Kuwait Aviation: Middle East Aviation Sector Defying the Crisis
The Middle East Aviation and Kuwait aviation sector, is different because it is fueled by oil and government spending. If you look at the per capita figures in the Middle East, you will see some of the highest rates in the world and people often spend money on Kuwait travel and tourism. Therefore, the Kuwait aviation sector performs very well.
Kuwait aviation industry: Up in the air
The Kuwait aviation and airline industry is not in the centre of Middle Eastern aviation. Dubai’s Emirates Airline has ordered 58 Airbus A380 Superjumbos. Qatar Airways (dubbed QA) led the headlines with a mega-order of Boeing’s 787 Dreamliner.
The state-owned Kuwait Airways has no such ambitions (as yet) to copy and paste the business model of Emirates and QA. As a primary center for the oil industry and a logistics hub for the rebuilding of Iraq, many flights are part of the non-civil sector, i. e. the government and military business.
The good news is that after the annus horribilis of 2009, more and more carriers are back in the air.
“We now see signs of recovery and high load factors coming back to China and India”, reports ALAFCO’s CEO Ahmed Al-Zabin. “The Middle East, however, is different because it is fueled by oil and government spending. If you look at the per capita figures in the Middle East, you will see some of the highest rates in the world and people often spend money on Kuwait travel and tourism.”
ALAFCO is an acronym for Aviation Lease and Finance Company. It is jointly owned by Islamic bank Kuwait Finance House and Kuwait Airways.
Dubai International Airport indeed witnessed constant growth. The Middle East saw air passenger growth of 11.2% in 2009 which is the highest in the world according to the International Air Transport Association.
Hamad Abdullatif Al-Falah, CEO of the contry’s flag carrier Kuwait Airways feels the increasing heat in the skies:
“Passenger growth has increased more than last year, we had about 61,000 more passengers than the year before. However, we are earning less profit due to hefty competition between us and the other airlines. In the past there were only one or two flights to Dubai, for example, but now there are about twenty flights a day to this destination on different airlines like Kuwait Airways, Jazeera, Emirates, and Al Wataniya, as well as other international airlines.”
Al-Falah aims to open 35% of the airline to international or Kuwait investment capital. Hamad Abdullatif Al-Falah: “Kuwait is nearest to Iraq and it will serve as a hub to get there, this will be advantageous in the future”.
Jazeera Airways (Jazeera is Arabic and means island), founded in 2005, was the first private airline in the Middle East. Its CEO Stefan Pichler is a well-known expert in the travel and tourism industry. The German Pichler led travel agency Thomas Cook for many years. In Australia, Pichler, a passionate hobby-diver, was CEO of Australia’s airline Virgin Blue, a subsidiary of UK’s Virgin Group, owned by billionaire Richard Branson.
“The Middle East is also pretty central to all other parts of the world, so we have a lot of connecting traffic that is happening via Doha, Bahrain, Abu Dhabi, and Dubai. Smaller GCC air carriers also help. We have been the fastest growing GCC carrier in the region and we are a small carrier”, says Pichler.
Jazeera Airways recently secured 105 million dollars in financing for three new aircraft from Europe. Pichler’s plan is to add 29 new aircraft over the next nine years.
“We believe the recovery will be sustainable by the end of 2010”, ALAFCO CEO Ahmed Al-Zabin concludes his outlook. For Al-Falah, increasing competition is not an obstacle but a motivation to do the best for his airline’s passengers.
“We are planning to buy approximately 27 new aircraft, and we have made a down payment of two million dollars toward this. Further, I hope we can maintain a high quality workforce to aid in the efficiency and quality of Kuwait Airways. We hope our image will reflect a better situation and the good reputation that we currently have.”