Gulf could handle up to 4 more low cost carriers - analyst

Comments come as Oman is mulling plan to launch rival to FlyDubai, Jazeera Airways, Air Arabia

(Photo for illustrative purposes only)

(Photo for illustrative purposes only)

As Oman considers launching up to two new airlines, a leading aviation analyst said the region’s market could accommodate up to four more low cost carriers.

Oman’s Public Authority for Civil Aviation (PACA) said last week the licence may be awarded to a local Omani private company or a subsidiary of state-owned carrier Oman Air.

"Over the next two to three years, the aviation business in Oman will change completely, I'm absolutely certain," PACA chief executive officer Salim Al Aufi told the Times of Oman newspaper.

"Our own study will determine if we need one or two licences, depending on the market. We don't want to flood it, but we don't want to starve it."

Low-cost carriers currently represent up to seven percent of Oman's aviation market, led by foreign carriers such as Dubai-based Flydubai, Air Arabia and India's Indigo, according to Al Aufi.

“Frankly I'm surprised it's taken them this long to announce such a move,” Saj Ahmad, chief analyst at StrategicAero Research, told Arabian Business. “Oman is a hot destination right now and frankly, I thought they'd be setting up an LCC (low-cost carrier) back in 2009, right after FlyDubai debuted, but they didn't.”

Ahmad added he believed there was “capacity for at least another two to four LCCs in the GCC. Iraq/Iran/Jordan/Egypt/Bahrain/Qatar/Saudi, each one of those could do with at least one LCC,” be believed.

The Gulf’s aviation sector certainly is booming as Middle East airlines posted the biggest growth in passenger demand in the world in May, according to latest data released by the International Air Transport Association (IATA).

The region's carriers saw the strongest year-on-year traffic growth for any region at 11.7 percent last month compared to the same month last year.

"Demand for air travel in the Middle East and Africa has benefited from continued expansion in trade volumes since late 2011," it added.

Tony Tyler, IATA’s director general and CEO, said: “Global economic performance remains a concern; however, demand for air travel continues to expand. The primary driver is growing demand for connectivity to emerging markets.

"The business environment has also improved compared to mid-2012 with some indications of easing weakness in the Eurozone. It’s still a tough environment, but there are some reasons for optimism in the second half of the year.”

This year airlines are expected to make $12.7bn profits this year on $711bn in revenues, representing a 1.8 percent net profit margin, or around $4 profit for every passenger.

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Posted by: Ahmed

Yes, I absolutely agree, another discount carrier out of Kuwait, especially for the Dubai route is sorely needed. This carrier could develop new routes especially during the summer travel season to cater to the market. I would love to see Wataniya Airways come back, it was a good carrier and to me was low-budget, although they viewed themselves and marketed themselves as a luxury carrier. The obstacle Kuwait faces, is that the airport can no longer handle passenger levels, and the government fails to address this issue which effects the huge travel industry there. They need to build a new airport and simultaneously correct the logistics of the present airport to make room for more check-in desks, airport gates, and security.

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