Set to soar
In the face of growing competition, Abdul Rahman Al Busaidy, chief executive officer (CEO) Oman Air, has adopted a simple but effective strategy to steer the airline out of turbulent weather.
“I admit that the skies in the Gulf region is getting more crowded so, rather than duplicate the others, we opted to serve a chosen niche market covering the Indian Subcontinent, the Middle East and East Africa. This business model, which focuses on the high-yield local market, connecting traffic within the chosen niche markets and focusing on inbound tourism, is different from the strategy adopted by other regional carriers i.e. to service long-haul international routes or become low-fare, no-frills airlines.”
Given their business model, Al Busaidy says that, for the time being, there is no place for widebody aircraft in Oman Air’s fleet. “But,” he is quick to point out, “we envisage a gradual and steady growth in our B737 fleet in the foreseeable future. And our expansion plans will basically cover a radius within five hours. This year, we are planning to add Delhi, Hyderabad and Bahrain to our network. Future routes will cover Iran, Yemen, Syria and Jordan. We will also increase our jet fleet to six units by the end of the year and add another four by 2007.”
Having initiated a five-year plan to consolidate growth in the region and beyond in 2001 when he was the general manager of the airline - Al Busaidy took over as CEO of Oman Aviation Services Company (OASC) the following year, which added the portfolio of Airport Services and Corporate Services to his responsibilities - he has gone about expanding Oman Air’s network and fleet.
In fact, Oman Air was the first commercial operator in the Gulf to acquire the new Boeing Next-Generation 737. Replacing the airline’s A310 and B737-400 planes, the first two of the five new Boeing 737NG aircraft were pressed into service in December 2001, a further two aircraft followed in the middle of 2002 and the last aircraft is due to join the fleet later this year. But that’s not all. Oman Air has also taken an option of two additional Boeing 737NG aircraft for planned delivery in 2006 and 2008.
“With these technologically-advanced aircraft joining our fleet, we are able to offer our customers more comfort onboard and greater on-time reliability and, at the same time, we have also reduced our operational cost,” says Al Busaidy. “Since a key objective of the airline’s strategic plan for growth was to transform itself as the businessman’s carrier of choice, the acquisition of the next generation B737s represented an important milestone for Oman Air. It projected the airline as modern and progressive and also gave us the much-needed flexibility in terms of range and ability to mount high frequencies on dense routes. And not to forget, it also played a big role in boosting staff morale.”
Oman Air’s decision to renew and standardise its fleet with Boeing’s new family of Next Generation 737s enabled it to create a model of operational efficiency and profitability in the Middle East. In real terms, the cost savings linked to the Boeing 737 NG aircraft resulted in 20 per cent savings in ownership costs, 50 per cent reduction in fuel consumption, 30 per cent lower maintenance costs, and 15 per cent savings in other operating costs.
Not surprising then that Al Busaidy confidently says that, right now, the airline is “actually ahead of its strategic five-year plan.”
But that’s not all. Al Busaidy has also successfully implemented Oman Air’s Total Quality Management System (OASIS) programme that was initiated four years ago in collaboration with Shell Aviation. “Initially, it was a system designed to address safety concerns in flight operations, maintenance and ground operations but it was later expanded as the safety and quality system to cover the whole company with the objective of achieving continuous improvement in all aspects of the company’s activities,” he informs. “As with most programmes, OASIS has been successfully implemented because of the commitment of the top management.” The fact that Oman Air went on to receive JAR 145 Certification in recognition of excellence in maintenance last year
amply demonstrated the high standards set in the company. “This important certification was earned through the consistent hard work of our Engineering team and their persistent pursuit of excellence,” adds Al Busaidy.
But having laid a solid foundation for Oman Air, the big question is where does the CEO plan to take the airline from here? For his part, Al Busaidy has his work cut out for him.
To begin with, in the last extra ordinary general meeting held in December last year, shareholders agreed to increase the authorised capital for the company to RO50 million ($130 million). According to Al Busaidy, this will help fund the company’s proposed expansion projects in the near future. “The next step,” he adds, “will involve preparing a prospectus, most likely with a reputable financial establishment, to attract additional capital from existing and new investors. This step is expected to be completed towards the last quarter of the year.”
Like the rest of the industry, Oman Air too suffered from the fallout of September 11, global recession, Iraq war and SARS but the CEO says the worst is behind them and he’s confident that the company will return to profitability this year. He points out that the company’s optimism stems from the following factors:
These efforts, coupled with the newly-announced liberal visa rules in the Sultanate, are expected to result in substantial new traffic to Oman.
What’s more, Oman Air has also had several discussions with Gulf Air and, Al Busaidy says, “The two airlines are at the threshold of elevating the present tactical alliance to a strategic alliance subject to ironing out certain details.” But he refuses to comment on rumours that Oman is likely to withdraw from Gulf Air if Abu Dhabi pulls out its stake in the airline following the establishment of Etihad Airways? “It’s an issue that the Government of Oman will need to address at the appropriate time,” is all he says.
On a different note, given that Al Busaidy is also the president of Arab Air Carriers Association (AACO) one is tempted to ask him whether the restrictive air transport policies coupled with inflexible visa requirements for travel between several Arab countries has hindered the development of air transport in the region. “Yes,” he says. “And, in my opening address during the last annual general meeting of AACO last year, I very loudly called for a review of the prevailing restrictive policies and asked Arab carriers to work with their respective governments to adopt more liberal policies that will encourage more travel into, through and between the Middle East region. The tide appears to be slowly turning in favour of such liberalisation as the issue is being addressed at the level of Transport Ministers in the Arab world. Moreover, as more and more Arab countries become WTO members, they will have to, over time, open up their markets including air transport.”
Whatever be the case, for now, Al Busaidy has his seatbelt firmly fastened as he’s set to take Oman Air to greater heights.