ERBIL, Iraq --
Upon hearing that Austrian Airlines has launched scheduled
passenger service to the Kurdish city of Erbil in Iraq, the
inevitable first question everyone asks is: "Why?" Sometimes "in
heaven's name" precedes the question, or "in the world" follows.
offered by Josef Burger, the airline's chief commercial officer,
depends on who is asking. He may say, "We are building a sky bridge
between Kurdistan and the world," or "Austria and Kurdistan have
many historical connections," or, "There is a lot of interest in
investing in Kurdistan from the Austrian business community; we're
opening markets, facilitating exchanges."
All true, but
none of these answers is complete.
Since the early
1990s, Austrian, the 13th largest airline in Europe, has been stalled at the
borderline of profitability, its viability in question. Many of its
woes can be traced to its diverse fleet, filled with a variety of
Boeings, Airbuses, Fokkers and Bombardiers (described as "a
butterfly collection" by one critic). This lack of fleet
standardization has driven up its maintenance and operational
Austrian has, for
more than a decade, been viewed as a weak player. Since the
millennium, it has sometimes eked out a percentage point or two of
profit margin, sometimes not. The airline has been involved in
various merger talks and has inspired
rumors of merger talks. (Since taking his position last May,
Austrian CEO Alfred Otsch was observed traveling to Paris
frequently, sparking conjecture that he was in meetings with Air
In this context,
opening a route to Iraq might be viewed as an act of desperation.
It may well be, but it is also consistent with Austrian's
articulated growth strategy.
The airline is
betting its future in part on what Burger calls "the first-mover
strategy." Its short- and medium-haul services have shown
consistent profitability, but its losses in long-haul markets have
more than canceled them out. It cannot expect to see growth in its
long-haul business from Austria's relatively limited and stable
population, nor can it easily compete for long-haul international
service in European skies crowded by much larger, stronger,
behind the first-mover strategy is to identify traffic from
second-tier cities, mostly in Central and Eastern Europe, that have
no point-to-point service to airports offering transatlantic
flights. Austrian then enters these markets and connects them to
long-haul routes through its Vienna hub.
Since Vienna is
the easternmost of Western European capitals, operational costs to
serve these Central and Eastern second-tier markets are relatively
advantageous for Austrian, compared with costs for carriers based
in countries farther west.
looking mostly east for feeder traffic, it can reach out to markets
that are beyond the preferred operational range of low-cost
carriers such as EasyJet and Ryanair.
As a result,
Austrian's route map has recently added red lines connecting Vienna
to cities such as Timisoara, Romania; Podgorica, Montenegro; Lvov,
Ukraine; and Chisinau, Moldova.
It carried 7.1%
more passengers in 2006 than in 2005. In that same time frame, load
factors rose 0.2%, revenue passenger kilometers were up 5.6% and
scheduled availability grew by 5.3%.
were to record levels, and Austrian ended the year ranking fifth in
terms of passenger traffic growth among European airlines. But
additional passengers do not necessarily result in profitability.
The airline had not released its economic results for 2006 by press
time, and Burger would only say that Austrian performed "better
than in 2005," a year in which it lost money. Lack of fleet
standardization, Burger noted, is still a drag on the
Burger outlined a
future in which the airline would address the fleet standardization
problem to reduce cost while boosting yields through the
first-mover strategy. It is no coincidence that Austrian has
targeted countries whose own national carriers -- the only real
rivals for international traffic originating from the second-tier
cities -- do not have service standards as high as Austrian's. As
long as that's true, Austrian can extract a premium fare from
business travelers, and the plane doesn't have to fly
Burger said that
this low-demand, high-yield strategy to feed traffic to long-haul
flights is working.
"Out of the 44
destinations in Central and Eastern Europe, we pioneered a third as
first-mover," he said. "Sixty percent of our business is now
transfer traffic [through Vienna], and of that, 56% is from
numbers are expected to be even higher to Erbil, which falls into the
first-mover category because Austrian's only real competition there
is from a Royal Jordanian Airlines charter that will not interline
baggage for connections out of Amman (not even with scheduled Royal
But the move into
Erbil also fits Austrian's "focus east" strategy, which seeks to
take advantage of its location nearer the Middle East than other
Western European carriers.
It can also
leverage its neutrality. It has, for instance, codeshare
arrangements with both Libyan Arab Airlines into Tripoli and with
El Al into Tel Aviv.
