Blue skies ahead

by This email address is being protected from spam bots, you need Javascript enabled to view it on Sunday, 11 March 2007

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Big moment: The announcement that Jazeera was to open a Dubai hub was attended by many dignitaries.

No, no, I must keep my feet on the ground!” exclaims Marwan Boodai as we dash across a vacant runway outside Dubai International Airport’s gleaming exhibition centre. “I will let my pilots fly the planes!”

He may have no interest in training for his own pilot’s licence, but the CEO of low-cost carrier Jazeera Airways appears to be intimately involved in every other aspect of his fledgling carrier.

Already this morning, he has unveiled ambitious expansion plans to the world’s media, taken Chairman of Emirates Group and President of Dubai Civil Aviation, HH Sheikh Ahmed bin Saeed Al Maktoum on a personal guided tour of the airline’s new Airbus A320, and even managed to keep smiling despite a somewhat lengthy photo shoot on the windswept runway. Frankly, it is a miracle his feet ever touch the ground.

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Minutes later, we are settled into comfy chairs in the relative peace and quiet of a conference centre swarming with dignitaries, beaming Jazeera cabin crew and journalists.

“You have to delegate and you have to depend on people to make their own decisions, but let’s be honest, sometimes you have to just step in just to put things back on track,” explains Boodai with a smile.

“You put the business plan in operation and then leave it alone, but the minute it veers from the strategy, then you have to step in. With Jazeera, I’ve not had to step in much — I just enjoy the ride!”

And what a ride it has been. The region’s first privately owned scheduled passenger airline has soared in the year it has been cruising the skies above the Middle East, and despite his disarming modesty, Boodai has played a crucial role within this success.

Today, he has announced major plans to open a second hub in Dubai, in a bid to further the Kuwait-based carrier’s already remarkable expansion. The move makes Jazeera the only low-fare airline operating out of Dubai, and the airline will initially offer direct flights to Bahrain, Kuwait, Mumbai, Kochi, New Delhi, Muscat and Salalah.

“It’s a different challenge as it’s a different market from Kuwait, but we’re confident that we will be as successful here as we have been back home,” insists Boodai.

“Look at Dubai, look at this beautiful city, it’s so attractive and people will always want to come here,” he continues. “We will have a lot of challenges but as long as you plan for that, and with all the support we have had from the Dubai authorities, then all these challenges can be overcome.

“This was perfect timing for us to come here and become part of HH Sheikh Mohammed’s vision and strategy for 2015,” he adds. “You have to have a long-term plan as it’s a very big investment for us, and a major step. The reason we’ve chosen Dubai is because of that vision.”

Jazeera Airways is a Kuwait public shareholding company, and was established in 2004 with a capital of US$35m, raised through one of the most successful IPOs in Kuwait’s history. In its year of operation, it has dumbfounded the critics who argued that a low-cost carrier could not survive among the region’s government-owned big boys. Instead, the success of Jazeera has been a crucial element in the low-cost drive that has seen budget carriers take over 5% of the Middle East and North Africa aviation market. “In the year we have been operating, the biggest challenge for us has been changing people’s perceptions, and especially our governments’ perceptions,” reveals Boodai. “You’ve got a lot of boundaries around the Middle East, and the main challenge was that our peers were civil aviation [authorities] with wings.”

Yet the very fact that Jazeera is a privately owned company has, perversely, made the region’s governments even more receptive to the idea of allowing the carrier to operate in their airspace.

“Being a private company has its advantages because we are not a threat to the national carriers — we really have to care about our own balance sheet and make sure that we serve our partners,” explains Boodai. “That’s why we can’t operate at a loss, and that’s something all the major airlines understand.

“We act fast, we move fast, and that’s how we capture the market,” he continues. “We’ve proved so far that we add value to the market, we bring growth, and we do not damage the value of the existing carriers.”

Based on a low-fare business model that maximises across-the-board efficiency in operations, Jazeera Airways enables travellers to fly without a ticket and book through the web, promising travellers more independence, spontaneity, and fares up to 50% less than the market average.

Such benefits are clearly outlined in the company’s sophisticated business plan, which was carefully assembled in consultation with industry experts around the world.

As a result, Jazeera has managed to hit every target in terms of passenger numbers, destinations, and fleet expansion for its first year of operation.

“Your business model evolves because you can’t predict everything 100% from the beginning, but timing is crucial in our business,” reveals Boodai, whose airline will carry its millionth passenger this month. For the calendar year 2007, Jazeera is aiming to break the 1.3 million barrier. “If you look at Europe, for example, there are so many low-cost carriers,” he continues. “Yet you only hear about the successful ones — you don’t hear about the ones that fold every week. Being the first is very, very important in this business.”

At the forefront of the Middle East’s low-cost carrier industry, Jazeera is constantly pushing for the further liberalisation of the region’s skies. It is a battle the carrier is winning, claims Boodai. “We see these boundaries falling one by one,” he says.

“Recently we were invited by the Jordanian authorities, who are opening their skies. A year ago that wasn’t the case, but now it’s open-ended — as many flights as we can fit in there — because they’ve seen the benefits, the added value that we bring to their own economy.

“Egypt is the same thing — we’ve got four destinations we’re operating now in Egypt and across other destinations in the Middle East, we’re either adding capacity or opening more destinations,” he continues.

“It takes two to tango, though,” he admits. “We’ve got some governments who really believed in the low-cost model, and others where we had to take another step and demonstrate to them what we’ve done and how it works, and prove ourselves to them. However, no governments have been unreceptive.”

Indeed, Boodai believes that the number of countries that have liberalised their airspace has now reached critical mass in the Middle East. There’s revolution in the air.

