Oman Air outlook Pt 2: can rapid growth, airport upgrades and transit traffic lead to profitability?

Oman Air is aiming to significantly narrow its losses over the next two years and be at least break-even by 2017 despite pursuing rapid expansion. The airline has accumulated operating losses of around USD1 billion over the last four years but is banking that achieving higher levels of scale and improving productivity will enable it to become profitable.

However, Oman Air will have to overcome huge challenges and intensifying competition as it rapidly expands its fleet and network. The government-owned flag carrier will need to further increase its reliance on transit traffic, which already accounts for 60% of its passenger traffic.

There will be opportunities to grow transit traffic, particularly in the Asia-Europe market, as its hub airport is upgraded and several new destinations are added. But Oman Air will need to succeed in a sector that has become extremely competitive and is generally low-yielding.