When asked if the
political volatility of the region made shareholders nervous,
Burger replied that the region accounted for only 6% to 7% of
Austrian's traffic and that when, in the past, it had pulled out of
markets because of political instability, as occurred last year in
Beirut, the financial impact was negligible.
the Middle East routes at night, tapping capacity that would
otherwise be sitting overnight in European airports. (Erbil,
currently a day flight, will switch to night traffic later this
encouraged enough by demand for Erbil that he will increase service
from twice to three times a week in March. He hopes to increase
frequency again in 2008. Austrian has secured the rights for daily
flights, should demand rise significantly.
frequency may also give pause to would-be competitors.
to prevent access [to Erbil] for other carriers, but with three
flights, we're trying to close the shop," Burger said. The farther
a competing carrier's hub is from Erbil, "the more difficult it
gets" for the carrier to enter the market, he added.
Burger said he
anticipated that 80% of the passengers to Erbil would be transfer
traffic, with 25% originating in Scandinavia, where a large
expatriate Kurd population lives; 40% from the rest of Europe; and
15% from overseas, particularly from the U.S.
To be profitable,
Burger said that flights to Erbil must average 70 passengers in a
130-seat Airbus A319, a target he predicted the airline would
easily reach by the end of March. "We're here to make money," he
said. "We'll break even the first year. I have no
He added that the
traffic was diversified: a third from ethnic markets, a third
business and a third institutional, both government and
percentage does he believe will be international
"We are not
anticipating any tourist traffic," he said.
Tourism, Iraq style
political situation in the Middle East muddles everything, tourism
included. On a visit to Iraq via the new Austrian service last
month, I spoke with a wide range of officials, including both the
president and prime minister of the Kurdistan Regional Government
and an American responsible for the security of visiting U.S.
officials in Erbil. To say that the messages regarding safety and
security were mixed is to understate the varied responses.
Confusing, even surreal, are far better descriptions.
I accompanied a
trade mission to Erbil from Vienna that included the U.S.
ambassador to Austria, Susan McCaw. Her presence increased the
level of security and perhaps exaggerated the perceived risks for
ordinary travelers. But it also made clear that our government
perceived that even in U.S.-friendly Kurdistan, significant threats
precautions became apparent before touching down in Erbil. When
landing at the airport, our plane descended in a corkscrew fashion,
remaining within the airport's secure airspace while at potentially
dangerous lower altitudes. (Take-off, likewise, was a corkscrew
ascent.) An airport official said that two U.S. military planes
continuously circled Erbil during the four days of our visit, which
to his knowledge was unprecedented.
Asked if Austrian
had security qualms about flying into Erbil, Burger replied that
the airport "meets the high safety and security standards of
Austrian Airlines," but he added, "We are operating in high
Within the city
itself, there are certainly signs that security is taken seriously.
For example, drivers must follow a serpentine route through a
forest of concrete pillars as they approach the airport.
buildings and the Erbil International Hotel (locally known as "the
Sheraton," though it has no affiliation with Starwood's brand), the
only hotel approaching international standards, are surrounded by a
tall perimeter of blast barriers, most covered with cheery murals
of flowers and upbeat messages.
Guests must walk
through a metal detector upon entering the hotel. If it beeps,
they're frisked, and their packages are inspected by armed guards
had a personal detail of four conspicuous American bodyguards, plus
security provided by the Kurds. Trade mission delegates and
journalists never traveled to scheduled functions except in a
convoy bookended by armed security personnel. If one of us wandered
from the pack while sightseeing, a young Kurdish man in a black
suit, wearing sunglasses and an earpiece, would hurry to our
Still, no one
officially discouraged any of us from taking impromptu walks during
our free time, and when I went on such walks, I sensed far less
surface hostility than I had discerned in parts of the world much
farther from zones of conflict. In fact, the only confrontation I
experienced was in a stationary store: After the shopkeeper found
out I was an American, he insisted that I take the goods for free,
while I insisted that I pay.
On the last
morning of our trip, we were escorted by the police
to the city's bazaar, but then turned loose in a disorienting
warren of 3,000 stalls for two hours, without
To be sure, the
only tourists likely to be interested in traveling to Erbil are
another variety of first-movers: Country-collecting globetrotters
who, out of curiosity or desire for bragging rights, enjoy
traipsing as far as possible off the beaten path.
reward for first-mover tourists is seeing marvelous sights in an
uncrowded, authentic atmosphere. Think Lhasa, Tibet, in the early
'80s, Angkor Wat in the early '90s and Bhutan at the beginning of
On the surface,
Erbil offers nothing so attractive. It's a relatively homely city
with a population of just under a million people and a handful of
interesting sights that are common throughout Asia Minor, such as
mosques and a bazaar.
