SalamAir's first mover advantage

SalamAir's first mover advantage
SalamAir CEO Mohamed Ahmed.
Published: 17 December 2017 - 7:30 a.m.
By: Shayan Shakeel

"This might be the best time for low cost to prosper,” says SalamAir CEO Mohamed Ahmed who joined the carrier after serving 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 complimenting the full service carrier in Oman.”

Ahmed insists SalamAir will help grow the market instead of taking share away from the country’s full service carrier. “They have a very different product which targets a very different 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 instead to drive to destinations within Oman. “We fly four times daily to Salalah from Muscat, but during the summer we were flying seven times daily at load factors over 90 percent. It’s because our fares were low enough to convince domestic travellers who would have otherwise opted to drive 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 A320s and will add upto four aircraft each year before reaching 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 own population may be small, but with Oman’s potential for tourism, including some of the longest 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.

Emirates and Flydubai joining forces 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. Such partnerships help reduce that overcapacity, so the market will rationalise, easing pressure on yields,” he says.

A stable political climate as well as cordial relations with neighbouring countries also puts Oman at at an advantage. “Geopolitical uncertainty definitely helps Oman because of it friendly relations which allow it to benefit from an increased traffic flow,” he says.

What might make Ahmed’s job trickier is the CEOs at both Oman Air and Salam Air departing abruptly earlier in an indication that the there is a lot more attention in Oman on returns from aviation. “The fantastic state of the art airport about to open next year has been spent on heavily and so the country is looking for a return on that investment by emphasising non-oil sectors,” says Ahmed.

The pressure to bring profitability is ultimately determined by how well plans can be executed, he says. “Fortunately the infrastructure including airports and ground handling already exist. 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.”

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