Oman Air is the only major airline in the region which is majority-owned by private investors. Although the Oman government holds a 34% stake, "we always have to generate a return for our shareholders, so decisions are always commercially driven", says Oman Air chief executive Abdul Rahman Al Busaidy.
Following his appointment in 2000, Abdul Rahman set about establishing a strategy for the airline. "We try to be friends with everybody," he says. The company sees itself as complementary to rather than competitive with its neighbours Emirates and Gulf Air - the latter being one-third owned by Oman Air's shareholder, the Oman government.
Abdul Rahman says that in determining the future strategy it became apparent "we needed to focus on niche markets, and provide high frequencies to key points to generate high yield business traffic". This required a reorganisation of the fleet that "wasn't the right mix of aircraft", he adds. The fleet was simplified with the nine aircraft comprising five types - two Airbus A310s, two ATR 42-500s, a Boeing 737-400, a de Havilland Twin Otter and three Fokker F27s - reduced to two types - four ATR 42s and five Boeing 737-700/800s.
The changes enabled frequencies to be boosted with services to India, for example - a market which is strictly controlled in the number of seats offered - increased from three times a week to daily, following the replacement of the widebody A310s with the 737.
Passenger traffic grew by 16% to 850,000 in 2002, says Abdul Rahman, adding that he is aiming for over 990,000 this year.
Seven new destinations were also added in 2002, bringing the total to 20, without an increase in the staff head count, says Abdul Rahman. "We reduced operating costs by 20% and ownership costs by 18%." At the same time, revenues increased by 20% to 39 million rial ($101 million) and the airline narrowed 2001's 3.5 million rial loss to 500,000 rial. "We will be profitable this year," he adds.
Last year the entire Oman Air Services (OAS) group suffered from Gulf Air's 30% reduction in operations at Muscat Seeb Airport, which it owns. "Revenue was down by 1.3 million rial," says Abdul Rahman. The OAS group returned a loss of 2.6 million rial in 2001, and 1.8 million rial last year. However, Gulf Air is adding capacity again and Abdul Rahman expects the group to be in the black this year.
The airline is at a crossroads in its development, the next stage of which should be finalised this year for implementation in 2004. "We will present three alternatives to the board by 1 June: regional jets, long-haul expansion with widebodies, or stay as we are," says Abdul Rahman.
The airline is evaluating the Bombardier CRJ700/900 and Embraer 170/190 family of regional jets for high-frequency shuttle services in the region, but Abdul Rahman is concerned about access to certain countries, which could make such an operation difficult. Some form of tie-up with Gulf Air, such as a joint venture regional subsidiary or a joint purchase, has been discussed.
A lower-risk option for regional operations would be to acquire two 100-seat 737-600s, adds Abdul Rahman. He adds that the 190-seat extended-range 737-900X is also under evaluation for services to the Indian sub-continent.
Long-haul operations have been under discussion for some time, says Abdul Rahman, and the possible strategy is clearer now that Gulf Air's future direction has been determined. "We would initially take three widebodies - either A330-200s or 767-300ERs - for services to Europe and Asia," says Al Rahman.
The airline would concentrate European services on a single destination - probably London Heathrow - where it has slots and landing rights. Initial Asian destinations would be Bangkok, Jakarta and Kuala Lumpur, which would complement the Gulf Air network.
Like Gulf Air, Oman Air sees the country's largely untapped tourist market as "a major area of growth", says Abdul Rahman. The airline has been working with Oman's directorate of tourism to simplify entry requirements.
Meanwhile, the airline is looking at further opportunities as Gulf Air reorganises its network. "Some East African services which Gulf Air dropped, we have picked up," says Abdul Rahman, and talks have been held about other possibilities.
Source: Flight International
