x Abu Dhabi, UAEWednesday 26 July 2017

Low-cost airline to seize the day

Jazeera Airways plans to take advantage of the economic climate and add another hub and five new destinations this year.

Low-cost airlines will benefit from the downturn as travelers seek better deals, says Jazeera Airways.
Low-cost airlines will benefit from the downturn as travelers seek better deals, says Jazeera Airways.

The world may be in the grip of an economic crisis, but officials at Jazeera Airways yesterday announced expansion plans, including adding another hub and five new destinations this year. "Travel budgets are being reduced and a downturn is underway whose severity is unknown," said Marwan Boodai, the chairman of Jazeera Airways, at its annual press briefing in Kuwait. "But low-cost carriers should expand in a downturn. We make corporate and personal travel budgets go further." In an economic climate where budget-conscious customers helped McDonald's shares become among the few gainers in the US last year, Jazeera executives said they believed belt-tightening among companies and individuals would also benefit the low-fare airline, which operates hubs in Kuwait and Dubai and flies to 14 countries. Jazeera was now considering a third hub somewhere within the Middle East, North Africa and South Asia, and planned to open the base by the end of the year, Mr Boodai added. An announcement on the new hub's location is expected in the next few months. Another factor pushing Jazeera's international expansion is competition in its home market of Kuwait. The country of 3.5 million people is now home to three local airlines after Wataniya joined Kuwait Airways and Jazeera last month. With this expansion, Jazeera will now fly to 30 destinations. It will also add two aircraft, bringing its fleet of Airbus A320s to 10. Andrew Cowen, the chief executive of Jazeera Airways, said he saw some positive signs for Jazeera, even as other airlines struggled. Already, the carrier had won some corporate travel accounts that were formerly with full-service airlines, he said. Despite new competition from Wataniya and the continuing global economic woes, demand for Jazeera flights was "holding up pretty well", said Mr Cowen, adding that the Middle East still held great potential for new demand to be stimulated from liberalising air rights. He acknowledged that the demand for "discretionary travel" could soften across all airlines. Jazeera also offered a series of incentives yesterday to stimulate the market during what is traditionally a slow period. It eliminated its fuel surcharge and offered a special promotion to its network of travel agencies. Mirroring moves by Etihad Airways, Emirates and other airlines serving the UAE, Jazeera also launched a two-day sale for tickets to certain destinations for as low as Dh249 (US$67), including taxes. The privately owned airline also released its full-year traffic figures for last year, which showed a 25 per cent increase to 1.5 million passengers. That increase could not match the amazing traffic rise in 2007, when figures soared from 600,000 to 1.2 million passengers. Last year's growth suggests that the Middle East air travel market has fared far better than other regions in the world, particularly those in the West. Worldwide passenger traffic grew by just 1.6 per cent last year, according to the International Air Transport Association. This year, the airline wants to increase passenger numbers to 2.5 million. It already has committed to increase the number of seats offered per week by more than 50 per cent through new aircraft arrivals and additional frequencies. Jazeera's expansion plans were set out in mid-2007, when it ordered 30 Airbus A320s in a deal worth more than $2.1bn. Since then, airlines around the world have gone bankrupt or cancelled orders, and this week both Boeing and Airbus registered negative order books for the year following several cancellations. That turmoil has benefited Jazeera because it will now receive its two deliveries for the year in June, six months earlier than expected. The airline, which is 30 per cent owned by the Boodai Group, will announce its full-year financial figures in March. That will be closely watched to see if budget airlines are faring relatively better in the downturn than full-service carriers such as Etihad Airways and Emirates Airline. Already, the latter two airlines have offered a series of fare discounts, in a sign that the traditional lower-demand winter season is being exacerbated by the financial crisis. igale@thenational.ae