 Jeddah, Saudi Arabia 12,121 855 Riyadh, Saudi Arabia 12,015 Not ServedKuwait 9,500 Not ServedBeiruit, Lebanon 8,079 Not Served

* Bahrain – Service to PVG Started in June 08 by GF

*

Source MIDT and BSP Data

Its not all doom and gloom

15 year trend

25 year trend

The Future

BOEING CMO

Where to go?

• Untapped Markets

Saudi Arabia 39,086Iran 28,536Qatar 19,393Jordan 16,212Bahrain 13,740

Questions to be asked?

• How to capture China Market from the perspective Middle Eastern Airport ?– In 2006, 34.52 million Chinese tourists travelled abroad

• Ask these questions?– Why Middle East???

– Why from China??

– Arab and Chinese travel patterns and buying habits

– Price sensitivity of the market

– Market sizes

High Yield Market

Destination Yield (USD)Amman 0.11Bahrain 0.17Damascus 0.12Doha 0.08Dubai 0.11Jeddah 0.10Kuwait 0.13Muscat 0.09Average 0.11

How to capture China Market from the perspective Middle Eastern Airport

• START SERVICE to other Major destinations in the Middle East before Middle Eastern carriers capture the market

• Where From– Beijing

– Shanghai

– Guangzhou

• Offer combined product to suit both markets – may be against the branding

Learning How to Serve Untapped Markets

• Extend existing services from points in the Middle East• Price sensitivity of the market in the Middle East• Be aware of capacity dumping

– Aircraft on order• Emirates

• Etihad

• Qatar

CA CA CZ CZ EK EK GF-GF KQAug-05 Aug-08 Aug-05 Aug-08 Aug-05 Aug-08 Aug-08 Aug-08

0.21 0.11 0.21 0.09 0.14 0.11 0.07 0.08870 914 2,491 3,828 2,394 6,659 154 1,763

FROM DXB - CHINA

Developing the optimal entry strategy for the Middle Eastern market

• Not all markets are big in the region– Collective revenue/tag/extension– Code share– Interline

• Match competitors frequency

• Offer mixed product

• Negotiate discounts on charges

• Remember a few things while planning your operations

– Location of Middle East – Center of the world– Middle East market is HIGH yield– Your passengers are both Arabs/Arabian residents and Chinese– Your passengers are business men – dealing with Oil,

Petrochemicals, Banking and Finance – Traders and purchasers – Overseas Chinese Workers

– Competition is increasing and be ahead of it.

THANK YOU

Mohammed MehdiDirector of Marketing and Promotion

Civil Aviation Affairs

Bahrain International Airport

E-mail smehdi@caa.gov.bh