Jazeera Airways prepares for launch
The region’s first privately-owned passenger airline, Kuwait's Jazeera Airways is set to begin operations next month.
The region’s latest start-up passenger carrier, Jazeera Airways is set to begin operations next month. The Kuwaiti airline is only the second low cost carrier (LCC) in the Gulf, after Air Arabia, and also the first 100% privately-owned airline to launch scheduled passenger services in the entire region.
Jazeera Airways will begin operations with two Airbus A320-200s, which will be wet leased from a European operator for up to a year. Towards the end of 2005, however, the airline will receive two brand new aircraft from Airbus, which will be followed by a second pair in mid-2006. The airline has also agreed options for four more A320s.
“The two [wet leased] aircraft are almost brand new, very nicely configured, and we will be operating them from February,” said Suhail Homsi, director, Jazeera Airways. “We will take [them] for a year with the possibility of extensions should we need them before the delivery of the third and fourth aircraft,” he added.
Following the high utilisation principal needed in the LCC model, the airline plans to operate up to 30 flights a week, with its two aircraft, during the first year of operations. Jazeera’s network will include a number of major markets in the Gulf and Middle East, including Dubai, Beirut, Damascus, Bahrain and cities in Egypt. The carrier is also looking at flying to the Indian Subcontinent during the nighttime.
“The trick for this [LCC] model is to have high utilisation of the aircraft, so they have to be in the air most of the time,” noted Homsi. “Night flights to the Subcontinent will increase the utilisation of the aircraft and make it much more viable for the type of business we are going to operate.”
In line with the LCC model, the airline has also outsourced most of its non-core operations, such as maintenance, groundhandling and reservations. It will also offer only limited onboard services. There will be no free food, for instance, although passengers will be able to buy snacks and drinks. There will be some inflight entertainment though, using the drop-down screens and programming provided by one of the airline’s sister company in the Boodai Group. “We are going to leverage on the synergies with Boodai TV, which will provide entertainment,” explained Homsi.
The Boodai Group is the largest shareholder in the airline, although 70% of the start-up capital, which totalled around US $34 million, was publicly subscribed. The launch attracted much interest in Kuwait, with the public share offering being 12 times over-subscribed within 10 days of it being issued.
Unlike other private start-up airlines in the region, which have struggled to begin operations, Jazeera Airways was able to get an air operating certificate (AOC) for scheduled services without many problems. This was because the Kuwaiti government had decided to allow a second carrier to launch services in order to create competition for the loss-making national carrier, Kuwait Airways. Government support has also helped Jazeera Airways to gain landing rights in other countries. “The Kuwait Civil Aviation is treating us as another Kuwaiti carrier,” said Homsi.
“We are also cooperating very closely with Kuwait Airways to either share or increase the traffic rights,” he added. “This is another advantage [in terms of gaining rights] in addition to the fact that other countries are opening up their skies.”
Despite sharing a base with Kuwait Airways, Jazeera Airways does not see itself as being direct competition for the flag carrier. Instead, the start-up is looking to develop new traffic from passengers who would not previously have flown. “I do not think we will be competing with Kuwait Airways, as our business model is aimed at a different class of passenger,” said Homsi. “Think about an Egyptian on a low salary [in Kuwait] who goes home every two years by bus. Going with us, he will pay less and reach the destination in less than two hours... That passenger has never been a Kuwait Airways passenger.”
“There is also not enough capacity at present... so we are going to add capacity and stimulate a class of passenger who will look favourably at rates and fly. We are also going to increase the recurrence of passengers who already fly frequently,” added Homsi.
The airline has implemented 100% e-ticketing, and its website will be an important distribution channel. However, the carrier is also setting up a call centre for bookings, as well as working with travel agents, as Kuwait is not yet ready for just online purchases.
“The culture here is that the people still want a receipt in their hand, so we are offering a ticket… It is not going to be an ATB2 ticket, it is going to be very basic and cost effective. There will also be enough space on the ticket to put some adverts, as we want to use all available space for marketing,” said Homsi.