Jazeera Airways

Could Jazeera Airways, a small and nimble carrier, come to the rescue of Kuwait Airways?

In the Middle East, it may be impossible to find two carriers sharing a common hub that are more different than Jazeera Airways and Kuwait Airways. One is privately owned, nimble, low cost and highly profitable.

The other is government owned, suffering from decades of losses and burdened with overstaffing and bureaucratic detritus. However the future for both carriers may about to become linked. Jazeera Airways chairman Marwan Boodai has announced that the carrier is definitely interested in purchasing a stake in the national carrier once it launches its long delayed IPO.

In doing so, the small Jazeera may just provide a lifeline to the larger Kuwait Airways.

Profits keep rolling but growth is elusive for Jazeera Airways

Jazeera Airways is now six months into STAMP, the business programme designed to take the positive momentum from its financial turn-around programme and return the carrier to a growth trajectory. The programme is based around three key pillars: enhancing yields; improving the carrier’s load factors to a modest 68% by 2014; and leading in market share on the routes it operates in and out of Kuwait.

All of this will be achieved while the carrier maintains the same network of 19 destinations out of Kuwait for the next three years.

Even though Jazeera Airways managed to report a record new profit of KWD3.8 million (USD13.5 million) in 1H2012, the first half of the year has not been an unqualified success for the carrier. While it turned its seventh and eighth consecutive quarterly profits, the carrier’s passenger traffic and load factors have suffered due to the regional unrest in the Levant.

Jazeera Airways and Air Arabia stick to their models and report double-digit increases in profits

Business is booming for LCCs in the Middle East. The two oldest low-cost airlines in the region – Air Arabia and Jazeera Airways – have both reported profitable first quarters, as the regional political environment cools and oil prices begin to trend back from their highs earlier in the year.

Both airlines have positive outlooks for this year. Jazeera Airways just reported its seventh consecutive quarterly profit – a record run of profitability for the airline – and aims to continue the success with its new strategic management plan (STAMP). Air Arabia achieved a double-digit increase in profit during the first quarter and the carrier plans to continue to enter new markets and launch new business ventures this year.

LCCs grab 10% of seats in the Middle East, but growth is slowing

The LCC phenomenon in the Middle East is entering the home stretch of its first decade. The importance of the LCC market in the Middle East has grown steadily since the launch of the region’s first LCC flights by Air Arabia in Oct-2003, but the growth has not been as high as initially anticipated, as carriers can attest to.

Just four airlines make up the regional LCC market – Air Arabia, flydubai, Jazeera Airways and NAS Air. Air Arabia also has two subsidiary carriers – Air Arabia Maroc, launched in 2007, and Air Arabia Egypt, launched in 2010. A third, based in Jordan, has been on hold for several years.

There are also some smaller carriers in the region that are filling the gap between LCCs and full service airlines. Bahrain Air markets itself as a “premium value” carrier, including some LCC elements in its model but also offering two seating classes – including an all-new business class cabin – and a correspondingly greater emphasis on service and product levels. RAK Airways, based in the UAE emirate of Ras Al Khaimah, also has low cost elements, but like Bahrain Air has adopted a hybrid model between full service and low-cost airlines.

Middle East regional carriers have profitable outlook for 2012

IATA’s latest 2012 industry forecast has airlines in the Middle East as the big winners, with the annual profit forecast for the region's airlines revised from USD300 million to USD500 million. It does come with a caveat though: a spike in oil prices could turn the forecast profit into a USD200 million loss for the region’s airlines.

In 2011, airlines in the Middle East reported a combined annual profit of approximately USD1 billion, according to IATA’s estimate. Despite the regional disruptions and spiralling price of oil, passengers in the region kept flying and Middle Eastern carriers increasingly developed their links with the rest of the world.

As they have been for years, financial results for Middle Eastern carriers were unevenly spread across the region.

Air services expansion to Iraq accelerating this summer

Another round of new routes to Iraq is occurring over the next few months, continuing the wave of expansion by international carriers as the country's economy develops and trade links grow. After almost two decades of limited activity, commercial aviation is playing an important role in the redevelopment of Iraq.

Between the early 1990s and 2000, Iraq was faced with heavy international sanctions, effectively preventing commercial travel. Royal Jordanian was the first international carrier to resume operations to the country, initially operating irregular cargo and charter services and then an on-again, off-again scheduled passenger service. It was only after the fall of the Hussein regime in 2003 that commercial airlines began to return to the country in any numbers.

What began as a trickle of airlines and a handful of routes become a torrent at the end of 2008. More than 20 airlines have added services to Iraq over the past three years. In the past six months alone, flydubai, Etihad Airways, Emirates, EgyptAir, Pegasus Airlines, Turkish Airlines and (the now defunct) Viking Hellas have all added new services or extra capacity into the country. Qatar Airways and Jazeera Airways are set to enter the Iraqi market in the next few months.