But a bit below
the surface -- both literally and figuratively -- there's
significant tourism potential.
In the center of
town is a half-mile-wide, 100-foot-high, circular tel, a raised
area built up over centuries by a series of succeeding
civilizations. Labeled the Citadel, the area is said by the Kurds
to have been inhabited continuously for more than 9,000 years,
though its current appearance is defined primarily from the period
in which it served as an Ottoman fort. It was until recently a city
neighborhood, but its denizens were evicted so that its historic
importance could be unearthed, restored, protected and ultimately
presented. A Czech company, Gemaart, was first hired to oversee the
project, but UNESCO stepped in. Though the Citadel is not a World
Heritage Site, the agency now must approve all excavations and
At present, there
is nothing ancient (and little that is old) in its appearance. Even
its gates and parts of the wall around it were built by Saddam
Hussein's Baathist government. Because the gates were constructed
in a Babylonian style that suggests civilizations farther south,
Kurds regard them as an abomination and an intentional insult. The
present regional government intends to tear the gates down and
replace them with ones constructed in a traditional Assyrian
the area today is a bit eerie. Trash and abandoned personal effects
are being carted out of deserted homes (some of them quite ornate)
in wheelbarrows and carts. It's possible to still find ceramic urns
in the corners of a large, empty, dry and dusty Turkish
I visited two
businesses that were operating within the perimeter of the Citadel:
the privately run Kurdish Textile Museum and, next door, a
cavernous second-hand store selling everything from framed
portraits of Saddam Hussein and his generals to carpets, coins and
used kitchen utensils. Both are certainly worth the time to
investigate, as they present, by far, the best opportunities in the
city for souvenir shopping.
prominent historic attraction is the ruin of an 800-year-old
minaret in Minaret Park.
lacks tourist-specific sites, its mix of religions provides a
fascinating entry point to the local culture. The overwhelming majority of
Kurds (97%) are Muslims, and among the mosques in Erbil is Al-Hajj
Jalil Khayat, a large and beautiful structure completed last month,
financed by a local wealthy family (the patriarch is buried in a
room on the grounds).
There is also a
community of 15,000 Chaldean Christians living in the Ain Kawa
neighborhood, an area that got high marks for safety even from the
hyper-cautious U.S. government security officers. The Chaldeans are
unusual in that they switched allegiance from the Eastern Orthodox
church to Rome 550 years ago, while almost all other Christian
communities this far east adhere to Orthodox traditions. The
Chaldean archbishop speaks English and is happy to meet with
The village of
Lalish, about 100 miles northwest of Erbil, is the center of an
indigenous Kurdish religion known as Yezidi. Its followers pay
particular attention to the sun, going outdoors to pray at dawn,
noon and dusk. Its holy text, "the black book," is the only
scripture written in Kurdish.
Among the Yezidi
beliefs is that Lucifer is not evil but rather more of a yin to
God's yang, and that Noah landed on Mount Everest, then set out
again and landed near Lalish, at an area known locally as "India
There is also a
substantial community of Assyrian Christians who trace their
history to a schism with other branches of Christianity in the
It is obvious to
even the most casual visitor that Erbil is a boomtown. Despite
sporadic electrical service, the lack of a postal system,
nonpotable water and no obvious major industry, development and
construction are occurring on a massive scale. I counted nine
cranes from my hotel window, and my view did not overlook the areas
that were being developed most actively.
The drivers of
the boom are wealthy refugees, thousands of rich businesspeople and
professionals fleeing the war to the south and finding safe haven
The influx has
resulted in improved medical care, better restaurants -- the owners
of two of Baghdad's best, El Mahar and Today, have moved
to Erbil -- and the opening of dealerships in consumer goods, from
automobiles to computers. The building frenzy and growth even
inspired Kurdish Regional Government president Massoud Barzani to
compare Kurdistan to Dubai.
president also conceded there were significant differences between
his region and that United Arab Emirates city, it is nonetheless
true that enormous tracts are being developed under names like
"Dream City" and "Empire World" that promise modern luxury housing,
upscale restaurants, hotels and shopping centers.
For the most
part, one need not lament the destruction of the traditional to
make way for the modern in Erbil. When it came to development and
infrastructure, Saddam Hussein ignored Kurdistan, and most of
Erbil's look and feel was developed after the 1991 Gulf
is, for the most part, profoundly uninteresting. What charm the
city has is provided by a distant backdrop of mountains.
