Lebanon’s MEA Plans Low-Cost Airline Amid Economic Challenges

In Riyadh, Lebanon’s national airline, Middle Eastern Airlines (MEA), which is fully owned by the central bank, is gearing up to introduce a low-cost subsidiary aimed at catering to travelers seeking affordable flights to EU and Middle Eastern destinations.

Given Lebanon’s crumbling economy, soaring ticket prices, and increasing competition from budget airlines like Wizz Air Abu Dhabi, analysts believe this initiative could positively influence the aviation sector in the country.

Economist Jassem Ajaka suggests that MEA currently enjoys a sort of monopoly on direct flights. However, the ongoing negotiations with the International Monetary Fund may lead to openings for new competitors, thereby heightening the rivalry in the market.

Ajaka views the creation of a low-cost subsidiary as a strategic move. He mentions that many travelers, facing high prices, are increasingly looking for alternative flight options, possibly even via indirect routes.

For expatriates like Ziad Fino, a project coordinator at HEC Paris who left Lebanon during the 2019 crisis, the rising airfare has turned family visits into a daunting financial task. “I used to visit Lebanon twice a year, but now with soaring prices, I think we probably can manage just once,” he shared.

According to Roger Hadchity, project manager at Blueprint Middle East, a round trip from Riyadh to Beirut during peak season can exceed $1,000, forcing many to consider other, costlier connections through different Gulf cities.

But how will this new subsidiary actually reduce costs? Ajaka argues that since MEA is an established airline, it can leverage existing resources and streamline operations. He believes the new low-cost carrier will benefit from effective yield management to optimize revenue across its flights.

Yet launching such an airline in Lebanon’s tumultuous economic environment poses significant challenges. “High inflation poses a big hurdle,” Ajaka noted. “Still, it could succeed if the operation remains self-sufficient and is funded in US dollars.”

Domestic security issues also loom large. As Ajaka pointed out, nothing functions smoothly in conflict zones, and should Israel act aggressively, it could jeopardize the project’s viability, or at the very least impact profitability.

The new airline is slated to launch within two years, focusing on routes to the EU and the Middle East. MEA’s public relations manager, Rima Mekkaoui, commented that substantial preparations may not begin until winter 2027, and at this point, that’s all they can disclose.

Regulatory Hurdles and Partnerships

Kamil al-Awadi, the International Air Transport Association’s Regional Vice President for Africa and the Middle East, emphasized that there are crucial steps to establishing the new low-cost carrier. He explained that while IATA membership isn’t mandatory for operation, it provides significant advantages, such as enhanced reliability and access to a broader network.

Al-Awadi noted that for an airline to maintain IATA membership, it must register under the IATA Operational Safety Audit standards. However, being part of IATA allows airlines to navigate the industry more smoothly compared to those without such accreditation.

Competition from Global LCCs

The move to launch budget airlines in Lebanon is noteworthy, especially since neighboring countries have successfully established such carriers, offering cheaper travel options. Wizz Air Abu Dhabi, for instance, is rapidly expanding its routes from Beirut, while Flydubai and Flynus are also making their mark in the region with cost-effective services.

These budget airlines leverage high-frequency travel and advanced digital booking systems, presenting a challenge for MEA, especially against the backdrop of Lebanon’s economic instability.

Fleet Expansion and Economic Realities

MEA has ordered nine new aircraft, including the Airbus A321XLR, to explore routes in Africa. However, delays in deliveries highlight the sector’s broader struggles. Beirut’s airport has seen a spike in capacity, serving over half a million travelers in May alone amid a post-pandemic surge.

To cope with growing demand, MEA is pushing for a new terminal, costing between $400 million and $500 million, through public-private partnerships. Still, past efforts have faltered due to corruption allegations, complicating future investments in the country.

During a recent address, Lebanon’s Prime Minister discussed plans for a second international airport aimed at boosting commerce and tourism, emphasizing the project’s importance for economic recovery.

Challenges Posed by Wizz Air

The entry of Wizz Air into the market highlights MEA’s pricing vulnerabilities. If MEA can maintain profitability without sharing its revenue streams, it may find a way to compete effectively. However, this rests on the shaky foundation of Lebanon’s financial and political landscape, causing many potential travelers to hesitate or seek alternatives.

“If prices keep rising, I think a lot of us will simply stop traveling,” Hadchity remarked, pointing to the grim situation facing many Lebanese travelers.