Kuwaiti discount carrier Jazeera Airways will seek an alliance with a major operator based in Europe or Asia after plans to secure a stake in state-owned Kuwait Airways were frustrated.
Jazeera will sound out potential partners on its joint venture plan and is likely to take at least six months to seal a deal, with flights starting in summer 2018, Chairman Marwan Boodai said in a phone interview.
“We are looking at the BAs, Lufthansas and Singapores of the world, established airlines that have value,” Boodai said.
A partnership with a major carrier would be a “game-changer” for Jazeera, allowing a company that operates only regional routes and attracts 1.2 million passengers a year to tap a long-haul market from Kuwait of 6 million people annually, he said. Kuwait could also provide a European or Asian airline with a well-located base through which to feed intercontinental traffic, he said.
Jazeera Air, which had net income of 15.4 million Kuwaiti dinars last year, is at the “initial stage” of reaching out to “reputable and well-positioned” airlines after its board approved the joint-venture plan, Boodai said, adding that taking a stake in unprofitable Kuwait Airways has ceased to be an option because of the flag carrier’s delayed privatisation process.
Low-cost airlines generally eschew long-haul ties because of the complexity and cost involved, with Saudi Arabia’s Flynas scrapping such flights in 2014.
“Jazeera Airways is more a hybrid,” Boodai said, referring to the business-class offering available on most of its routes, adding that the carrier wouldn’t be operating its own flights at the long-haul end of the market.
Jazeera also plans to open a new route to Isfahan, Iran, this summer.
The airline plans to seek loans from local and Gulf banks for an investment of about $40 million in ground infrastructure and will put out a request for proposals by the end of March, Boodai said. Jazeera will also require funding for its airport terminal building, a project worth $50 million, that it plans to finance from equity and bank loans at a 20 to 80 ratio.
Jazeera doesn’t hedge for fuel and is seeing the benefits of low oil prices, Boodai said. Its fuel bill dropped from 30 percent of operational cost to the “higher 20s,” he said, boosting profit per passenger.
Source: Gulf News
|Abdul Naser Khan||Posted on : March 02, 2016 9:54 am|