Jazeera Airways Eyes Big Opportunities in Mideast and Beyond

 - June 28, 2019, 8:47 AM
Jazeera became the first Middle Eastern carrier to take delivery of an Airbus A320neo last year. (Photo: Jazeera Airways)

After carrying 2 million passengers last year, Kuwaiti low-cost carrier Jazeera Airways expects traffic to increase 25 percent this year as it launches flights to London Gatwick this autumn, a company official told AIN.

This year, Jazeera increased its fleet size from seven aircraft to nine. Flying eight A320s, it took delivery late last year of the first A320neo based in the Middle East. By the end of 2019, it expects to have taken 14 aircraft, with a further three joining the fleet next year. “This will bring total fleet size to 17 aircraft,” CEO Rohit Ramachandran said. “All the new aircraft joining our fleet are A320neos, and we're being quite opportunistic in terms of picking up distressed aircraft units rather than placing one large order.”

Andrew Ward, vice president of marketing and customer experience, told AIN that Jazeera leases its airplanes from several companies. “We have been considering placing a major RFP to the two main aircraft manufacturers, but that is currently on hold as we are getting some fantastic deals in the market for leased aircraft,” he said. “This is helping us manage our costs and making better business sense. We are well connected with the market and key lessors and we are always getting approached with aircraft availability. The market just happens to be quite buoyant at the moment for what we are looking for.”

Jazeera sees its target market as any destination within five hours flying time from its Kuwait hub, boasting a “very good network” within the Gulf Cooperation Council (GCC), the larger Middle East, the Levant, and destinations in the CIS. “In the last 18 months we've launched seven routes into the Indian subcontinent, which is also doing extremely well,” said Ramachandran. “We are one of the largest airline operators into Egypt, with nonstop flights direct to six cities. And now, with the launch of the London service, Western Europe is also within our reach.”

Jazeera will launch six new routes in 2019, the first of which the chief executive called interesting. “It's the first low-cost link between the Gulf Cooperation Council and London,” noted Ramachandran. “We'll be launching a Kuwait-London Gatwick Service commencing [later this year]. That will be on an A320neo. We will also be launching two new routes into Turkey: Sabiha Gokcen Airport, as well as Bodrum. We'll also be launching Katmandu in Nepal, Dhaka in Bangladesh, and Al Ain, which is the second airport in Abu Dhabi.”

Asked if Jazeera had exhausted the five-hour market or would look at new geographies such as Central Asia, he said at least 30 more routes of interest lie within range and would become activated when new aircraft deliveries became available. It already serves 30 destinations.

“In Saudi Arabia, we only fly to three cities, whereas at least another 10 are high-potential,” said Ramachandran. “Iran remains high-potential. We only fly to one route there at the moment, and there is at least one other. I want to fly to another 10 cities in India and another five cities in Pakistan, so they are far from exhausted. I think there's a lot of potential.”

He said Jazeera, as one of the few airlines in the region not owned by a government, has turned a profit for several years. Last year, Jazeera issued 7 million Kuwaiti dinars ($23 million) in dividends. “[This] is not a bad amount for a small, seven-aircraft company,” added Ramachandran. “The first quarter of this year has been significantly profitable, despite it being one of the weakest quarters traditionally for airlines in the region. Cumulatively, over the last five years, we have returned about 85 million dinars as dividends to our shareholders. We continue to have a very strong balance sheet with zero debt and about 60 million in cash reserves.”

Starting operations in 2005, Jazeera has gained a reputation for reliability. Although profits fell over the last two years, load factor on its two-class aircraft stood at 75 percent last year and revenues climbed 45 percent to $271 million. Aircraft utilization rose from 10 hours in 2018 to 14.3 hours in 2019. In 2018, it also inaugurated a dedicated 3.5-million-passenger-capacity Terminal 5 at Kuwait International Airport and has already embarked on the second phase of an expansion.

Ongoing problems in the rest of Kuwait’s aviation sector, with the closure of Wataniya Airlines last year and the continuing struggles of Kuwait Airlines to return to profitability, have given Jazeera its chance. He said he relished the stiff competition from the rest of the GCC.

“Jazeera has been in existence for 14 years and been profitable for most of that,” Ramachandran said. “Dealing with competition is in our DNA, and, as a low-cost carrier, with tight control on costs and close focus on our P&L, it's a normal business day for us to deal with competition. The region is full of government-owned carriers with big, deep pockets and we are used to dealing with them.”