Although less than a year old, Oman's first low-cost carrier SalamAir is now being led by its second CEO. Despite closer shareholder attention to return on investment, Mohamed Ahmed remains optimistic that the airline has what it takes to be successful
This might be the best time for low-cost air travel to prosper,” says SalamAir CEO Mohamed Ahmed who joined the Omani carrier after serving as group director of operations and maintenance at Air Arabia. “With regional economies practicing austerity, the appeal for a low-cost carrier grows. We’re the first one in Oman which gives us a huge first-move advantage as well, while complementing the full service carrier in Oman.”
Ahmed insists that SalamAir will help grow the aviation market as a whole rather than take share away from the country’s flag carrier, Oman Air. “They have a very different product that targets a very different market segment compared to us. There might be some overlap in terms of destinations, of course, but we’ll try to fly to destinations they don’t go so as to grow on that ability to complement their offering.”
Crucially, SalamAir is targeting those customers who would otherwise not fly and opt to drive to destinations within Oman instead. “We fly four times daily to Salalah from Muscat, for instance, but during the summer we were flying seven times daily at load factors over 90 percent,” he says. “It’s because our fares were low enough to convince domestic travellers who would have perhaps opted to drive for 12 hours to take a chance on low-cost air travel instead.”
The benefit of low-cost carriers is that they bring a win-win proposition for the industry by growing the market, says Ahmed. “If demand doesn’t historically exist for travel in a destination, we’ll create it by flying there.”
The airline currently operates three Airbus A320s and will add upto four aircraft each year before reaching a total fleet of 25 in five years. “As a private company, revenue and income will of course be core to our growth plans,” he says. “But our goal is to be able to reach 60 destinations in five years across the Indian subcontinent, the GCC – especially Saudi Arabia – as well as the wider Middle East in Sudan, Iran and Iraq.”
The carrier currently flies to Dubai and Doha as well as three airports within Oman. The country’s population may be small, but with Oman’s potential for tourism, including some of the longest and most pristine beaches in the region, Ahmed says SalamAir is merely waiting for the opportunity to expand operations to more airports as they come online in 2018. “At times when the temperatures reach 45 degrees in the rest of the Gulf, Salalah is at 20 degrees. So the country has a lot to offer and we’re working hand in hand with the tourism department to bring more visitors here,” he says.
The recent strategic partnership between Emirates and Flydubai bodes even better for low cost travel, and consequently SalamAir, according to Ahmed. “One of the main challenges to yields in the region has been overcapacity. Partnerships help reduce this overcapacity, so the market will rationalise, easing pressure on yields,” he says.
A stable political climate and cordial relations with its neighbours also places Oman in an advantageous position. “Geopolitical uncertainties definitely help Oman as it is in a position to benefit from increased traffic flow,” he adds.
What might make Ahmed’s job harder, though, are the abrupt departures of the CEOs at both Oman Air and SalamAir in 2017, an indication that the there is more attention to investor returns in the sector. “The fantastic state-of-the-art airport in Muscat that is set to open next year has been spent on heavily and the country it looking closely at these non-oil sectors,” says Ahmed.
The pressure to bring profitability is ultimately determined by how well plans can be executed, he continues. “The infrastructure, including airports and ground handling, already exists. Oman has also commenced licensing a second ground handler at Muscat International Airport, which is unprecedented in the Gulf,” he says. “Being the first low-cost carrier is a huge advantage,” he says. “We’re bringing a product that hasn’t yet been available. Add to that Oman is a big country with a number of airports about to come online. So we’re here at the right time and place to propel both GDP growth and investment.”
SalamAir in 24 months
January 20: Muscat National Development and Investment Company (ASAAS) receives air services operator license
November 26: SalamAir receives first A320s
January 30: SalamAir begins three weekly domestic flights from Muscat to Salalah
March 1: Begins international flights from Muscat to Dubai World Central (DWC)
October 2: Mohamed Ahmed appointed CEO
October 8: Starts flights to Dubai International (DXB), dropping all flights to DWC from October 28