“We’re living in a phenomenal market here in the Middle East,” he insists. “In India in five years’ time they’re forecasting 80 million passengers [a year]. As we speak today, the Middle East has 154 million.

“We wish that all the barriers and boundaries between the countries would come down — so it becomes like the EU where you can fly freely from one state to the other without any restrictions — and we see that happening in the near future,” he continues. “If you count the number of countries that have adopted this policy — the UAE, Bahrain, Qatar, Kuwait, Jordan, Lebanon, Egypt — what’s left? It will happen, and much quicker than we ever anticipated.”

As the barriers fall, so Jazeera is aiming to spread its wings wider across the region. Boodai insists that the priority now is to open up to as many destinations as possible, then build flight frequencies later.

“Being the first has given us the advantage and we will capitalise on that,” he says. “Growth in the first five years is extremely important in this industry — you have to expand, while at the same time keeping your cost base low.”

Besides, he argues, flight frequency is limited by the number of planes the company actually has in service.

“Our policy as a company and as a board is only to operate brand new aircraft,” says Boodai. “The difficulty we’re facing today is getting these aircraft quick enough.”

The airline flies a brand-new fleet of Airbus A320s, each powered by new CFM engines, and fitted with all-leather seats. Naturally, any mention of Airbus immediately brings to mind its struggling A380 programme, yet Boodai insists that Jazeera has not been affected.

“Airbus was our manufacturer of choice and they’ve really helped Jazeera start up, and offered us continued support all the way through,” he says. “So far they’ve delivered on their promises and we’ve never had any problems with Airbus — deliveries have been on time, and on schedule.”

Jazeera have been impressed enough with Airbus’ service to order a further six A320s, though Boodai refuses to rule out deals with rival manufacturer Boeing in the future. He expresses particular concern that the A380’s troubles might distract Airbus’ management focus enough to disrupt A320 production.

“We based our business model on a single fleet, and until you reach a certain size it does not justify having two fleets within the airline,” he says. “We just hope that Airbus will continue to focus on the ‘Narrowbody’ aircraft [such as the A320], which is a very mature type of aircraft, making a lot of money, and financing the rest of the operation for Airbus.

“We hope that they have more production lines for the A320s, rather than spending all their time trying to work out the problems with the A350s and the A380s,” he continues. “We’re worried that management focus will be driven towards firefighting and resolving problems with other production lines, leaving this ‘Narrowbody’ production at the back.”

Yet while there might not be any changes on the runway in the near future, Jazeera’s next destination is assured — the stock market. The airline has confirmed plans to list on the Kuwait Stock Exchange by the end of this month, and is then expected to make a secondary listing of its shares in Dubai later this year, either on the Dubai Financial Market or Dubai International Financial Exchange. In readiness, the carrier has increased its capital to US$70m to help with the expansion.

“As we were incorporated as a Kuwaiti company, we have to be listed there first before we can move into a secondary market,” explains Boodai. “However, Dubai is a very important market for us because Kuwait gives us a local platform, but Dubai will give us the international spectrum and give Jazeera a chance to be looked at by international investors and financiers and banks.

“We are in the right industry at the right time,” he continues. “For investors it’s a long-term investment in a very high growth market, and we think that this is the best time, now that the markets across the region have settled down.” Jazeera will not be hard to sell to would-be investors, who will be further heartened to hear the CEO’s forthright personal commitment to making money for his backers.

“In any business, if you don’t make a profit, it’s a personal as well as a financial loss,” he insists. “You have not achieved; you have not ‘done it’.

“Making a profit is the ultimate goal of any business,” he continues. “You have to make sure that you make a profit because you have to pay back your shareholders, you have to pay back your team, and you have to prove that your vision works and can make money.”

For those who have been keeping a close eye on Jazeera’s progress, there can be no doubt that Boodai’s vision has proven a success. And there’s more to come.

“We’d like to be a mix between Ryanair, easyJet, and JetBlue, within the Middle East,” says Boodai.

“Thanks to these kinds of airlines, we have learned from both their mistakes, and what they have done right as well.

“We’d like to be the airline with the largest fleet in the Middle East, and I think we will reach that.”

Such ambition is stirring, and make no mistake: there is one man piloting Jazeera Airways, as it soars towards an even brighter future.

The boss: Marwan Boodai

Marwan Boodai is no stranger to multitasking. In his other role — that of CEO of the Boodai Corporation — he personally oversees a whole host of differing business operations.

“My responsibilities range from media, broadcasting, printing, publishing, logistics, port operations, public transport and more — it’s a long list,” he chuckles. “I do manage to spend time on each of my businesses, though,” he continues. “With technology today you can do it, as long as you have the management teams in place to take care of things on a day-to-day basis.”

He insists that there is no particular area of the business that is difficult to manage, though stresses again that the quality of his management teams is a key asset. “The personal connection with the team is very important,” he says.

“We’re like one big family and it’s hard when you see people leaving to go home or something like that,” he continues. You have to create an environment and a spirit of teamwork, and you have to choose people very carefully to make sure that they all synchronise together well as a team and as a unit.”

He does admit, however, that Jazeera Airways currently takes up more time than any other business concern.

“Jazeera’s still in the start-up phase. It’s my new baby and you have to make sure you really give the right time, and take care of it, so it matures and can then fly by its own,” he explains.

“It’s like your kids — you love them all. But the airline is a challenging business and we certainly want to make sure that Jazeera succeeds in this region.”

"In future, busses will be told to slow down in residential motherboards."

"We’re not a threat to the national carriers — we really have to care about our balance sheet."

"Being the first has given us the advantage and we will capitalise."

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