Subscribe Free
in Air Transport / Features

Omani LCC future all in the balance

Posted 19 April 2017 · Add Comment

As Omani low-cost carrier, Salam Air, takes to the skies, it must find a balance between not over-extending itself, yet ramping up sufficiently quickly to cope with an expected leap in tourist traffic to the country. Alan Dron reports.

Over the past 15 years, low-cost carriers (LCCs) have made a substantial impact in the Gulf and beyond. Air Arabia, Jazeera Airways, Flynas and Flydubai have all established themselves on the local airline scene.
Now, new Omani LCC Salam Air is aiming not only to take a slice of that market, but also to grow it in the sultanate.
Salam Air’s CEO, François Bouteiller, is convinced there is still a lot of room for growth – double-digit growth, he believes – in the GCC region. “I don’t think we will take a lot of business from our competitors; I think the size of the pie will increase.”
This is not the first time that consideration has been given to setting up an LCC in Oman.
Flag-carrier Oman Air previously looked at setting up its own LCC subsidiary, but decided against doing so in 2014 on the grounds that it would distract management and could cannibalise its own traffic.
That was the correct decision for the national carrier, believes Bouteiller, a former CEO of Saudi hybrid carrier Flynas. It is extremely difficult, he says, for a full-service airline to set up a budget operation – the ‘DNA’ of low-cost operations is simply not embedded in staff.
The obvious question facing Salam Air is whether the Omani domestic market is large enough to support both national carrier Oman Air and itself. Oman, after all, has a population of just 3.5 million
“It’s a small market but I believe there’s strong demand, particularly on the Muscat-Salalah route,” said Bouteiller. Additionally, the planned major expansion of the tourism and hospitality industry over the next few years will enlarge the air travel market considerably.”
Over the past 20 years, Oman has plotted its course in the tourism sector carefully, catering mainly for upmarket guests in a limited number of hotels. However, the next few years will see three-star, as well as more four-and five-star hotels, being constructed as the government goes for growth, with an ambitious plan to increase tourist numbers by 40% by 2019.
Salalah and its surrounding region will play a major part in this. Oman’s second city, some 550nm (1,020km) southwest of the capital, Muscat, and close to the Yemeni border, experiences the edge of the Indian Ocean monsoon every summer.
This phenomenon, the khareef, brings mist, drizzle and temperatures in the mid-20C range, compared to the scorching 50C heat further north in the interior. It attracts many Gulf tourists, who come to look in wonder at the lush greenery and streams that suddenly appear all over the region’s hills and wadis.
The Salalah-Muscat route will be the new airline’s initial breadwinner and it plans to operate multiple daily frequencies on the sector. It is likely to complement Oman Air’s flights on the sector.
Cooperation, not competition, is favoured by both airlines. In spring 2016, Oman Air’s CEO, Paul Gregorowitsch, acknowledged that discussions were under way on “where and how we can cooperate, wherever it makes sense for both of us”.
Bouteiller wants to take the same approach: “We’re very open with this. Paul, the chairman of Salam Air, and I are into very open discussions on where and how we can cooperate.”
Such cooperation may extend to areas such as ground-handling and training, as well as on routes.
On the subject of routes, “The GCC is obviously a priority for us,” said Bouteiller. “It matches our aircraft’s capability. At the end of last year, for example, negotiations were under way for flights into Dubai International and Dubai South: We may serve one, or both.” Jeddah and Madinah are other early possibilities.
The Indian sub-continent may also play an important role and east Africa is also being investigated, especially given Oman’s historic maritime ties with areas such as Zanzibar, “but those markets are regulated by traffic rights in terms of frequencies. They are also getting close to the limits of our financial model in terms of hours-to-cycle ratio.”
Iran, just across the Straits of Hormuz, is another obvious target, given Oman’s careful political positioning as an intermediary between Arab states and Tehran. However, said Bouteiller, Oman Air had already launched several routes into Iran and, while he believes the country, with its large population, has considerable potential “it may be a little bit early to go into this market”.
Three Airbus A320s, leased from South American airline group, LATAM, will initially operate Salam Air’s route network.
Both the A320 and Boeing 737 were evaluated as initial equipment, said Bouteiller, but several factors, including market availability and an operational performance that more closely matched Salam Air’s ‘hours per cycle’ ratio, swung the deal in favour of the European type. Maintenance will be contracted-out to an external organisation, at least initially.
There are already plans to increase the size of the fleet, but Bouteiller is understandably cautious about Salam Air trying to run before it can walk: “We’re planning to expand, but before we talk about expansion plans you have to realise we’re still a start-up.”
The visiting friends and relatives (VFR) market is of particular interest to an LCC like Salam Air “and something that will definitely grow from what it is today”. He foresees attracting traffic into Oman for weekend breaks.
But business travellers are also on his radar, with the intention of offering timings that will allow them to conduct business in other Gulf cities and get home the same evening.
Bouteiller, speaking before Salam Air launched its services, said that its approach to passenger service would be closer to that of UK LCC EasyJet, rather than that of ultra-LCCs such as US airlines Frontier and Spirit, or Ireland’s Ryanair.
Despite the presence in the Omani market of regional LCCs such as Flydubai and Air Arabia, local customers are not yet particularly accustomed to budget carriers. They understand the LCC concept, said Bouteiller, but an educational exercise would still be required to familiarise them with the details of the LCC product.
One of Salam Air’s priorities is to offer employment to local people. Speaking in late November, Bouteiller said Omanisation levels were already around 60% and he expected this to rise further by the time the first flights started.
“Having said that, we still need to find the right competencies and skill sets and today it’s still very difficult to find those skills in aviation. We will train and organise [Omanis] but it will take a bit of time.”


* required field

Post a comment

Other Stories
Latest News

Iranian carriers seek compensation for Tu-154 groundings

The Association of Iranian Airlines (AIA) has petitioned the Iranian government for compensation for the Civil Aviation Organization of Iran's 2010 move to ground twenty-three Tu-154s, reports ch-aviation.

Air Algérie to wet-lease in B737 capacity in 3Q19

Air Algérie will wet-lease a B737-800 from fellow Algerian carrier Tassili Airlines during the summer of 2019, reports ch-aviation.

Aseman Airlines ends B727 passenger operations

Iran’s Aseman Airlines as ended B727-200 passenger operations after EP-ASB conducted its last revenue service on January 13, 2019, reports ch-aviation.

Gulfstream G280 sets city-pair record on renewable fuel

Gulfstream Aerospace has reaffirmed its commitment to sustainability by using sustainable alternative jet fuel (SAJF) to power a record- breaking flight by its class-leading super-midsize Gulfstream G280 aircraft.

First female fighter pilot makes history

Pilot Officer Shaikha Aisha bint Rashid Al Khalifa has become the first Bahraini woman to fly a military aircraft in the history of the Royal Bahrain Air Force (RBAF), writes Jon Lake.

Qatar Airways Group chief executive addresses Global Aviation Summit in Mumbai

A Qatari delegation led by the Qatari Minister of Transport, Mr. Jassim bin Saif Al Sulaiti, which also included the chairman of Qatar’s Civil Aviation Authority, Abdullah bin Nasser Turki Al-Subaey and Qatar Airways Group chief

See us at
ACCA19_BT2141218280219SaudiAirshowBT0711140319AIME19BTA3005120219Aviation Africa BT0607280219MECAS_BT171218130219