Profiling a business based on lCC fundamentals, careful route selection and aggressive sales.
“We’re a small airline based in Kuwait and until two years ago, we had seven airplanes operating successfully around the Gulf. But three years ago, we decided to make a step change – to expand, but keep our focus on the bottom line.” Jazeera Airways CEO Rohit Ramachandran is explaining his airline’s remarkable 2019.
The figures in question were an all-time record for the carrier, with a net profit of 14.9 million Kuwaiti dinars (around $48 million), 124% up over 2018’s figures. Passenger numbers for the year rose 20.6% to approach 2.5 million.
“We began expansion in the Indian subcontinent, then pushed into the CIS. We drove up seat factors by investing in aggressive sales teams. It’s been a blend between that and the low-cost business model where business comes largely through online direct channels,” Ramachandran adds. “Some routes are far from the busy international gateways, but have been some of our most profitable. A good example is Osh. The second city in Kyrgyzstan – a mostly Muslim country – has a huge travel demand for Umrah and Hajj. They have no way to connect from Osh to Jeddah. So we launched two flights a week and in six weeks it was profitable. That’s a good example of our approach,” the CEO explains.
The fleet is changing with new A320neos joining the A320ceos. “We’re now at 14 aircraft and by year end should have about 20. We adopt an opportunistic approach to fleet development. We can do that because we’re small.
“We don’t place large aircraft orders, we go for aircraft which are largely distress events that couldn’t have been taken by the original operator and we take them at prices well below market,” Ramachandran elaborates. “In about three years’ time, we’ll have about 30 aeroplanes.”
Last year Jazeera added a route to London Gatwick. So are there any other western European cities on its target list? “Well, the low cost carrier bible says that you should be within 4-5 hours’ flying time at maximum from your base. But that was when narrowbody aircraft capabilities went to that range,” he notes. New generation narrowbodies offer more, so six hour flights can be done while maintaining narrowbody cost characteristics. The CEO wants to wait and see how London performs, but sees possibilities for other western European airports including Manchester and Birmingham. “We’re very interested in Russia and the wider CIS too,” he admits.
Jazeera has also been thinking about moving east. “At the end of March we’re launching Dhaka and Chittagong in Bangladesh which is the extreme east of the range for the A320,” he confirms.
On the topic of range, Ramachandran admits the airline is interested in the Airbus A321XLR. “We are in conversation with Airbus and expect to have detailed discussions over the next two quarters. From 2023, once we’ve exhausted the low hanging fruit that exists within 5-6 hours flying time from our base [we’ll consider it]. It’s an interesting option,” he concludes.