Al Jazeera stays grounded after plane deal collapses

KUWAIT’S first budget airline, Al Jazeera Airways, may not get off the ground for over six months after seeing a deal to lease its initial aircraft fall through.

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By  Richard Agnew Published  March 20, 2005

KUWAIT’S first budget airline, Al Jazeera Airways, may not get off the ground for over six months after seeing a deal to lease its initial aircraft fall through. The privately owned firm, which originally intended to start flights in February, is searching for two new planes after being told by its partner that their delivery had been cancelled. Al Jazeera may now delay its launch until October, when two new A320 jets it has bought from manufacturer, Airbus, will be ready. “We had an agreement with a European carrier, but unfortunately they had some technical problems and couldn’t deliver,” Suhail Homsi, director, Al Jazeera, told Arabian Business. “We are considering some options, but summertime is approaching in Europe and it’s not as easy [to find planes] as a few months ago. Alternatively, our first delivery from Airbus will be in October — that’s the worst-case scenario,” he added. The move provides a setback to Al Jazeera’s plan to take on the region’s existing carriers by offering cheaper deals on short-haul flights. According to Homsi, the firm is in talks with “one or two” other airlines in a bid to secure replacement planes, and is likely to hear this month whether they will lead to a new deal. It is only considering A320s and says it will “not compromise on standards” in order to ensure an earlier launch. “We would like to take off with the right perception [so] we are willing to wait for the deliveries of our own aircraft,” Homsi added. Al Jazeera, whose largest shareholder is the local Boodai Group, claims that it could launch shortly after new planes are secured, as it plans to wet-lease the aircraft and outsource their maintenance and crew. It has ordered an additional two A320s for 2006, and says it intends to be operating eight planes by the end of 2007. Al Jazeera’s flotation was 12 times over-subscribed last year, with investors anticipating that its demand-based pricing system will make a strong impact on the market. According to Homsi, passengers could be offered fares as low as US$35 when it has spare capacity on a plane, and that fares will average out 60% lower than “legacy airlines”. However, he added that, unlike similar ventures in Europe, the company would not be marketing itself as ‘no-frills’. “We don’t want to call it a low-cost system — when passengers enter the aircraft, they are not going to believe it,” said Homsi. “There will be leather seats, a sophisticated entertainment system, and we own a TV station as well so we could deliver different programmes for different routes,” he added. Al Jazeera initially plans to provide flights between Kuwait and Dubai, Beirut, Damascus, Bahrain and Egypt, before commencing flights to the Indian Subcontinent. It is only the second budget carrier to be launched in the Gulf, after Air Arabia.

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