The only threat
to tradition from the new construction is that a "shopping mall" is
being built in the area of the traditional bazaar. At present, the
bazaar has a virtual monopoly on scenes of local color.
A mysterious runway
Perhaps the most
controversial aspects of Erbil's future as a travel destination are
connected to the expansion of its airport.
activity prompted Austrian Airlines, and the Austrian trade
delegation it transported to Erbil, to be very optimistic. Burger
called his two weekly flights to Erbil "the tip of an iceberg," and
hopeful regional aviation officials, with the aid of consultants
from Swedavia, a subsidiary of Sweden's civil aviation authority,
have completed the superstructure of a modern airport terminal,
built a new control tower and have almost finished a three-mile
runway, which, when completed in October, will be one of the five
longest in the world -- long enough to land the space
The need for so
long and wide a runway is curious, and what makes it even stranger
is that there are many different authoritative explanations for why
it is so long and wide.
Serdar Allaf, the
supervising engineer of the airport extension, said that details
about the Airbus 380 (the delay-plagued jumbo liner that can hold
550 to 800 passengers) were announced during the planning phase,
and that the runway was lengthened to make it possible for the
craft to land in Erbil.
Johann Rollen, an
airport development specialist working for Swedavia, had a
different take. "We're at a high altitude [1,404 feet above sea
level], and in summer it's very hot, as much as 130 degrees. Those
extreme conditions really affect operating conditions for planes.
It requires a very long runway to take off and land in heat like
that," Rollen said.
director general of the airport, said the runway and other
improvements were simply designed to make Erbil suitable as a
trans-shipment point between Asia and Europe. "Cheaper than Dubai,"
government official, who asked that his name be withheld, called
the new airport a "lifeline" to the world. Though Kurdistan
officials, including the president and prime minister, maintain
they want to remain part of a free and democratic Iraq, they have
also made clear that they want no part of an Iraq that falls short
of that goal.
However, none of
Kurdistan's neighbors -- Turkey, Iran nor Iraqi provinces to the
south -- are particularly keen to see an oil- and-mineral-rich,
independent Kurdistan. It's not unreasonable that the landlocked
Kurds might worry about overland access routes being cut off should
they declare independence, and an airport capable of receiving a
high volume of large planes could be seen as an appropriate
In fact, none of
these explanations conflict, and all may be legitimate reasons
contributing to the decision to construct such a long a runway. But
only Herbert Felber, Austrian Airlines' director of network and
sales for the Middle East, acknowledged for the record another
theory, one widely assumed to be true by locals: "It's for the
been semi-autonomous since 1991, when the no-fly zones were
established after the first Gulf War to protect the region from
Saddam Hussein's vengeful feelings toward Kurds. At that time, the
Iraq flag was lowered and since then, only the Kurdistan regional
flag has flown, even at government buildings.
Asked about the
future of Kurdistan, President Barzani answered,
"Statehood is a national right of our people, and it will come when
circumstances are correct."
One fears that
the status quo of relative peace and prosperity in Kurdistan,
safeguarded in large measure by the U.S., may be as good as it gets
for the region in the foreseeable future.
disintegrate as a functioning state and the U.S. withdraw,
Kurdistan would find itself surrounded by stronger enemies covetous
of its oil and mineral wealth and fearful of a rise in nationalism
from their own Kurdish populations.
"Go back and tell
everyone that if the U.S. wants another Israel in the region, a
democracy in the Middle East, they don't need to look further than
Kurdistan," said Subi Schakir, a local project manager for the
German Zublin contracting and construction firm. "But they need to
make a commitment not to betray us."
Whether the U.S.
has the stomach to expand its Middle East commitments is, of
course, a great unknown.
between the tenuous nature of the political situation and the
optimistic investments that Austrian Airlines and other businesses
are making in Erbil is viewed as an inspiring and hopeful sign by
Whether it is
inherent in the nature of free enterprise to seek opportunity where
none is obvious or whether businesses entering the region truly
feel bullish about the long-term prospects for Kurdistan, the
effect of Austrian Airlines choosing Erbil as part of its
first-mover strategy is seen locally as a palpable endorsement of
"We're here to
make money, but this [show of support for Kurdistan] is an extra
for a businessman," said Burger. "At the end of the day, it makes
me feel like we're in a worthwhile business."
To contact editor in chief Arnie Weissmann, send e-mail to
For more on this article, see "In the Hot Seat: Nimrud Youkhana."