RIYADH: Lebanon’s flag carrier Middle East Airlines — wholly owned by the central bank, Banque du Liban — plans to launch a low-cost subsidiary to serve destinations in the EU and the Middle East in what would be a welcome addition to the sector.

Amid an economy in freefall, soaring ticket prices, and competition from Hungarian budget carrier Wizz Air Abu Dhabi’s limited but cheaper flights, analysts told Arab News how the proposal could still have a positive impact on the country’s aviation sector.

Jassem Ajaka, an economist and university professor, believes the MEA has “kind of a monopoly in terms of direct flights.”

However, negotiations with the International Monetary Fund include liberalizing various sectors, which could see increased competition for the company if new competitors enter the market.

Ajaka sees the low-cost subsidiary as a strategic play, adding: “Launching an LCC (low-cost carrier) during this monopoly scene is a step to keep its position, especially as many customers suffer from high ticket prices and look for indirect flights through cheaper airlines. This could help MEA recollect those travelers.”

For Lebanese expatriates like Ziad Fino, a project coordinator at business school HEC Paris who left the country during the 2019 crisis, soaring airfares have turned family visits into a costly ordeal. “I used to visit Lebanon at least twice a year — once in the summer and again during the holidays,” he told Arab News in an interview. “But now, with ticket prices skyrocketing, I’ve had to cut back to maybe once a year, if I’m lucky.”

MEA’s fares have become a significant burden.

“A round-trip ticket from Riyadh to Beirut during peak season can cost over $1,000,” said Roger Hadchity, a project manager at Riyadh-based Blueprint Middle East, a commercial fit-out and refurbishment contractor, who left Lebanon for Saudi Arabia.

“We’re forced to look for alternatives, like connecting flights through other Gulf hubs, but even those options are getting pricier,” he added.

But how can MEA’s subsidiary operate at genuinely lower costs? Ajaka said: “MEA is already an established airline, so it could rely on one type of airplane and benefit from existing human resources. The new LCC could also use yield management to maximize revenues from every trip.”

Lebanon’s broken economy poses a steep challenge. “It’s so hard to launch and operate an LCC amid high inflation,” the economist admitted. “But it could work if the chain is autonomous and self-sufficient — selling tickets in fresh USD cash or through fresh USD credit cards, using cheap fuel, and implementing yield management,” he noted.

Any operation in Lebanon is directly affected by the security in the country, and as Ajaka affirmed, nothing can operate in an armed conflict area.

“In case of Israeli aggression, the project cannot proceed. Even if the airport isn’t targeted, rising insurance fees would affect profits,” he added.

In July, it was announced that the new airline was set to be launched within two years and serve destinations in the EU and the Middle East.

Speaking to Arab News, MEA’s Public Relations Manager Rima Mekkaoui said that concrete preparations for the airline may not begin until winter 2027. When asked for more details, Mekkaoui confirmed that was all the information currently available.

Regulatory hurdles and global partnerships

Kamil Al-Awadhi, the International Air Transport Association’s regional vice president for Africa and the Middle East, outlined the certifications that any new LCC would need to become operational.

“The IATA Operational Safety Audit Program is IATA’s internationally recognized and accepted evaluation system designed to assess the operational management and control systems of an airline,” he explained, noting that such IATA-specific certifications are not compulsory for aviation firms to obtain before being operational.

The top official explained that if an airline wants to become an IATA member, it must become IOSA registered and must remain registered to maintain membership. 

While IATA membership is not compulsory for an airline to operate, it has its perks as the association offers support to both LCCs and full-service carriers.

“Becoming an IATA member airline offers numerous benefits, including enhanced credibility, access to a global network, reduced costs through streamlined operations, and a powerful voice in industry advocacy,” Al-Awadhi said.

“IATA membership also facilitates industry change, promotes safety standards, and provides access to financial services and business intelligence,” adding that non-IATA airlines face limitations including barriers to joining alliances and integrating into the wider aviation ecosystem, especially without IOSA certification.

Regional LCCs and Lebanon’s uphill battle

Lebanon’s plan to launch a budget airline comes as nearly every neighboring country has already established its own successful low-cost carrier, reshaping regional travel with ultra-affordable fares.

Wizz Air Abu Dhabi is a growing ultra-low-cost company in the region, expanding with flights from Beirut.

Flydubai serves as Dubai’s budget-friendly alternative to Emirates, while Saudi Arabia’s flynas operates flights to over 70 destinations. Kuwait’s Jazeera Airways and Oman’s Salam Air dominate budget travel in the Levant and Gulf. These airlines thrive on cost efficiency, high-frequency routes, and digital-first booking — something MEA has struggled with due to Lebanon’s economic constraints.

Unlike Gulf carriers, which benefit from state-backed stability and open-skies policies, MEA faces hyperinflation, fuel shortages, and a collapsing currency.

Fleet expansion vs. economic reality

MEA has nine new aircraft on order, including long-range Airbus A321XLRs to open African routes, but delivery delays — some jets were due in 2023 — highlight broader industry struggles. Meanwhile, Beirut’s airport, strained beyond its 6-million-passenger capacity, saw a post-ceasefire surge, handling 560,050 travelers in May alone.

To cope, MEA is pushing for a $400 million to $500 million second terminal via a public-private partnership, promising advanced, passport-free processing. But similar plans were scrapped in 2023 over corruption claims, and Lebanon’s instability may deter investors.

In June, Lebanese Prime Minister Nawaf Salam revealed plans for a second international airport in Lebanon.

Public Works and Transport Minister Fayez Rasamny confirmed during a speech on Aug. 19 that “reactivating the René Moawad Airport in Qlayaat is a fundamental pillar for stimulating commercial and tourist activity in the North (of Lebanon),” clarifying that “the airport’s feasibility study has been completed and the project is now awaiting the executive steps for its revival.”

Wizz Air’s shadow

Wizz Air’s arrival has exposed MEA’s pricing vulnerability, but its limited routes leave room for competition — if MEA can undercut its own mainline fares without cannibalizing revenue.

With Lebanon’s financial system in shambles and political risks lingering, MEA’s gamble hinges on two bets: that travelers will trust a state-linked budget carrier, and that Lebanon’s economy won’t ground it before takeoff.  As Hadchity put it: “If travel stays this expensive, more of us will drift away.”