Egypt’s battered tourist industry anxiously awaits EgyptAir crash investigation results

Egypt’s travel industry is watching anxiously as experts and officials air competing explanations for the deadly crash of EgyptAir flight MS804 last week.

The effect the crash will ultimately have on the sector depends a great deal on whether investigators rule the incident an act of terrorism or a technical failure, and whether the airline is found responsible for any security breaches or lack of maintenance.

“It’s not known if it was a terrorist act or a technical malfuntion,” says Hesham Gabr, founder of Camel Dive Club and Hotel in Sharm el-Sheikh. “If it was an act of terrorism, then it depends if it originated in Charles de Gaulle airport.”

The worst case scenario for Egypt is an act of terror enabled by a breach in EgyptAir’s security, but whatever happens, the crash is the latest in a string of disasters to hit Egypt’s tourism sector.

The crash of a Russian aircraft on October 31 left 224 people dead and prompted key tourism markets, including Russia, the United Kingdom and Germany, to impose flight restrictions on Egypt. A month-and-a-half before the Russian plane crash, a military air strike on a tourist convoy in the Western Desert killed 12 people, including eight Mexican tourists.

Less deadly incidents, such as the hijack of an EgyptAir flight in March and the thwarted June 2015 bombing of Karnak Temple in Luxor have also scared tourists away, while the brutal murder of Italian student Guilio Regeni has damaged Egypt’s reputation internationally and led to some private travel agents boycotting the country. Egypt has also been caught up in a general downward trend in tourism to the Middle East and North Africa, as attacks on tourists in Tunisia and Turkey have made travelers think twice about the region as a whole.

Tourism revenues plummeted by 66 percent for the first quarter of 2016, with just US$500 million in revenue, compared to $1.5 billion in the same months of 2015, officials recently said.

As an independent operator depending largely on direct bookings rather than package tours, Gabr says he is doing slightly better than average. In December and January, business was down by 60-70 percent, he says. Since then his receipts have gradually recovered, showing a decline of 45 percent in April and roughly 38 percent for May. But others have fared far worse. According to Mohamed Abdel Hamid, owner of Luxor’s Eye of Horus travel agency, many hotels and cruise ships in Upper Egypt faced occupancy levels of just 5 to 10 percent in the aftermath of the Russian air disaster. “Most of the hotels are almost empty,” he says.

Will tourists cancel their trips?

“As far as we are concerned, so far we have no cancellations,” Elhamy al-Zayat, owner of Emeco Travel agency and chairman of the Egyptian Tourism Federation says. “But we have such low numbers already.” Gabr also says he has yet to have a tourist cancel a planned trip, but notes that new bookings have slowed.

To a degree, this speaks to the relatively small role EgyptAir plays in bringing tourists to places like Sharm el-Sheikh, where travel is still dominated by charter flights and budget carriers. The Russian Metroject crash in October was devastating, not just because of the tremendous loss of life, but because it struck a direct blow at exactly the type of package tourism that so much of the Red Sea trade depends on. “The impact of the EgyptAir crash is not going to be so dramatic because the share of business coming through EgyptAir is minimal,” Gabr says.

Abdel Hamid, in Luxor, is less optimistic. “After what happened with the EgyptAir flight, we have lots of cancellations now,” he says, noting that other local companies he has spoken to report the same “Even Egyptian friends abroad are now afraid to travel from the United States to Luxor on EgyptAir. If even Egyptians are afraid, what about the tourists?” he says.

The latest disaster comes as a particularly hard blow for Luxor, because things finally started looking up a bit last month, Abdel Hamid says — occupancy rates improved to 15 to 20 percent in April. This new downturn has him worried about both his business and his community. In 15 years working in the industry, he has never seen the situation so bad.

“We all, as Luxorian people, depend on tourists,” Abdel Hamid says. “The people here don’t have anything to do.” With no tourists, and no other job opportunities, people in the city are idle and desperate, leading to an uptick in social problems and criminal activity. “People will do anything for money,” he says. This, in turn, could damage Luxor’s reputation as a travel destination, even if tourists do start coming back.

Looking to the future

Despite grim assessments on the ground, Egypt’s Tourism Minister Yehia Rashad told Bloomberg news he doesn’t believe the EgyptAir crash will prevent the country from reaching a goal of 10 million tourists and 12 million in revenue by 2017 — compared to 9.3 million tourists and $6.1 billion in revenue in 2015.

These figures aren’t impossible, Zayat says, but reaching them depends on European countries lifting flight bans on Egypt. “This incident will not affect next year, but after the summer the UK needs to cancel restrictions on Sharm el-Sheikh,” he says.

“To have these kinds of numbers by 2017 necessitates resumption of flights from Europe by October 2016,” Gabr agrees. Both point to Germany’s recent decision to lift restrictions against baggage at Sharm el-Sheikh as a positive sign. “I don’t believe that the standard the Germans are looking for is less than what the British are looking for,” Gabr says. “Already, the argument of security, is not a valid argument anymore.”

If investigations into the EgyptAir crash reveal a breach in the company’s security protocol, it could slow the resumption of flights. Even if the airline is cleared, Zayat isn’t optimistic about the UK making any decisions before its June 23 referendum on European Union membership. “They are busy with other things,” he says.

Russia — until recently the most important market for Egypt — is even more of a question mark. “They haven’t said what they plan to do,” Zayat says. And Russia has its own problems: an economic crisis and hard-currency shortage, with leading politicians pushing citizens to travel domestically rather than abroad.

In Egypt, the government can’t count on domestic travel to make up for foreign visitors. Despite a high-profile campaign, only about 70,000 additional people traveled due to government programs for domestic tourists, Zayat says. “This can’t make up for the millions.”

Hopes to expand Egypt’s share of the Chinese market have stalled due to administrative barriers to increasing the number of flights coming from China each week, Zayat explains. Slightly more hopeful are efforts to lure Arab tourists, and reach out to new markets like Georgia and Azerbaijan.

Despite these challenges, people have faith that Egypt’s tourism industry will eventually recover. “Tourism is affected, but it never dies,” claims Abdel Hamid, pointing to the rebound in visitors within just two years of a deadly 1997 massacre of 58 tourists at the temple of Hatshepsut. “We have temples, tombs and culture,” he says. “This is a dream for most tourists.”

Isabel Esterman 

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