Oman Air toying with idea of budget airline

MUSCAT, Oman – Oman Air has roped in two international consultants — Seabury and Oxford Economics — to conduct a feasibility study to launch a low-cost airline. The firms will also make a blueprint to improve the company’s revenues, profitability and fleet expansion.

“We have got in-principle approval from the government to start the low-cost carrier (LCC). The government has also approved setting up a company for the LCC and has asked us to submit a feasibility study for final approval. The budget airline will most likely operate on domestic and regional routes,” said HE Darwish Bin Ismail Al Balushi, Minister Responsible for Financial Affairs and Chairman of Oman Air’s board, said on Thursday.

“We are keen to reduce our losses and break-even. In this backdrop, we have roped in Seabury consultants, who will prepare a 10-year network and fleet expansion plan,” he said.

The study will show us whether the airline will be profitable in three years or five years and whether we should focus on transit or point-to-point strategy, he said.

The consultant, which has been asked to submit its recommendations in three months, has been tasked with recommending supporting activities and businesses, which Oman Air can undertake to improve revenues, and attain profitability such as ownership of hotels, restaurants, travel and tourism offices, he said. As per a preliminary study, the socio-economic benefits of the airlines operations including tourism promotion currently stand at 450 million rials.

“We have also asked the consultant to designate the types of aircraft suitable for operation on long haul routes such as Indonesia and Philippines with possibility of connections to Saudi Arabia in order to attain profitability. Further, the consultant has been asked to highlight the growth impact of the airline during the next five years and ways to boost tourism and economic development; details of the stations where other carriers are taking passengers from Oman and also the impact of implementing the growth plan of transferring such revenues estimated at 50 million rials to Oman Air, he said.

Al Balushi said that Oxford Economics has been tasked with highlighting the role of the airline in supporting local firms and products by purchasing Omani commodities, services and fuel; illustrate means of joint cooperation and tie-up between the local airline and other airlines to encourage them to operate to Oman; point out the logic and subjective justifications that should convince the government to continue its support to Oman Air.

It has also been asked to study the impact of Oman Air’s operations to the proposed airports and how it contributes in linking Oman with international airports.