Oman Air uses 737 fleet to fuel market expansion

BY SANDY ANGERS


In today's commercial airline industry, success is rarely measured by the size of your fleet or the airplanes you fly. Consider Oman Air: at a time when most airlines are struggling to remain profitable in the current economic environment, this Middle Eastern airline is flying high with a modest fleet of Boeing 737s.

Oman Air is the national carrier of Sultanate of Oman, a country situated on the southeastern tip of the Arabian Peninsula. It is the only publicly held airline in the region.

It also is one of the fastest-growing airlines in the Middle East. Last year, the Muscat-based carrier experienced a 16-percent growth in air traffic, carrying 848,000 passengers. It also generated US $101 million in operating revenue. This is especially remarkable these days with so many airlines operating in the red.

Small fish in a big pond

Surrounded by large carriers that primarily fly twin-aisle airplanes on long-haul routes, Oman Air has carved out a profitable niche using single-aisle airplanes to connect with a growing number of regional markets.

Oman Air Chief Executive Officer Abdul Rahman Al-Busaidy visited Seattle last month to meet with top-level Boeing Commercial Airplanes executives about his fleet requirements and to take delivery of a new 737-800. During an interview with Boeing Frontiers, Al-Busaidy explained his airline's strategy is to attract business travelers using comfortable, medium-range airplanes and high frequencies.

"There's a belief that big is good, but in that pursuit of bigness you can find a number of gaps," Al-Busaidy said. "The airlines around the Middle East region tend to put most of their emphasis on long-haul international flights. Because of this, we found that the regional business traveler is not satisfied."

Capitalizing on those underserved markets, Oman Air has successfully grown since its humble beginnings in 1993. The airline was created as a subsidiary of Oman Aviation Services, a ground services and cargo-handling company at Oman airport. Back then its fleet consisted of four turboprop airplanes, Fokker F27s and de Havilland Twin Otters, plus a Boeing 737-200, which flew from Oman to Dubai and India.

Spreading its wings

About two years ago, the airline embarked upon a remarkable five-year expansion program. The objective of the plan was to become the carrier of choice for business travelers. Oman Air recognized it needed the right equipment to meet business travelers' expectations for reliable and frequent flights.

The expansion began with a decision to buy new Boeing 737-700s and 737-800s to replace older Airbus A310s and early 737 models. Oman Air was the first carrier to introduce the Next-Generation 737 to the Persian Gulf region when it accepted its first 737-800 in 2001.

Coinciding with these first deliveries, Oman Air added seven new destinations including Karachi, Pakistan; Colombo, Sri Lanka; Cairo, Egypt; Beirut, Lebanon; Mombasa, Kenya; and Zanzibar and Dar Es Salaam, Tanzania.

Today, the airline operates a fleet of five Next-Generation 737s and four turboprop ATR 42 aircraft, and flies to 20 destinations in the Middle East and east African regions.

Using the right tool

Al-Busaidy said the fleet simplification was critical to the airline's expansion plan.

"We had a fleet comprised of five different types of airplanes, and that resulted in a lot of inefficiencies in terms of aircraft utilization, crew utilization and spares," he said.

In addition to its mixed fleet, the airline also had a fleet of airplanes ill-suited for the routes being flown.

"We had aircraft that were designed to fly long haul, seven-hour flights, but they were operating on routes that were, on average, two to three hours long," Al-Busaidy said. "We wanted an aircraft that could do both a one-hour flight and a five-hour flight economically. The beauty of the 737 is that it is really an efficient aircraft."

He also emphasized that the reliability of the 737 has allowed the airline to use its fleet an average of 12 and half hours a day.

"That's one of the highest utilizations in the industry. Considering our average flight is only an hour and a half, that number really reflects its reliability and performance," Al- Busaidy said.

He credits the new 737 fleet for significantly reducing its operating costs, cutting aircraft-ownership costs by 20 percent and setting the stage for the next step in the airline's business plan.

For the long haul

In addition to adding more 737s to its fleet through the next five years, Oman Air plans to grow gradually into long-range markets. The strategy opens the possibility that the airline will need jets bigger than the 737, which can fly as far as 3,300 nautical miles.

Oman Air is considering new routes from Oman to London, Bangkok, Kuala Lumpur and Jakarta. Al-Busaidy indicates that the mid-size twin-aisle airplanes like the 767 or the 7E7 may be ideal for these flights.

"For those routes, we would like to continue with the same strategy of operating high-frequency nonstop service with rightsized aircraft," he said. Until that time, the airline continues to focus on what it does best—providing reliable service, frequent flights and exceptional comfort and hospitality. Setting the standard In fact, Al-Busaidy believes his airline's focus on pleasing the customer is the key differentiator in a competitive marketplace.

"We encourage our customers to write to us and call us, and we listen carefully to what they are telling us. We adapt accordingly, and they notice the difference," he said.

Passenger feedback ranges from the use of airport lounges to flight departure times. In response to passenger suggestions, for instance, Oman Air instituted a frequent flier program last year. On another occasion, it changed the departure time to Dubai from 8 a.m. to 7 a.m. in response to business travelers who wanted an earlier start to their day.

Al-Busaidy is a firm believer in empowering his employees to please the customer. In a CEO message posted on the Oman Air web site, Al- Busaidy wrote that his employees are "individuals with feelings, thoughts and insights that need to be aired and understood. By putting people first, they are informed, inspired and involved in decision making. Therefore, by putting people first, it brings out the best in them. Only then will they put customers first."

To reinforce this philosophy, Oman Air provides employees with extensive training that teaches them how to make good decisions in the moment and on the field with passengers.

"No matter how many gadgets we use to pamper our customers, it's the human touch that is most important. We empower our staff, because they, not the supervisors, are the ones dealing with the customers," Al-Busaidy said.

Known for its efficiency and warm hospitality, Oman Air spares no expense on amenities. For this CEO, it is an interesting contrast to the cost-conscious approach of U.S. carriers.

"On an Oman Air flight, we give you a hot meal in economy during a one-hour flight. Here in the United States, you can fly first class in a two-hour journey and you're given peanuts and water. To me, that was quite a dramatic difference. It may explain our success and why our customers like us," he said.

Partners in flight

Al-Busaidy also credits the strong relationship between Oman Air and Boeing for enabling the airline's success. "

Boeing won our business on merit because of the superior product they have, and I have to say they have never let us down. The customer support is just brilliant," Al-Busaidy said.

Samir Hanna, Boeing International sales director, said Oman Air took a big risk in introducing the Next-Generation 737 in the region.

"The airline always had a concern that they were going to be like an orphan, because they have such a small fleet," Hanna said. "But we stood behind our product from day one, and their experience has been great. It's all about relationship and mutual trust."

sandy.l.angers@boeing.com