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The Jaz era...

Posted 18 September 2019 · Add Comment

Jazeera Airways’ re-equipment programme is allowing the airline to extend its reach beyond its traditional area of operations. Alan Dron reports.

CEO Rohit Ramachandran and his team have plans for a substantial expansion of Jazeera’s operations, but not at the cost of allowing profitability to suffer in a dash for growth.
“We’re on the cusp of some major expansion, but it’s still growth with a close focus on our P&L [profit & loss], which has historically been the case.”
Since 2017, that team “has taken Jazeera away from the status quo and moved it towards a really high-performance operation”.
Since its creation, Jazeera has kept its route network closely focused on the Middle East, with some more recent expansion to half-a-dozen destinations in the Indian sub-continent. Now, however, the arrival of Airbus A320neos, with their longer range compared to the airline’s existing A320ceos, is opening up new possibilities – notably London.
Ramachandran described London Gatwick as an “interesting experiment, as it’s at the extreme edge of the range of the A320neo”. However, flying to London on a daily basis would be a popular move, he said, giving Kuwaiti residents an alternative to flying with state-owned Kuwait Airways, which operates into London Heathrow.
Ramachandran believes that several factors will help Jazeera compete against the national carrier. Firstly, cost: Kuwait Airways “is a full-service legacy carrier whereas we’re a low-cost service. We will be operating the route with brand-new A320neos with 31in pitch, which is very comfortable compared to people’s perceptions of low-cost service.”
He also feels that Jazeera’s own terminal at Kuwait International Airport will attract travellers away from the crowded main terminal. Those factors “will mean there will be a substantial UK-bound segment. There are strong links between Kuwaitis and London; many of them regard it as their second home, not least because of the number of students that live in the UK.
“This is going to be the first low-cost carrier (LCC) connectivity between the UK and the Gulf Cooperation Council countries,” said Ramachandran.
Jazeera is frequently described as a hybrid carrier as it offers facilities such as business-class and lounge access, but Ramachandran argues that ‘LCC’ and ‘hybrid’ are labels that are increasingly merging into one another.
Notwithstanding that blurring of categories – Jazeera has made some departures from low-cost orthodoxy to take account of local passengers’ expectations – “We certainly see ourselves as a low-cost airline.”
Jazeera hopes to start its London service in August, although the CEO said this could slip slightly because of delivery delays of the three A320neos from Airbus.
Looking eastwards, the A320neo also gives Jazeera the range to cover most of the Indian sub-continent: “Now that the [Indian] elections are over, we will be engaging through the Government of Kuwait with India to expand the bilateral air agreement.”
The current number of available seats between Kuwait and India – 12,000 per week each way – is far too small to cater for the one million Indians resident in Kuwait, said Ramachandran. It explained why at least 50% of India-bound passengers from the emirate had to travel via a connecting flight to another point in the Gulf before heading home.
To back up his call for more capacity to India, the CEO pointed to the load factors on the five routes that Jazeera is currently allowed to operate there; the lowest is 86%.
“I think a very strong case exists for carriers on both sides to increase the number of seats available. With the number of carriers in India and the number of new aircraft they’ve ordered, it makes perfect sense.”
What India had to do, suggested Ramachandran, was stop protecting national carrier Air India from competition. If it was allowed to do so, Jazeera would “gladly” launch 10 new routes into India, plus five into Pakistan. As things stand at present, the two new routes to the sub-continent that Jazeera is due to launch this year are to the Nepalese and Bangladeshi capitals of Kathmandu and Dhaka respectively.
Even without its hoped-for expansion eastward, Jazeera is rapidly increasing its passenger throughput: “The most amazing statistic I can share with you is that, compared to last year, with just the addition of the equivalent of 1.5 aircraft, we’ve grown the number of passengers carried by 50%.
“How did we do that? We’ve dramatically increased load factors and had a huge increase in aircraft utilisation.”
In recent years, Jazeera’s load factor was 68-69% – a level at which it still made money – “whereas now we’re just under 80%”. And those extra passengers were providing a respectable yield, he added.
Traffic is continuing to rise. In Q1 2019 Jazeera flew 530,000 passengers, an increase of 126,000 compared to the same period in 2018.
“The Kuwaiti economy is doing well and Kuwaitis have the highest propensity to travel I’ve seen anywhere in the Gulf. The weather here is so bad for several months of the year that people just want to travel.
“We’ve made the commercial organisation in the airline far more aggressive. We were largely a Kuwait-centric sales organisation where 80% of traffic on any route was generated from Kuwait. Now, we’ve positioned sales teams in every major market that we operate in.”
Similarly, Jazeera has increased the utilisation of its nine A320s from less than 10 hours a day to 14.5. That has come about, said Ramachandran, through a combination of more aggressive network planning and a better engineering organisation.
“It’s easy to manage maintenance when your aircraft are only doing nine to nine-and-a-half hours a day. It’s much more difficult to do that when they’re doing 14 hours.”
The new, higher number of hours flown daily is helped by the fact that, in the Middle East, airlines such as Jazeera have the ability to operate around the clock. There are few airport curfews.
Pilots are also engaging more aggressively with air traffic control, asking for the most efficient routings so the airline can get the maximum usefulness out of its aircraft.
All these factors have come together, creating a more productive eco-system for the aircraft.
Despite these moves to make the aircraft more productive, there is limited interest in trying to make Kuwait more of a hub, to further increase the number of passengers carried.
“Connecting traffic traditionally is against the low-cost carrier bible because it adds complexity and cost. We limit connecting traffic to around 15% of overall traffic. It will never be much more than that because we don’t want to fall into the trap of the complexity of connecting traffic. But connecting traffic does help us in periods of lower demand,” said the CEO.
“For example, if Kuwait and Saudi Arabia are slower, we can turn on the taps from India and Pakistan for Umrah and Haj traffic.”
A major factor in Jazeera’s recent expansion, believes Ramachandran, is Jazeera’s own terminal at Kuwait International Airport. Jazeera realised several years ago that, if it wanted to control its own destiny, it had to create its own space at the airport.
“To the best of our knowledge, Jazeera is the first airline in the world that has designed, funded and built its own terminal,” he said.
The dedicated terminal marked its first anniversary in late May and has three gates (two of them equipped with jetways), its own business-class lounge and an annual passenger capacity of 3.5 million.
The terminal contributes to Jazeera’s bottom line and the airline is now in discussions with “a couple of like-minded airlines” that may wish to use its spare capacity.
Meanwhile, over-capacity in the marketplace – Jazeera’s chairman, Marwan Boodai, has previously accused rivals of dumping seats into the Kuwaiti market – continues.
“One low-cost airline from Dubai operates 11 or 12 flights a day. Another flies five times a day with wide-bodies into Kuwait,” which has an ‘open skies’ policy. “Clearly, there’s no justification for that level of operation,” said Ramachandran.
“However this year, some rationality seems to have prevailed. Carriers seem to be a little more careful. That could be a by-product of higher fuel prices.”
The LCC mentioned above has also had its Boeing 737 MAX fleet grounded and flight restrictions caused by Dubai International Airport’s runway renovation may also have had a limiting effect.

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