The Kuwait aviation sector was given a jolt in 2004 when the market was liberalised and the 50-year dominance of flag-carrier Kuwait Airways officially came to an end. The fresh new entrant into the market was Jazeera Airways, which started operations in October 2005 with a fleet of Airbus A320 aircraft.
With government-owned Kuwait Airways this year suffering a series of setbacks — strike action by workers demanding better wages and conditions, its planes being grounded over safety concerns, and bitter discussions with Iraq over aircraft stolen during the Gulf War — many would think this would be the perfect time for Jazeera to capitalise on its rival’s misfortune.
However, this is not the case, says Marwan Boodai, chairman of Jazeera Airways, as we sit down for an interview at his office in Kuwait City. “A healthy Kuwait Airways is much better for Jazeera Airways than the situation it is in right now. They can cover long-haul and we can focus on the short-haul,” he says.
Instead of competing, the two Kuwaiti carriers operate different markets: Kuwait Airways handles the long-haul international traffic, while Jazeera Airways focuses on the short-haul, low-cost regional traffic. With Kuwait Airways’ various issues creating complications, larger international carriers, such as Abu Dhabi’s Etihad Airways, Doha’s Qatar Airways and Dubai’s Emirates, have moved to fill the void.
Boodai says this has resulted in local carriers increasing capacity in and out of Kuwait so they can direct traffic through their respective hubs and elsewhere around their route networks. The answer to Kuwait Airways’ problems, Boodai believes, is for the government to push ahead with the privatisation of the national airline and open up the market even further.
“Governments are meant to govern, not run airlines,” he says emphatically. “Once they get Kuwait Airways privatised, rest assured there is a huge weight of opportunities in Kuwait Airways that could be exploited but you need a private-sector mentality to make sure you get the best returns,” he adds.
When Jazeera Airways launched its own initial public offering (IPO) in 2004 it was heavily oversubscribed. Boodai says that while a Kuwait Airways IPO might not reach such high levels, he believes it would “definitely be oversubscribed”.
“To be frank, it is always easier to start with a greenfield project rather than having to deal with all the historical problems like Kuwait Airways. Times have changed, I don’t think they are going to get ten times oversubscribed but definitely it will be oversubscribed once the government pushes the button.
“We want to see the implementation… We want to see Kuwait, as a state, to be taking the leadership in our region in privatising their service sectors,” he says.
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