The aviation industry across the Middle East is currently enjoying a surge in both business and consumer traffic. Figures from the International Air Transport Association (IATA) show that Middle Eastern airlines have enjoyed a 30.8% increase in traffic compared to the same period last year. The regional industry is recovering and traffic is up on pre-pandemic levels.

There are various reasons for this boost: Airlines benefited from last year’s FIFA World Cup tournament in Qatar, which saw numerous airlines running high volumes of shuttle flights leading to record financial results. They are also benefiting from a wider demand rebound, as passengers eagerly return to the skies after a prolonged period of being literally grounded.

An unexpected positive: The pandemic inadvertently also created an unexpected positive impact. Due to the inability of staff to travel and the surge in remote working, airlines were compelled to accelerate their digital transformation across all their operations.

We’ve seen this impact financing: This transformation has allowed airlines to embark on treasury improvement projects that automate complex processes, improve their payments functionality, and help digitize their reconciliations of receivables. HSBC has helped a number of our clients along this journey.

In technical terms we're seeing customers move from physical to virtual bank accounts. Having these accounts assigned for each of their relationships means that as soon as a payment has been received, they know exactly which vendor has made the payment. The airlines are also embracing the use of API (Application Programming Interface) platforms — the software that connects two different applications — so that they can get more real-time information on their balances and make real-time payments.

One regional airline that has worked with HSBC is Jazeera Airways KSC, a Kuwaiti airline based at Kuwait International Airport. Jazeera has expanded passenger and cargo flight operations to 40 destinations and 15 countries in the Middle East, India and Europe. Prior to the pandemic, its treasury operations relied significantly on manual paper-based systems and multiple banking relationships, which led to data inconsistencies, human error, and a lack of scalability across multiple markets.

Jazeera Airways turned to HSBC because we matched their geographic footprint while also offering cutting-edge treasury solutions. This treasury transformation included a streamlined reconciliation of automated data that can be called and delivered via an API. We also delivered virtual accounts that can provide segregation of receivables across payers, as well as improved cash visibility and access to a liquidity management dashboard for enhanced views of currency balances across markets.

It is an example of a sudden challenge instigating the need for reform and transformation. In this one area, Jazeera Airways has improved efficiency in a way that customers see. Their reduced frictions between platforms means customers need to log in to fewer platforms.

The increased automation and visibility reduces processing costs, eliminates duplication of records, and increases the ability to facilitate electronic payments. So, for airlines like Jazeera, from the challenge of Covid came the opportunity of business improvement, which was felt across their business and industry. We’re proud of what they have achieved and of our strong relationship.

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