Kuwait is rapidly liberalising its air transport market, with the launch of three carriers threatening to heap pressure on Kuwait Airways.
Jazeera Airways, which launched operations one year ago with a new budget airline license, is now preparing for a local stock exchange listing which could help it accelerate expansion plans. The Kuwaiti Government has also approved licences for a new full-service operator, Kuwait National Airlines, and a cargo carrier, LoadAir.
Diversified industrial firm Kuwait Projects Company has established Kuwait National Airlines and raised 70% of the carrier's KD50 million ($173 million) in start-up capital through a public offering. The other 30% was raised by its founders. The carrier has not yet set a launch date but plans to be listed a year after operations begin.
LoadAir, also established by Kuwaiti investors and capitalised through a public offering, plans to begin operations early next year using Boeing 747-400 freighters. Kuwait has no dedicated cargo airline - Kuwait Airways only carries cargo in the bellies of passenger aircraft - and LoadAir aims to take market share back from foreign carriers.
Jazeera similarly went to the public for its initial funding - with over 36,000 shareholders, one in 25 Kuwaitis already owns part of the carrier. It just doubled its capital to KD20 million and plans to list on Kuwait's stock exchange early next year. While the listing was always part of the initial set-up mechanism, Jazeera vice-president for finance Mark Elliott says: "One of the future benefits will be to reach a wider audience, it will open up a means of raising capital in the future."
The airline claims to be stimulating the market - traffic on the Beirut route rose a third in six months after Jazeera started flying it - and the carrier is accelerating its development plan. It will take a fifth Airbus A320 in January and plans to have a fleet of 10 A320s by 2010.
Jazeera already serves 13 destinations. Elliott says it is seeking to launch services to Saudi Arabia "sooner rather than later" and adds reinforced frequencies are central to its strategy. "We also clearly want to have commercial bases in other parts of the Middle East."
Kuwait Airways, meanwhile, has been tasked with forecasting its operations for the seven years from 2008-09 in order to determine fleet requirements and ensure the airline remains competitive. While aircraft types have yet to be selected, assistant financial affairs manager Mohammad Al-Hilal says the fleet should be compatible with Kuwait Airways' network for the next 15 years. Kuwait Airways chairman Sheikh Talal Al-Ahmed Al-Sabah previously indicated the carrier will focus on long-haul services and move to a two-type fleet, replacing its Airbus A300/310s.
Source: Airline Business
