As Kuwait serves as a centre for the oil industry and a logistics hub for the rebuilding of Iraq, government and military business dominate the aviation sector. The national carrier is the government-owned Kuwait Airways, which until 2005 had a monopoly on aviation operations in Kuwait. Kuwait Airways operates scheduled international services throughout the Middle East, to the Indian subcontinent, Europe, Southeast Asia and North America. Since 2005 and the liberalisation of air services in Kuwait, the sector has opened up to two new carriers, Wataniya Airways and the LCC Jazeera Airways. The gateway to Kuwait is the Kuwait International Airport.
Airports in Kuwait
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Kuwait Airways is saddled with one of the oldest and least efficient fleets in the Middle East, but the carrier is reportedly considering postponing its long awaited fleet order with Airbus, in favour of a deal involving short-term aircraft leases. The option to postpone the long-term solution may be the best avenue for the debt-laden carrier to accelerate replacement of its badly ageing aircraft, while sidestepping the political interference that has dogged previous acquisition plans.
Meanwhile, neighbouring Middle East airlines will add more than 50 widebody aircraft this year and another 50 in 2014, as carriers in the region continue to expand their fleets with high-capacity, long-range aircraft to fill out their globe-spanning networks. At the same time, they are dictating the options for other airlines in the region.
More than half of the aircraft scheduled to be delivered to the region over the next five years are widebody aircraft, including large numbers of next generation aircraft types such as the 787 and A350.
Regional political uncertainty and social turmoil have not been able to stop low-cost carriers in the Middle East from reporting another profitable six months. Two of the region’s key privately owned LCCs, the Sharjah-based Air Arabia and the Kuwait-based Jazeera Airways, have both posted strong profits in 1H2013.
In addition to this, the region’s other two LCCs, the privately owned nasair and the emirate of Dubai-controlled flydubai are anticipating profitable full year results. flydubai reported a maiden profit in 2012 and is looking to continue this momentum into 2013.
nasair has not yet reported a break-even year, despite being launched in 2007, but a restructuring in late 2012 has already seen the carrier reporting profits on a monthly basis.
Jazeera Airway’s regional focus continues to pay dividends for the carrier, with passenger traffic up 7% in May-2013. The airline has seen “significant passenger pick-up” in May on a number of its most important regional routes, even in the face of heavy competition from both LCCs and regional widebody operators. Strong growth was reported on routes to Dubai, Beirut, Amman, Jeddah, Cairo, Sharm El Sheikh, Assiut and Sohag during the month.
Jazeera’s network covers 19 routes in 11 countries, concentrated on the Middle East with most destinations within two hours flight time of its Kuwait hub. Unlike LCC contemporaries in the Gulf region such as flydubai and Air Arabia, the company is concentrating on yield first and growth second. Jazeera aims to maximise profit on its existing sectors on a quarter to quarter basis, rather than trail breaking new markets and expanding its network coverage. This involves increasing frequencies on its highest-demand and most profitable routes, gradually building load factors and raising yield levels.
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.
Kuwait aviation poised to deliver at last, but Kuwait Airways restructure, airport upgrade essential
After a rough two decades for Kuwait Airways, there are signs that the carrier could be finally at the beginning of a major turn-around.
The decks are cleared for a new take-off.
In Jan-2013 the Kuwait parliament gave its final sign-off for the carrier’s privatisation legislation and agreed to pay off its heavy losses. An agreement on fleet renewal, at least a decade overdue, appears to be close to fruition after the failure of several agreements in recent years. And the airline has also settled its long-running dispute with Iraqi Airways over war reparations, with a USD500 million settlement also ratified by the Kuwaiti National Assembly.
Cebu Pacific’s new low-cost long-haul unit plans to initially focus on Middle Eastern and regional markets as it works towards launching services with 436-seat A330-300s by Jul-2013. Dubai will be the Philippine carrier’s first long-haul route and will likely be followed by service to Abu Dhabi, Saudi Arabia and Kuwait in 2014. But Cebu Pacific over the medium to long-term also aims to use its new fleet of A330s to serve Australia and potentially Hawaii.
Cebu Pacific will become Asia’s fourth low-cost long-haul carrier, joining Jetstar, AirAsia X and Scoot. But Cebu Pacific is implementing a different strategy with an all-economy product and focus on point-to-point traffic. This reflects the different dynamics of the Philippine market, particularly its large overseas population.